North Korea’s Kim Jong Il has been acting (Issa Rae voice) “Hella Reckless” as of late. In Mid-February North Korea launched a mid-range missile into the Sea of Japan. Many believed Jong-Un was testing the Trump administration’s preparedness. Trump immediately stoked the flames, using the provocation to deploy the Terminal Altitude Defense System (“THAAD”); THAAD is designed to protect South Korea against attacks from short and medium-range ballistic missiles.
The U.S. action was followed by more missile tests from North Korea, which was followed by more tough talk between Trump and Jong-Un. In August President Trump promised to meet any North Korea threat with fire and fury:
The US president on Tuesday warned Pyongyang that he would meet North Korea’s threats “with fire and fury like the world has never seen”. North Korea responded with hints that it might attack the US territory of Guam in the Pacific, in turn leading to Mr Trump to talk about the US nuclear arsenal. “My first order as president was to renovate and modernise our nuclear arsenal. It is now far stronger and more powerful than ever before,” he tweeted on Wednesday morning. “Hopefully we will never have to use this power, but there will never be a time that we are not the most powerful nation in the world!”
And how does Jong-Un respond? Last week he tested a hydrogen bomb that was seven times more powerful than the atomic bomb dropped on Hiroshima (13 kilotons) and five times more power than the one dropped on Nagasaki (20 kilotons). Trump tweeted that North Korea was a “rogue nation”:
..North Korea is a rogue nation which has become a great threat and embarrassment to China, which is trying to help but with little success.
— Donald J. Trump (@realDonaldTrump) September 3, 2017
The President has called for China and other countries to stop shipping oil to North Korea. He has also recommended more economic sanctions and the shipping of high-powered weapons to South Korea. The reality is that since the Financial Crisis of 2008 executives from Wall Street and big business have bilked this country for trillions; government officials have been party to it. Between the robber barons, mass incarceration and the Obama administration’s faux wealth effect to the benefit a few people, how can we tame North Korea when we cannot even tame bad actors in America?
How Can Trump Tame North Korea When He Can’t Tame Allergan?
The Fed’s wealth effect has created a bevy of hedge funds and private equity firms who want to invest in stocks. Allergan, PLC is a hedge fund hotel that has acquired healthcare companies, raised prices and then saw its stock price go through the roof – buoyed by the Obama administration, Ben Bernanke and Janet Yellen. Earlier this week Allergan partnered with St. Regis Mohawk Tribe to insulate patents for Restasis, its top-selling dry eye drug, from generic competition:
Allergan plc (NYSE: AGN), a leading global pharmaceutical company, and the Saint Regis Mohawk Tribe today announced that the Tribe now owns all Orange Book-listed patents for RESTASIS® (Cyclosporine Ophthalmic Emulsion) 0.05%, and that Allergan has been granted exclusive licenses in the patents related to the product. The Tribe, a recognized sovereign tribal government, is filing a motion to dismiss the ongoing inter partes review (IPR) of the RESTASIS® patents based on their sovereign immunity from IPR challenges.
Allergan will contribute the Restasis brand (worth over $10 billion), and actually pay the Mohawks $13.75 million up front and $15 million in annual royalties beginning in 2018. In Q2 2017 Restasis generated $354 million and has a contribution margin (prior to corporate allocations) of nearly 70% – this is the quarterly income stream Allergan hopes to protect. That said, the agreement does not impact current patent litigation between Allergan and generic rivals (Mylan, Teva, Pfizer) who have filed abbreviated drug applications (“ANDA”) regarding Restasis. A trial on the matter was recently completed in Federal District Court in Marshall, Texas.
The Dry Eye Market Is Currently Underserved
Restasis is a calcineurin inhibitor immunosuppressant indicated to increase tear production in patients whose tear production is presumed to be suppressed due to ocular inflammation. Dry eye disease connotes a condition in which the eye does not produce an adequate volume of tears or when the tears are not of the correct consistency. Dry eye affects about 5% of the adult population age 30-40 and 10% to 15% of adults over age 65.
