Price Gouging on Infant Heart Drugs

A lot of things get called “price gouging”. Some early-adopters whined about price gouging when the price of iPhones dropped $200 just two months after the uber-gadget was introduced. And back in August, an article in Maclean’s wondered whether Canadians are getting gouged, given that prices on some consumer items cost more in Canada than in the U.S. But it doesn’t count as “gouging” every time a price is higher than we think it ought to be.

But this…this is price-gouging. From Chicago Business: Feds sue Ovation Pharma over skyrocketing price of heart drug

The federal government on Tuesday sued Ovation Pharmaceuticals Inc., accusing the Deerfield company of illegally raising the price for a drug that treats heart defects in babies.
The Federal Trade Commission claims that in 2006, Ovation raised the price of its drug, Indocin, to nearly $500 a vial from $36, after acquiring the rights to the only competitor drug on the market.

OK, so, find a super-vulnerable population that desperately needs your product. Eliminate all competition. Then jack up the price more than 1000%. Yup, that pretty much takes the cake.

I’ll only add, very briefly, that there are some people at least who argue that limited forms of price-gouging are ethically justified in certain circumstances: roughly, if prices are “unreasonably” high, that fact may have an important signaling effect within a market, attracting investment and effort into solving a dire need. I doubt the Ovation case could be justified that way. Yes, we probably need more investment into these kinds of drugs. But reducing competition is not a way to do that.

(For a very good, limited defence of some kinds of price-gouging, see Matt Zwolinski,“The Ethics of Price Gouging” Business Ethics Quarterly, Volume 18, Issue 3.)

Hat tip to the irascible Pharmagossip.

2 comments so far

  1. Anonymous on

    I use Mustargen for my cutaneous cancer by applying it to my skin after dilution. My shock was when Ovation acquired selling rights to the drug, lying to me telling me that they manufactured it, and raising the price 1000%. Merck made and probably still makes the drug. My last package Dec. 2009 says manufactured by Merck, sold by Ovation. This is indeed immoral if not criminal.
    Victoria Franks

  2. […] Under this heading, we might include the profits earned by drug companies that jack up the prices for life-saving drugs, or profits earned by tow-truck operators who cruise the highways during snowstorms, offering to […]

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