Monday, October 5, 2015

How Prescription Drugs Get So Wildly Expensive

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Value for drugs is a function of demand (potential users), supply (ease of manufacturing, patents, and competition), and efficacy (how much the drug improves users life). Insurance companies can negotiate cheaper price if the drug is widely used and has ample supply. Ff the drug is unique, only important to few users, and has a high efficacy, insurance companies have little bargaining power.



Headline: How Prescription Drugs Get So Wildly Expensive

MARTIN SHKRELI IS the Internet’s villain of the week. After buying and then immediately jacking up the price of a drug that treats a potentially deadly parasite, he’s become a sneering meme in social media, a think-piece punching bag, and a policy springboard for presidential candidates. He gives a bad name to former hedge fund pharmaceutical CEOs everywhere.


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