BRANDED DRUGS AND NEW YORK NANOSECONDS

The Fed keeps looking for that mystical, elusive 2% inflation.

Look no further, boys and girls, than the pharmaceutical sector. Drug prices on branded drugs since last month jumped 9-10%, according to today's WSJ. "Drug Firms Ring in Higher Prices" is the story headline, a play on the old New Year's saying: "Ring out the old and ring in the new."
Well, from the looks of it, and we'll get to this later, these drug monsters don't always wait until the new year to roll out price increases.

One of the media's constant memes about deflation is the absence of pricing power. Look again no further than the drug makers. What's been nearly a news avalanche of  negative publicity against drug companies--remember it's an election year--and their high prices, especially their prescription ones, to those who need them, you can bet they can find 2% inflation and way more.

Besides hurting people with these higher costs they bring out those know-it-all, we'll-fix-it-all bureaucrats and politicians who then pass legislation these drug firms claim they deplore and stifle business and the whole cycle begins again.

Here's one of our favorites, mostly for its display of pure altruism, from the Journal article. Vanda  Pharmaceutical rang in the new year by hiking the price of it new drug to treat a sleep disorder in "blind people 10% to $148,000 a year." No doubt an industry mouth piece will note how small that market is. But--and this is a huge but--since the drug's 2014 introduction the once-daily dose is "now 76% higher," the WSJ reports.

Now, back to those who don't wait for the new year to ring in price increases. Amgen, the manufacturer of Embrel, an anti-inflammatory to treat rheumatoid arthritis, hiked the price 10% last May and just four months later, September, added on another 8%. The average weekly cost of treatment, according to the Journal, is $704 or about $36,000 a year.

The real sinister part here, however, goes on behind the scenes. Drug company lobbyists slipped money into political pockets to stop the progress of any and all alternative medicine efforts to address these maladies. The FDA, a friendly cousin of the industry, recently went after the private makers of Kombucca, a fermented tea some use for medicinal purposes, because of it ETOH content. The story there is orchestrated scare tactics against the tea have mostly failed, so we'll go after a substance that is regulated and comes from fermentation, alcohol. Our fermentation is okay, but not yours.

One industry wag attempted to explain away the price hikes, saying: the raises are "...our way of insuring that we can survive and develop these programs and bring these new innovative drugs to market." Taking just the case of Vanda, a 76% hike in the cost in less than two years, is a pretty decent amount of surviving in an environment where even the vaunted Fed with all it's computer resources can't find 2% inflation.

It's one we feel for sure most of us whether we use these products or not would opt for in a New York nanosecond.