Wednesday, May 6, 2015

qotd: Gilead and the hedge fund managers

Vocal New York
May 5, 2015
Activists Target Hedge Fund Managers Cashing In on Predatory Drug
Pricing Schemes from Gilead Sciences

On the eve of Gilead Science's annual shareholder meeting, activists
criticized the pharmaceutical giant's decision to price its Hepatitis C
Virus (HCV) cure out of reach for millions of sick people by targeting
three major hedge fund investors in the company. The groups released a
new report charging Julian Robertson of Tiger Management, Steve Cohen of
Point72 Asset Management, and other hedge fund managers of profiting
from extortionate drug prices on the backs of 3.5 million Americans and
175 million people worldwide who are living with the virus.

Gilead charges as much as $1,125 per pill and $94,500 for a course of
its lifesaving treatments, forcing health care systems to limit access,
robbing patients of a decent quality of life, and forcing many into
serious health problems and complications.

Hedge fund managers are laughing all the way to the bank. A pack of
hedge fund managers bet big on Gilead price-gouging schemes in 2014,
increasing the number of shares they held by a factor of 12. The bet
turned out well for the hedge fund managers – Gilead's stock rose 84%.
But things haven't worked so well for HCV patients who still can't get
access to Gilead's overpriced drugs.

"The hedge fund industry directly supports Gilead's decision to put
astronomical profits over people's lives," said Fred Wright of the
grassroots political group VOCAL New York. "Hedge fund managers,
including those we're protesting today, have unapologetically attacked
any effort to control drug costs for the good of the public. They're
parasites feeding off of people's desperation."

"While Gilead reports, once again, exorbitant profits from their HCV
cures, the majority of the people with chronic HCV infection cannot
afford them and are not being cured," said Luis Santiago of ACT UP New
York. "Millions of people will see their HCV disease progress, with
horrendous yet avoidable health results. Gilead's profiteering is
letting people get sicker, knowing there is a cure. Gilead must
substantially lower these outrageous prices so the rationing is lifted
and we can cure everyone with HCV."


Hedge Clippers
May 4, 2015
Hedgepapers No. 13 - Hepatitis C and Hedge Fund Profiteers

A pack of hedge fund managers bet big on Gilead price-gouging schemes in

Julian Robertson of Tiger Management: "I love Gilead right now. I think
it's fabulous…They're going to get inundated with cash from the profits
on the Hepatitis C drug"

Steve Cohen, Chairman and CEO of Point72 Asset Management, whose firm's
schemes to game drug trials resulted in extensive insider trading
investigations and almost landed him in prison

Cliff Asness of AQR Capital Management, who has published extensive
rants against Obamacare, and who sits on the board of the Manhattan
Institute, which opposes Medicare drug price negotiations

Robert Mercer of Renaissance Technologies, a major backer of key players
in the fight against Obamacare, including the Heartland Institute and
presidential candidate Ted Cruz

Joel Greenblatt of Gotham Asset Management and Glenn Dubin of Highbridge
Capital, also significantly increased their stakes in Gilead Sciences
over the course of 2014

These six hedge fund managers increased their shares of Gilead by twelve
times during this period. The stock price rose 84% over this period, and
the value of their collective holdings in Gilead went from $45 million
to $844 million.

That's a lot of interest in curing Hepatitis C victims – or rather, in
squeezing them for profit.


Quote of the Day
April 27, 2015
Pharmaceutical firms contribute to wealth inequity

Pharmaceutical firms are buying the rights to the products of other
firms, often buying the firms themselves, paying very high prices for
these rights. …an even more egregious example is the action of Gilead
Sciences in buying up the rights to the newer, more effective Hepatitis
C drugs, again paying outrageous prices for those rights. They are
recovering this capital cost by charging $1,000 or more for each pill
sold, when a course of treatment may be 84 pills.

A massive amount of capital is paid out, requiring the purchasing firm
to charge much higher prices for those drugs to recover the funds paid
to acquire the drug rights. Who receives the capital paid out? The
wealthiest tier - the tier that holds by far the largest percentage of
shares in public and private corporations.


Comment by Don McCanne

Last week in a Quote of the Day it was described how pharmaceutical
firms such as Gilead were paying outrageous amounts for drug rights and
then passing these extra costs onto patients through much, much higher
drug prices, while tacking on exorbitant profits.

Today's report shows where much of these profits are going: to the hedge
funds! The pharmaceutical industry has become a tool of Wall Street in
extracting funds from patients and passing them on up to the very
wealthiest, including the fund managers themselves - compounding our
problem with wealth inequity.

This screams out for government intervention. With this and all of the
other abuses, how could we not support moving control of health care
financing to our own public program - a single payer improved Medicare
for all?

(For those who plead that hedge funds serve not only the wealthiest
individual investors, but they also serve institutional investors such
as university foundations and union retirement funds, then you should
ask yourself if it is proper for these institutions to expand their
assets with tainted money. An important role of government should be to
ensure that their money is clean.)

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