Much-reviled Martin Shkreli is not alone in his efforts to massively increase the prices of older drugs to line his pockets. The one-time hedge fund wunderkind and current biotech big-shot wannabe Shkreli is really just jumping on a fast-moving bandwagon with his plan to increase the cost of Daraprim 50-fold (he has since rolled back the price hike). More than a dozen other private equity groups and hedge funds have also bought up older drugs for relatively rare conditions over the last few years, and then jacked the price up by thousands of percent. However, Shkreli likely did a dis-service to himself (and many others) by doing the hike (and responding to the outrage) in such a boorish and inept way.
As a September 30th white paper from nonprofit, progressive, anti-hedge fund activist group Hedge Clippers points out, the American health care system is under siege as powerful financial interests do everything they can to milk the system for every possible dollar. The most recent scam from these antisocial and unpatriotic organizations and their morally bankrupt leaders is buying up rare or orphan drugs for conditions with few effective treatments, so that patients have no choice but to pay the higher price for the same medicine.
Health insurance, of course, covers most expensive drugs under our system, so it really boils down to the fact that the greedy hedge fund execs who are rolling out this disgusting new “strategy” are getting rich by ripping off insurance companies (who then raise the health insurance premiums paid by American consumers).
How hedge funds are ripping off the American health care system
The evidence is all right there in the public record. You might think that these selfish coyotes who are looking to make a quick buck off of sick people might try to hide what they’re doing, but they are brazen in their thievery and claim they are using the extra funds from the new sky-high prices for “research” or “to save the company from bankruptcy.”
The Hedge Clippers paper highlights that: “Out of the twenty-five drugs with the fastest-rising prices over the past two years, twenty are owned or have been acquired by firms with significant activity from hedge fund, private equity, or venture capital firms during the relevant time period.”
This means that 80% of the drugs with the recent fastest-rising prices have been a part of hedge fund, private equity or similar activity in the past two years.
While the details of each deal are different, the outcome is invariably the same: the prices of drugs for which no lower-cost generic alternative drug exists go up by many thousands of percent to satisfy the greed of investors.
In most cases, the reason(s) for the price increase are not even connected to medical or production costs for the drug. The HC report notes that “drugs like Sprix nasal spray or Vimovo have rocketed in price after an ownership change made possible by private investment.”
Of course, missing from the report is the fact Obamacare has not managed to control spiking healthcare prices, leading to healthcare becoming unaffordable to middle class Americans. That said, just imagine how bad healthcare inflation would be without the few checks on the broken American healthcare system that the current watered-down version of “Obamacare” provides…even the rich might have trouble affording it!
