Hedge Fund Manager's Turing Pharmaceuticals Raises 62-Year-Old Drug From $13.50 to $750
What would you do if the price of your everyday prescription rose 5,500%?
It may seem far-fetched, but it's exactly what happened to Daraprim (pyrimethamine), a drug originally developed over 60 years ago to fight protozoal infections like malaria and toxoplasmosis. After Martin Shkreli, a former hedge fund manager, acquired the drug for his company, Turing Pharmaceuticals, he raised the price by 55 times overnight, according to the New York Times.
Daraprim used to cost just $13.50 per dose. Now it's $750 for each and every tablet, meaning some people who need it to manage chronic infections have seen the cost of their health-care explode into the six-figure range. People who take Daraprim include immunocompromised HIV and cancer patients.
Shkreli defended the price raise to the New York Times, saying "This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business [...] This is one of the smallest pharmaceutical companies in the world. It really doesn't make any sense to get any criticism for this."
On Monday, Shkreli also went on Bloomberg TV to further defend Turing Pharmaceuticals's decision, citing increased production costs since the drug's approval in 1953 and Daraprim's previously undervalued price. "This drug was doing $5 million in revenue, and I don't think you could find a drug company on this planet that could make money on $5 million of revenue. Most costs are much higher than that." Shkreli also said on Bloomberg Markets his company would give away half their Daraprim supply for just $1 per pill or even for free to patients who can't afford the drug.
While John Carroll of FierceBiotech was reporting on the story over the weekend, he got into a heated Twitter exchange with Shkreli in which the Turing CEO brushed off and ignored Carroll's questions, calling him "such a moron."
Dr. Judith Aberg, the Icahn School of Medicine at Mt. Sinai's infectious disease division chief, responded by telling the New York Times hospitals may now be compelled to use "alternative therapies that may not have the same efficacy" and "this seems to be all profit-driven for somebody, and I just think it's a very dangerous process."
Such dramatic price increases are common: Though a 5,500% price jump seems unheard of, the U.S. has a for-profit medical system where average people increasingly lack the funds for common medical bills. Huge increases in the price of prescription drugs remain a major problem.
The Wall Street Journal reports research firm Truveris found prices for "brand, generic and specialty drugs combined increased 10.9% in 2014 from the year before," with certain categories of drugs seeing increases more than twice that. According to data compiled by Bloomberg, narcolepsy drug Xyrem has increased by 841% in price over the past seven years, while diabetes drug Humulin R U-500 increased by 354%, EpiPens for allergic reactions 222% and Viagra 159%.
The price increases have mostly been among established brand-name drugs, including some for serious ailments like cancer or multiple sclerosis. Though generic drug prices have not risen as quickly, sometimes a generic version of a prescription simply isn't available — or the generic drug is nearly as expensive.
What's causing it: Spending on prescription drugs is actually growing in line with skyrocketing health care costs in general, though prescription prices are among the most visible effects of that increase. CNN's Sreedhar Potarazu blames the increase on a myriad of factors including declining competition in the pharmaceutical industry, lengthy patent periods, good old-fashioned price gouging and the inability of Medicare officials to negotiate lower prices with drug manufacturers.
In October 2014, a congressional committee headed by Rep. Elijah E. Cummings (D-Maryland) and Sen. Bernie Sanders (I-Vermont) began seeking out the root cause of the increase in drug prices.
"Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescriptions to manage their health needs," Sanders said in a statement to the New York Times. "We've got to get to the bottom of these enormous price increases."
On Monday, Democratic presidential candidate Hillary Clinton promised to take on prescription drug "price gouging" in a post to Twitter.
By later in the day, NASDAQ biotechnology stocks fell by 4.5%.