jordan and egypt. he took it back and put it on continual. >> that's on target tomorrow. 10:30 eastern. that is our show for today, i'm ali velshi. ♪ ♪ ♪ >> for more people for more illnesses than ever before, the answer is, take a pill. the inventiveness of drug companies, the basic research of scientists and the growing needs of a population have combined to cure disease, extend life and make drug companies immensely profitable.

some people are stopping pills, medications altogether. is there going to be a desire for shareholder value, prescriptions and profits? it's the "inside story." >> welcome to "inside story." i'm ray suarez. in the past few weeks, americans have been treated to the spectacle of an unapologetic corporate chief confidentably justifying his decision to take a 62-year-old drug and start charging 50 times its regular price from 13.50 to $750. the drug startup made mar stin martin strel

lrv elli look like gla glaxo smith kline, look like a poster boy. since it has no counterpart, its developer, touring pharmaceuticals, can charge what they want. even by a factor of 50. >> successful drug company, profitable drug company. >> i see where it looks greedy but there are a lot offal truic of altruistic issues. >> critics attack touring and others like it for this basic business model.

>> these companies are simply acquiring all therapies and repackaging them and saying well now we're going to set the price at this amount, and that's exactly what's going on. >> this company isn't the only drug maker boosting prices. this past summer, a tuberculosis drug from $500 for 30 pills to nearly $10,000. valiant pharmaceuticals international raised the price of two heart drugs from 550% and 220%. harvoni is being soalt sold at sold at $95,000 nor two month course of treatment. the process can be expensive and electee and while a generic drug may be awaiting approval new treatments could arise that make investments unprofitable.

but to some huge price hikes for old drugs are simply not justified. >> even if you pay the price, your diabetes doesn't get 50% better when you pay 50% more. it's the same drug. it works the same way. and it has the same result for patient if they have access to it and take it. >> public outrage over daraprim was swift. republican and democratic candidates weighed in. donald trump called that company a spoiled brat, and hillary clinton talked about reignin reining in drug prices. >> right now it's a free market and it's up to the company to decide what's proper. we buy that company and we ask to charge toyota prices, i don't think that should be a crime. >> touring pharmaceuticals has announced its not going to go

through the $he 750 per price pill like, but it hasn't announced what it will be or when it will take effect. prescription prices, john graham, and jeffrey joyce, director of health policy. professor joyce, welcome to the program. is it something that happens often, that a drug that's been around this long, that's not particularly challenging to make, gets this kind of sudden price like? >> no. it's a relatively new phenomenon. we've seen it increasingly over the past several years, where we've seen some consolidation in the generic market, you have one or two manufacturers in the drug therapy, that causes them to raise prices because they have monopoly power.

>> in this case is there another producer for daramrim? >> there are not. we have generics to treat broad diseases but in this case, it's a relatively mayor reoh range disease. we have to think about is there a scope for the government to ensure we provide access to these drugs and medications. >> in the marketplace for things like drugs do we have to tease apart what's legal and what's right and are they two different things? >> well, i think of course they're different things because laws can incentivize either moral or immoral behavior. mr. skrelli is not a person that is not a classical pharmaceutical executive. he didn't run through finance r&d, he's a hedge fund manager

that has figured out how to do something, he has been denounced by the bases of pharmaceutical makers, he may be falling flat on the face because of the blow-back he's gotten. >> you know drugs broadly speaking have gone up 13% over the past year in price. while the generate of inflation in the economy is around 2%. so he may not be exactly aping the business model of the rest of big pharma. but there is something going on here. a lot of generic drugs have seen very healthy price rises that are not forced by for instance a rising cost of production. what's going on? >> the rising price of generic drugs is i think mysterious. because you can't make the justification that a research-based drug maker like

gilliad could make for hep c drugs. there is effectively no research and development in generic drugs. they should be easy to enter the market,ing india and israel should be able to enter it easily. i can't explain it easily, perhaps your other guest can. they have a backlog of 4,000 drugs now and it takes almost two years to approve a new generic drug to come in. that allows incumbents to raise prices a little more than they would a few years ago. >> similar to people working in other markets, because the cost are shifted so that a patient won't necessarily pay the increase? >> to some degree, insurance which we all value and benefit, does insulate consumers from the full price of a product. so yes, to some degree.

