Drug Company Faces Backlash After Pill Price Increases 5000%

Published on October 8, 2015, by Matthew Sharp

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Drug Company Faces Backlash After Pill Price Increases 5000%

Drug company Turing Pharmaceuticals is facing a barrage of outrage from doctors, patients and the public after hiking the price of the drug Daraprim from $13.50 a tablet to $750. The drug is used to treat toxoplasmosis, an infection that arises from drinking contaminated water or eating undercooked meat. The disease primarily affects those with compromised immune systems.

The drug, which received US Food & Drug Administration approval in 1953, was historically manufactured by GlaxoSmithKline. In 2010, GlaxoSmithKline sold the marketing rights to CorePharma, which was acquired by Impax Laboratories in 2014. In August of this year, Impax sold the drug to Turing Pharmaceuticals for $55 million. Before being purchased by CorePharma, the drug typically retailed for about $1.

After the New York Times published an article about the drug’s steep price increase, Turing Pharmaceutical Founder and Chief Executive Officer Martin Shkreli vigorously defending the move.

“Because the drug was unprofitable at the former price, so any company selling it would be losing money. And at this price it’s a reasonable profit. Not excessive at all,” Shkreli told CBS News. “This is a disease where there hasn’t been one pharmaceutical company focused on it for 70 years. We’re now a company that is dedicated to the treatment and cure of toxoplasmosis. And with these new profits we can spend all of that upside on these patients who sorely need a new drug.”

While Daraprim’s price increase is extreme, this isn’t an isolated case. The cost of a 30-pill prescription of Cycloserine, a tuberculosis drug, recently increased from $500 to $10,800.

Price Gouging, Profiteering Illegal in Only Limited Circumstances

While Turing’s behavior may seem unethical and abominable, it is not illegal. Profiteering and price gouging are crimes in many jurisdictions, but the laws only apply during civil emergencies such as earthquakes and hurricanes. Even then, only basic necessities — food, shelter and fuel, for example — that are essential to survival are covered by price gouging laws.

Dozens of states have enacted price gouging laws, but the state of Nevada has no such law. Even where such laws exist, state authorities are often reluctant to prosecute many price gouging allegations.

In 2014, the Southeastern Pennsylvania Transportation Authority sued Gilead Sciences over the price of its Sovaldi hepatitis C drug. The civil lawsuit alleged price gouging and the violation antitrust laws, but legally monopolies can set the price of goods at any level it chooses. The transit authority sought class-action status for the lawsuit, which would have allowed others hit by the Sovaldi price increase to benefit from a judgment against Gilead or settlement. In May, the judge assigned to the case granted Gilead Sciences’ motion to dismiss the case.