Outrage over a pharmaceutical company’s decision to increase the price of a decades-old drug by 5,000 percent ignited debate for measures to impose anti-gouging regulations in an industry that’s free to charge whatever it wants for its products.
Facing widespread public backlash, Turing Pharmaceuticals’ chief executive, Martin Shkreli, announced Tuesday he would lower the price of Daraprim, a 62-year-old drug to treat a parasitic infection that the company raised from $13.50 a pill to $750. He didn’t specify the new price, but said it would be below $750 a pill.
“We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,” Shkreli, a former hedge fund manager, told ABC News. “We think these changes will be welcomed.”
Because the government has virtually no control over drug prices, public shaming or industry pressure remain some of the few options to prompt quick action. In this case, shaming proved effective, but the 32-year-old Shkreli’s sheer brazenness and unapologetic attitude — through most of Tuesday at least — inspired a special brand of public contempt.
Over the past several days, Shkreli had cast himself as a Good Samaritan in numerous media appearances by calling the hike “altruistic” because it could help pay for newer, better treatments for the disease.
CEO likened to the Joker
“This guy is laughing in the face of public shaming,” said Dr. David Belk, an Alameda physician before Shkreli‘s announcement.
“He’s having fun with this like he’s the Joker in Batman,” said Belk, who hosts a website called the True Cost of Healthcare. “You almost wonder if he isn’t just trying to create regulations in the market. I actually can’t think of a better way to do it.”
This is not the first time fury over rising drug prices had incited pleas for change. When South San Francisco’s Gilead Sciences released its chronic hepatitis cure, Sovaldi, in 2013, the drug’s $1,000 per-pill price tag also prompted cries of price gouging. A successor drug made by the same company debuted to even higher prices.
But health experts point out that Gilead actually developed the highly effective drug, whereas Turing purchased Daraprim from another company in August and then jacked up the price.
Daraprim, which hit the market in 1953, is considered the gold standard to treat toxoplasmosis, a parasitic infection that is relatively common but is potentially life-threatening to unborn babies whose mothers had become infected. People with weakened immune systems from HIV/AIDS, cancer treatment and organ transplants who get the disease also benefit from the drug. About 2,000 Americans take the drug each year.
Another high price hike, also involving an older drug used to treat a rare condition, was averted this week as well. The drug, cycloserine, is used to treat a form of drug-resistant tuberculosis.
The company, Rodelis Therapeutics, agreed Monday to return the drug to its former owner, a nonprofit affiliated with Purdue University, under pressure from the foundation over its plan to increase the price more than 20-fold, from $500 for 30 capsules to $10,800 for the same supply.
Options are limited
Although such jumps in price to the consumer are predictably unpopular, the options to keep them from happening or reversing them when they do are limited. Most experts say that the chances of enacting price controls on the pharmaceutical industry are unlikely in the current political environment, although some politicians are trying.
In a direct response to the Daraprim price hike, Democratic presidential candidate Hillary Clinton on Tuesday introduced a plan to curb drug companies’ “excessive profiteering” by capping consumer out-of-pocket costs.
Clinton’s proposal is similar to a California bill on Gov. Jerry Brown’s desk waiting to be signed or rejected.
The bill, by Assemblyman Rich Gordon, D-Los Altos, would require insurance companies to cap the amount a patient pays for specialty drugs and other needed medications to $250 a month per prescription. The bill covers high-cost prescriptions such as those for hepatitis, HIV/AIDS and multiple sclerosis that can otherwise cost thousands a month.
Critics say such regulations do nothing to change the root of the drug-pricing problem; the measures simply limit the amount of the costs health insurers can shift to consumers.
As for Turing Pharmaceuticals, the monopoly it has on Daraprim will continue. Generic drugmakers could apply to federal regulators to make it, but the process takes time and money. It’s unclear whether other companies would want to invest in the drug aimed at a relatively small market.
“It would take another company a certain amount of lead time — say a year or a year and a half — before they came out with the drug, so (Turing) is probably just thinking they can reap the profits while they can,” said Keith Yoshizuka, assistant dean of administration for the College of Pharmacy at Vallejo’s Touro University.
Yoshizuka said federal laws prevent drug manufacturers from price fixing or colluding on prices, but prices aren’t regulated.
“The fact that they’re the only manufacturer tells you there wasn’t a whole lot of money in it,” he said.
But Turing apparently thought it had figured out how to make money from the drug. The company in August simply bought the drug, and jacked up the price.
Leslie Wilson, UCSF professor of medicine who’s also in the department of clinical pharmacy, called the company’s actions “extreme,” but different from other pricing decisions, such as Gilead Science’s Sovaldi.
In that case, she said, the company took on the financial risk of developing the drug. Not so with Turing: “Here is a company that just recently started and has not taken any of the risk of developing a drug, and then bought it and sort of flipped it,” she said.
Caution on new rules
But Wilson called for caution when it comes to enacting new regulations in response to Turing Pharmaceuticals. “I would hate for people to overreact and make rules that make it difficult for everyone because of this one firm that’s really behaving badly,” she said.
Belk, the Alameda physician who writes about health costs, said so-called extreme cases like this make consumers nervous because they wonder what else is going on behind the scenes that they can’t see.
“Nobody’s looking at big picture. The big picture is the entire market is being manipulated,” he said of the country’s health care system. “It’s a profit-based system that’s completely opaque. There are so many games they can play that nobody will notice.”
Victoria Colliver is a San Francisco Chronicle staff writer. E-mail: firstname.lastname@example.org