Health Care’s Newest Public Enemy No. 1

Dear Rundown Reader,

It’s almost disheartening to have to tell this story.

But early reports are indicating we have a “Pharma Bro” 2.0 situation brewing.

We’ve barely caught our breath from chastising Martin Shkreli.

And now reports are surfacing about a duo from Chicago sweeping across the nation, raising drug prices everywhere they go.

The duo claims they’re helping patients.

Critics say they’re sending costs further down the pipeline in the form of higher insurance premiums.

Who’s right? Who’s wrong?

Today’s Rundown gets to the bottom of it all.

Your Rundown for Monday, April 9, 2018…

“Pharma Bros” 2.0

Todd Smith and Benjamin Bove.

Remember the names.

To prescription drug companies on the brink of failure the Chicago-based duo are a godsend.

According to Bloomberg, the two claim they offer a “sure-fire fix for struggling pharmaceutical companies. And wherever they go, the price of prescription drugs tends to skyrocket.”

At a glance their business model appears simple.

According to Smith and Bove, their strategy employs the use of specialty pharmacies that allow for zero-dollar copays and less red-tape in acquiring expensive, but life-saving medicine.

Sounds good so far.

Looking closer however, the lack of details behind the duo’s operations could be a major red flag.

According to Bloomberg, Smith notes using “their ‘special sauce’ to get those meds into the hands of customers who need them.”

What that means is anyone’s guess.

The lack of transparency on how the two are able increase drug prices and decrease patient’s out-of-pocket costs is concerning.

The Chicago Tribune reports the two “have raised prices on life-saving and other drugs by as much as 4,116%.”

Specific examples, according to Bloomberg, include tripling the cost of an arthritis drug called Indocin to $2,550 and increasing Kaleo’s two-pack of naloxone, a life-saving treatment for opioid overdoses, to $4,100 from $575.

As more information emerges, things start to look a lot like another “Pharma Bro” scenario.

Patients feel like they’re paying less, but they in fact they “end up paying the price in the form of higher premiums,” according to Bloomberg.

Stephen Schondelmeyer, professor of pharmaceutical economics at the University of Minnesota notes: “It’s totally a wrong way to frame the issue to say it’s free to the patient. It’s ripping people off.”

And it’s story all too reminiscent of Martin Shkreli’s.

Shkreli, you’ll remember, became notoriously famous for raising the price of the drug Daraprim by 5,000% a few years ago.

Earlier this year he was found guilty on three counts of investor fraud and sentenced to seven years in prison.

Commenting on the verdict we asked, does sending Shkreli to jail for seven years fix anything?

It appears we have our answer.

Not at all.

The drug pricing ecosystem is deeply flawed.

The question is, are we at a point where the only recourse is to blow health care up completely and start from scratch?

What other options are out there?

We’re all ears.

Now, turning to the markets this morning…

Market Rundown for Mon. April 9,

S&P 500 futures are up 13.00 at 2,618.75.

Oil’s up a point to $62.73.

Gold’s flat at $1,336.30.

Bitcoin’s still down now at $6,722, according to CoinDesk this morning.

We’ll talk again on Tuesday.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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