Comments on: Pharmaceutical Pricing Practices Must Change to Reestablish Market Trust http://www.pharmareform.com/2010/02/28/pharmaceutical-pricing-practices-must-change-to-reestablish-market-trust/ Transforming Pharmaceutical Companies in an era of Healthcare Reform Fri, 03 Feb 2012 03:57:38 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Mike Wokasch http://www.pharmareform.com/2010/02/28/pharmaceutical-pricing-practices-must-change-to-reestablish-market-trust/comment-page-1/#comment-61 Mike Wokasch Wed, 10 Mar 2010 20:12:47 +0000 http://www.pharmareform.com/?p=281#comment-61 Thank you. You are correct. Big Pharma suffers from many of the same executive integrity and accountability issues found in other large corporations. Mike Thank you. You are correct. Big Pharma suffers from many of the same executive integrity and accountability issues found in other large corporations. Mike

]]> By: Pharma Conduct Guy http://www.pharmareform.com/2010/02/28/pharmaceutical-pricing-practices-must-change-to-reestablish-market-trust/comment-page-1/#comment-58 Pharma Conduct Guy Sat, 06 Mar 2010 15:23:24 +0000 http://www.pharmareform.com/?p=281#comment-58 Hi Mike, As usual, you did a great job outlining the current state of affairs, highlighting current problems and offering suggestions for improvement. Although I absolutely agree with your <i>prescription</i> for fixing the problems, you and I both know that so long as execs are simultaneously rewarded <em>and</em> pressured to think quarterly and they have control over a <em>life-or-death</em> resource with elastic demand, pricing will continue to be "a very impersonal, quantitative spreadsheet modeling exercise." The best example of the dark-side of this behavior is the way Enron priced energy in CA after their successful bid for deregulation. Besides practicing some creative accounting to hide losses, as one person in the documentary <a href="http://en.wikipedia.org/wiki/The_Smartest_Guys_in_the_Room" rel="nofollow">Enron: The Smartest Guys in the Room</a> stated, Enron basically used California as their own personal cash machine. By adjusting the price of energy to arbitrarily high rates (e.g. what the market would bear), Enron was able to plug revenue holes quarterly. We all know how that story turned out though. Hi Mike,

As usual, you did a great job outlining the current state of affairs, highlighting current problems and offering suggestions for improvement. Although I absolutely agree with your prescription for fixing the problems, you and I both know that so long as execs are simultaneously rewarded and pressured to think quarterly and they have control over a life-or-death resource with elastic demand, pricing will continue to be “a very impersonal, quantitative spreadsheet modeling exercise.”

The best example of the dark-side of this behavior is the way Enron priced energy in CA after their successful bid for deregulation. Besides practicing some creative accounting to hide losses, as one person in the documentary Enron: The Smartest Guys in the Room stated, Enron basically used California as their own personal cash machine.

By adjusting the price of energy to arbitrarily high rates (e.g. what the market would bear), Enron was able to plug revenue holes quarterly. We all know how that story turned out though.

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