Tag Archives: Price-fixing

Pharma Shares Melt Down, But Consumers Might See Relief, by Wolf Richter

Posted on August 5, 2017 | Leave a comment

The pharmaceutical industry is essentially a price-fixing cartel. Crack down on price-fixing and it puts a dent in big pharma’s profits. From Wolf Richter at wolfstreet.com:

Effects of competition after government cracks down on price fixing?

Shares of Teva (TEVA), the largest generic drug manufacturer in the world, plunged 13% on Friday, to $20.60, after having already plunged 24% on Thursday, after having reported that second quarter revenue and profits had been beaten down by a 6% decline in generic drug prices. Since July 2015, shares have plunged 70%.

Though revenues rose, Teva booked a net loss of $6.0 billion in the quarter. It listed a slew of special items, including a $6.1 billion write-off “related to the US generics reporting unit.”

It announced that it would slash its dividend by 75%, lay off 7,000 employees globally, including in Israel where it is headquartered, pull out from 45 countries, and close 15 plants. It is grappling with a generics market where competition started to push down prices in 2015. “Negative net pricing” is what the company calls this.

During the earnings call, Dipankar Bhattacharjee, head of Teva’s Generic Medicines Group, explained that their customers – wholesalers and buying groups – were consolidating and pushing for price reductions, and that Teva cut prices “to secure additional business.”

These pricing pressures would accelerate this fiscal year, the company said. That’s good for consumers who’ve been bludgeoned over the past many years by soaring pharmaceutical prices. But it appears to be a tough pill to swallow for the stock market.

AmerisourceBergen Corp., the second-largest of the three big US drug wholesalers, reported on Thursday a 8.7% decline in operating profit in its pharmaceutical distribution unit. It expects generic prices to skid by a range of 7% to 9% in its current fiscal year.

Its shares (ABC) plunged 10.5% on Thursday and skidded 1% on Friday, to $80.83. They’re down 13.8% over the past four trading days and down 23% since July 2015.

CEO Steve Collis told The Wall Street Journal: “There’s no doubt that when you have a key product category with a 9% deflation rate, that’s a headwind you’re getting.”

To continue reading: Pharma Shares Melt Down, But Consumers Might See Relief

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The True Face Of ‘Health Reform’ by Karl Denninger

Posted on May 8, 2017 | Leave a comment

The big problem with medicine is its cost, and a big part of its costs stem from the fact that medicine has become a government-cosseted cartel and racket, engaging in price fixing and exclusion of competition. From Karl Denninger at theburningplatform.com:

If you want to know why fixing “health care” is so difficult you need only read this article.

From Akron to Youngstown and Canton to Cleveland, as in cities and towns across the country, workers who once walked out of factories at the end of each shift now stream out of hospitals.

While manufacturing employment has fallen nearly 40 percent in northeastern Ohio since 2000, the number of health care jobs in the region has jumped more than 30 percent over the same period. In Akron, the onetime rubber capital of the world, only one of the city’s 10 largest employers still makes tires. Three are hospitals.

If these were doctors and nurses that might be understandable.  But they’re not.

They’re nearly all paper-pushers who contribute exactly zero to actual consumer care.

The problem is that all of these people draw salaries and thus drive up the cost of medical care by ridiculous amounts.  In fact last month some 20,000 people were added to the “health care” employment rolls and nearly all of them will never provide one second of actual care to an actual person — but every one of them has and will massively drive up your health care costs.  In fact if the average “administrator” in that group makes $40,000 in the last month alone a whopping $800 million per year before their health insurance and employment tax cost was added to your medical bills and yet not one single person got one minute of additional actual care out of that expense.

Next month there will be another $800 million added on which you will be forced to pay.

The next, and at least as-large problem is found in the continual bleating of hospitals and similar that “Medicare doesn’t pay what X costs” as their justification to gouge private parties.  But this claim is false; if you look at many of the so-called “non-profits” you can find myriad examples of this being a flat-out lie, and nowhere is it easier to find than in the hospitals’ lab sections.

Direct operating costs are usually about 10% of the revenue amounts!

To continue reading: The True Face Of ‘Health Reform’

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Posted in Economics, Government, Medicine, Uncategorized

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