but i think it's important to make a distinction between sort of the generic market and the issues involved there and the branded-drug market. and as john mentioned i think on the branded side, prices are high, and sometimes launch prices will shock consumers when it's $100,000 for a break through drug. and again i think over time, the value of those drugs, in many cases, has been quite high, and most of the value has gone to society. on the generic side, i don't think that argument could be made. and i do think what we've seen is some consolidation in the industry. i think we've had a very vibrant generic drug industry up until the past few years where the prices of generic drugs were much lower than the rest of the improved world. we have $4 typical generics at most retail outlets now, but the margins have gotten tight and we've seen fewer

and fewer manufacturers in certain categories and that makes them have pricing power. what do we do with one or two producers in a particular drug class? as john says, it should be faster but that's not the only reason for getting drugs to market. in certain cases the market's not that big for certain drug classifications. >> gentlemen stand by. is a bill different from most other health care that you buy? is medicine developed priced and sold in a way that's so different and used for reasons that are so different that it's hard to apply the marketplace rules that work with other items? prescription he and profits, say with us. it's "inside story." >> you have kids here who've

killed someone? >> award winning journalist soledad o'brien takes us inside the violent world of kids behind bars. will a new experimental program be their last chance? >> i have to do my 100 percent best so i don't end up in a place like this again.

>> you're watching "inside story." i'm ray suarez. as the prices of things rise and fall, manufacturers make choices and so do consumers. if the bries of bee pricing of f rises, scoomple consumers may change to chicken. a medicine that treats a rare condition or cheaply fights a disease that only has far more expensive alternatives lives in

a different kind of marketplace. or does it? one also responding to life and death, health and illness, wealth and poverty, concerns we don't apply to a chocolate bash or a car bumper. i'm back with john graham and jeffrey joyce. john graham, consumers are always making choices but they another. in the face of price rises, they can't necessarily do without daraprim if let's say they're suffering with hiv infection and are threatened with toxoplasmosis. >> absolutely not. that's why the shocking spike in price of this drug. the shockingly small in the tens of thousands i believe,

mr. skrelling asserted the price at which glaxo smith-kline was selling, they were losing money, i don't know if they were losing money, but they were happy to sell it at that price. people say we shouldn't sell our companies to people like mr. screlling. that's one solution. i do know this drug is available in indian for penny a pill. oreign competing manufacturers supplying the united states that might help as well. >> you don't have to go clear all the way to india, you could drive to windsor ontario from detroit or mexico from the southwestern border and find american branded drugs at significantly cheaper prices. how does that work? how does drug pricing work in a world that's becoming increasingly borderless? >> well, it's -- the way drug

manufacturers, research-based drug manufacturers were able to maintain price differences is there are borders in drug pricing in the sense that many other countries, governments exert some power over drug prices. there are differential the incomes, prices that can be maintained in the united states can't be maintained in subsaharan africa or places in europe. i'm from canada originally so i do know people do drive across the border to take the lower-priced medicine. whether it's a way people are going to respond to this daraprin situation i don't know. but for the lower prescription drugs they do do that. then there's a question are you getting the real drug? sit a copy? is it safe? i don't know, i wouldn't want to make other people's decisions for them. but the problem people have to really look into is this: if

the drug company that is legitimately doing research and development and i'll just say glaxo smithkline as an example, they have to put their capital at risk. cram down the drug price investors say you know what i'm not going to put my capital at risk anymore. >> professor joyce, you can't use production substitution as easy with medicine as you can with other consumer goods, can you? >> increasingly we can. we do have drug classes why we have generic -- where we have generic substitutes in most of them. daraprim is a six decade old drug, it was the only game in town simply because others are not producing it. it is not a new novel product, there bhean hasn't been a financial inevitable.

john raises a good point, we want innovation and sure we could allow importation from other countries which we don't do today, that would save consumers and health plans today but it would come at a cost of future innovation. the generic drug market, we have had a very vibrant market, so that generics drug prices are lower here than in most other countries. but recently we've had cases where there's consolidation in the industry, lack of competition, in the case of daraprim we have a monopoly. how should we treat though cases, i think it is in the public's interest where we treat i.t. as a public utility. -- it as a public utility. we get some sort of price floor but they cannot price-gouge and we do that in medicare part d for example, the prescription drug plan for seniors where

plans have to justify price increases to the government. they have to say why prices increase beyond a certain amount in order to get approval. >> they can't negotiate drug prices. >> right. >> we'll speak about that in a moment. as we've heard in the program, a lot less government influence. but as a major player, does government or by you do you already have a stake in the profits the pricing and the successes of different drugs? when the government wade in to try and hold drug prices down is it exerting undue influence or merely protecting its shareholders, people like you, prescriptions and profits, stay with us. it's "inside story."