About 30 million people are effected by dry eye. Allergan has dominated the market for decades, and currently charges $5,000 annually for Restasis. Restasis ceded some market share to Shire’s (SHPG) Xiidra after it entered the market in the second half of 2016. However, Xiidra’s presence might not have improved pricing or market conditions. Xiidra is also priced at $5,000 so Shire and Allergan are likely fighting over the 1 million people already with a prescription.
Source: Shock Exchange
Currently only 3% of the 30 million dry eye market is being served. That could change if generics enter the market. Restasis is under siege from Mylan, Teva, Pfizer, et. al. The company is accusing generic rivals of violating its patent protects, while the rivals accuse Allergan of trying to extent exclusivity beyond its expiry.
The entrance of generics could bring down pricing, but also expand the market. It could make the drugs more affordable to the 29 million people currently not being served. Allergan has much to lose. Restasis is its second-best selling product and is already in decline. Its revenue fell 9% Y/Y. Allergan’s organic growth is dead and it does not have the R&D prowess to develop new drugs. Its $234 share price and $30 billion debt load hang in the balance.
Mohawk Deal Is An Affront To Trump, Bernie Sanders, Claire McCaskill
Allergan’s attempt to insulate its expired patents and continue price-gouging in the dry eye market is an affront to President Trump and Senators Bernie Sanders and Claire McCaskill. Sanders’s HCV rant against Gilead in 2015 brought the nation’s attention to the high price of drugs. Healthcare costs have been rising at multiples of the rate of inflation. It became a campaign issue between Hillary Clinton and Trump last year. The Senate Special Committee on Aging – spearheaded by Claire McCaskill and Senator Susan Collins – led a study on price-gouging by firms like Valeant and Martin Shkreli’s Turing Pharmaceuticals.
They recommended that [i] drugs be imported from outside the U.S. and [ii] the FDA fast track approval of generics. Allergan’s attempt to circumvent the Senate’s recommendations on price-gouging could test the resolve of Trump, Sanders and McCaskill.
Takeaway
If President Trump cannot sort out Allergan then how can he sort out North Korea? This could be a key test of his mettle. Kim Jong-Un is watching.
On Shock Exchange
Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead explains the stock market and U.S. economy through the eyes of the New York Shock Exchange, a financial literacy program Ralph Baker started in 2006 to share his passion for investing and basketball with his 11-year-old son and other boys his age. The book predicts the “pain ahead” for the U.S. economy, the demise of China, the pending stock market crash and social unrest.
Shock Exchange has been trumpeted by President Obama, the Senate Finance Committee and House Ways and Means Committee. However, they conveniently forgot to cite the source. Critics try to make and unmake authors, but the market always decides. The book was also recently added to Trump Syllabus K12, crafted by Dr. Kaye Wise Whitehead of Loyola University Maryland. Shock Exchange is the best book on Wall Street in the past 20 years, and on economics, it may be the most important book since the Great Depression.
Trump And The Global Economy – October 24, 2017
We had our second installment of Trump And The Global Economy town hall in October. Professor Lance Brofman, Coconut Rob, Wuyi Jacobs (AfroBeats Radio) and the Shock Exchange chopped it up with hundreds of members of the Brooklyn community. The town hall is designed to give the public real information about Trump’s policies on taxes, immigration, the economy, the stock market, etc. and how they will impact the country and the community.
And you guessed it, Allergan was the topic. We explained the company’s shenanigans over tax avoidance, price-gouging and its recent controversial decision to sell its dry eye patents to the St. Regis Mohawks to avoid a patent challenge from Mylan and Teva. We also explained in detail how the president and should reign in Allergan, and how his ineffectiveness could embolden North Korea’s Kim Jon Un. The video is below.
[…] they were endorsing a cool product, but CoolSculpting is owned by Allergan – arguably the most-hated drug company in America. Allergan acquired Zeltiq Aesthetics, the previous owner of the product, in 2016 for […]