>> welcome back to "inside story." i'm ray suarez. the federal government in the united states is for better or worse a big player in the field of medicine. it regulates health care plans. it tests and approves and bans medicines. and it underwrites a lot of basic medical research in the country. you'll hear the government panned, does the u.s. that is you as taxpayers and patients partners in life savoring research with the power to hold down prices and profits in your own interest? still with me, professor jeffrey joys, chair of pharmaceutical and health economics at usc's health commission and john graham a -- legality economics and john graham. who can practice medicine

has a bown boundary in the united states. who can prescribe, you can't use drugs that are not fda approved but the big companies are vast multinational interests. how come being able ting charge high prices to 5% of the world's population is so important to the fe future of drug research. >> some would argue, i would say honestly, most of the profits come from the united states. the government could exert that power if they wanted to. hillary clinton has undoubtedly seemed to suggest that inner proposal. we would see less r&d. >> so the american patient is in some cases subsidizing the world's drug industry? >> that's a blunt way to put it. it's subsidizing the research and development budgets of the

world's drug industry but most american industries are doing something similar, whether it be the automobile industry or the i.t. industry or whatever. we are an engine of innovation in all areas and the world benefits. >> professor joyce is that a deal that you can live with? and your young students who you're sending out in the world to be pharmacists? >> i think we do have -- there's an underlying belief that the market is innovative and effective in some ways and we have to guard against abuses of some in the market, we talked about daraprim. but the lifesaving drugs let's say helpc drugs by gilliad, not only cure symptoms but disease. the value to the company is great but also greater to society, if you sort of quantify what are the value in life years

saved from those hiv medications, antiretroviral, that change hiv in a terminal illness to a chronic disease, most of the values went to patients and their families with hiv. no more than ten or 20% of the value generated went to the innovative companies. so in essence there really are societal values and when the drugs become generic, still reaping the benefit of daraprim 60 years later. >> as opposed to dutchmen or italians or subscribers to the british nhs heading off to the doctor in pleed leeds or london? >> good question. we do share a disproportionate amount of the price but they're still paying more than the costs of the marginal cost of that drug so they're still contributing to the profitability of let's say

pfizer or glaxosmithkline. so it is still in the interest of those companies to sell around the world at different prices. but that is a separate question of can sort of wealthy, as wealthy european countries should they be paying lower prices than we do in the u.s? that's one issue, a separate issue. we clearly should be charging different prices based on willingness to pay and ability to pay across the world. we shouldn't have one drug price because that would seclude a large segments of the world marketplace. >> john graham, we're just about done. this has to be brief. did the experience with daraprim create price controls that might not otherwise be there? >> i think it did. it was perfectly timed with hillary clinton's announcement of her drug price policy, this will be with us some time. >> i'll be back in a minute with

a final cost thought on the cost of medicine and medical care. join us on "inside story." follow us at raysuareznews. should prescription drugs be set on the laws of supply and demand? we'd love to hear what you think. i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline.

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you. >> recently i was treated in an emergency room after an accident. the bill was an eye opener. a brace for a fractured wrist some sutures for a busted lip and some pain medication ran around $1400. because i have good insurance, the cost to me was a manageable $75, the rest of it was exorbitant prices like $25 for a generic pain pill. but after my accident what should i have done? shopped around from emergency room to emergency room to try to find the cheapest treatment? pharmaceutical companies are in business to make money. they make money by finding new medicines. how much should a company be willing to spend on research for treatment for a tiny group of

sufferers? if price pressure is too strong will they even spend to money to look for treatment? this is tough stuff with no easy answers. if somebody is too poor to pay for a lifesaving medicine should somebody be compelled to get them the medicine they need? maybe the conversation should begin with admitting to ourselves that sentimentality and morality and ethics are right along with the market. you might find forcing companies to sell at a loss repugnant but also find the death of someone in africa or asia or baltimore for want of a few hundred dollars of medicine repugnant too. so can we begin by admitting the market and humanity are both at work here? thanks for joining us for "inside story." i'll see you next time. i'm ray suarez.

>> on "america tonight." legacy of an addiction. >> i wanted to let people know that it was a drug overdose. was i proud of it? no. but we need to stop airing these young people. >> love loss and why these people want their final words to speak the truth. and drugged to death? the risk to dementia patients and the struggle to help them.