Daraprim Price Hike
The Full Story Behind Daraprim and Martin Shkreli
An infection-fighting drug called Daraprim recently made international headlines when it jumped from $13.50 to $750 per tablet overnight. Here’s the true story about Daraprim and the man responsible for its price jump, Martin Shkreli.
What is Daraprim?
Daraprim is a drug that has been on the market for over 62 years. Over its decades of use, it has become a globally accepted standard at treating a specific type of life-threatening parasitic infection.
The generic name for Daraprim is pyrimethamine. The “life-threatening parasitic infection” it’s primarily used to treat is called toxoplasmosis. That infection can cause serious or life-threatening problems to certain groups of people. Those people include:
— Babies born to women whose mothers became infected during pregnancy
— People with compromised immune systems, like AIDS patients and certain cancer patients
Daraprim is also used to treat malaria.
Things were going well for Daraprim. People would develop that life-threatening parasitic infection, then receive a prescription for Daraprim. They paid $13.50 per tablet, and they were treated. Up until a few years ago, Daraprim cost only $1 a tablet.
That all changed when Daraprim was acquired by a company called Turing Pharmaceuticals in August 2015. That company – a pharmaceutical company run by a former hedge fund manager – immediately increased the price of the drug by an almost unfathomable amount – it now costs $750 per capsule.
Patients who had relied on Daraprim to treat the deadly infection saw the price of their prescription increase overnight – with some patients being told to pay hundreds of thousands of dollars in order to stay alive.
Who Raised the Price for Daraprim?
Turing Pharmaceuticals raised the price of Daraprim from $13.50 to $750 per tablet overnight. This immediately pushed the pill out of reach for anyone who can’t afford, say an extra $736.50 USD cost added to their daily medication budget.
Critics of the price increase, like Dr. Judith Aberg at the Icahn School of Medicine at Mount Sinai, said that typically, companies will raise prices if they adjust the drug’s formula or manufacturing conditions. It’s unclear if Turing Pharmaceuticals changed any part of Daraprim:
“What is it they are doing differently that has led to this dramatic increase?”
Dr. Aberg later went on to claim that patients’ welfare would be at risk because they would be forced to turn to other methods of treatment. Patients might be forced to practice “alternative therapies that may not have the same efficacy”, for example.
Meanwhile, some are claiming that Turing Pharmaceuticals is simply practicing good business. Turing purchased the drug from its previous owner, Impax, for $55 million. Before the price increase, Daraprim had approximately 8,000 to 9,000 prescriptions across America (not including inpatient use at hospitals). Even if some of those prescriptions drop away, the deal could generate tens of millions of dollars for the company.
Who is Martin Shkreli?
Martin Shkreli has been the center of hatred on the internet over the past few months. He’s the founder and chief executive of Turing Pharmaceuticals, which is the company that raised the price of Daraprim by several thousand percent overnight.
The 32-year year old former hedge fund manager “has a reputation for both brilliance and brashness” according to the New York Times.
At first, Shkreli was surprised to receive such hatred for his company’s decision. He defended his company, saying that:
“This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business.”
Shkreli went on to explain that the price of the drug brings Daraprim “more in line” with other drugs used to cure rare diseases, and that the company is using the profits from the drug to create better treatments for toxoplasmosis.
Better Treatments for Toxoplasmosis Aren’t Needed
Shkreli defended his company’s decision to boost the price of the drug because he feels that better treatments are needed for toxoplasmosis.
However, one HIV researcher interviewed in a CNBC piece claimed that “that’s not true”.
Shkreli, meanwhile, continued to defend his company’s decision saying that many people were dying from toxoplasmosis despite taking Daraprim. Ultimately, he concluded that:
“We feel this is the more appropriate price for Daraprim.”
When pressed about his research and development team, Shkreli claimed that he has a team of 25 researchers who will actively try to find a safer and more effective version of Daraprim whether it’s needed on the market or not.
This Isn’t the First Time Shkreli Has Generated Controversy
Of course, Shkreli can try to play the hero all he wants, but people aren’t buying it.
Perhaps they remember that the 32-year old Mr. Shkreli has been the subject of controversy before.
In his 20s, he started a company named MSMB Capital. That hedge fund company became infamous for urging the Food and Drug Administration to block certain drugs whose stock he was shorting.
Daraprim isn’t even the first drug Shkreli has aggressively acquired.
In 2011, Mr. Shkreli launched a company called Retrophin. That company had one purpose: to buy old, neglected drugs and sharply raise their prices to boost its own bottom line.
Retrophin still exists today, but the board fired Mr. Shrekli in 2014. Retrophin later sued Shkreli (as seen in this document from the Federal District Court in Manhattan), and accused him of using Retrophin as “a personal piggy bank to pay back angry investors in his hedge fund.”
Shkreli would later file for arbitration against his old company, claiming they owed him $25 million in severance pay and that they had concocted a “wild and crazy and unlikely story” to discredit his name.
Turing Pharmaceuticals Isn’t the Only Company Doing This
Turing Pharmaceuticals and its founder, Martin Shkreli, are the first to become household names by buying popular medication and ramping up the price.
However, Shkreli isn’t the first person to engage in such morally questionable practices. As the New York Times explains,
“Turing’s price increase is not an isolated example. While most of the attention on pharmaceutical prices has been on new drugs for diseases like cancer, hepatitis C and high cholesterol, there is also growing concern about huge price increases on older drugs, some of them generic, that have long been mainstays of treatment.”
There are different reasons why a company would buy the license for a drug:
“Although some price increases have been caused by shortages, others have resulted from a business strategy of buying old neglected drugs and turning them into high-priced “specialty drugs.”
Some of the other famous examples of medication prices that increased dramatically in America overnight include:
— Cycloserine, a drug used to treat a particularly dangerous type of tuberculosis resistant to other drugs, was recently increased in price from $500 to $10,800 for a single 30 pill dosage. This increase occurred after the license for the drug was acquired by Rodelis Therapeutics.
— Valeant Pharmaceuticals recently jacked up the price on two heart medications by hundreds of percentage points. Isuprel and Nitropress had their prices raised by 525% and 212% overnight, respectively. Interestingly enough, current presidential candidate Bernie Sanders was one of the leading investigators against Valent Pharmaceuticals in this case.
— Bernie Sanders’ investigation also pointed out Doxycycline, an antibiotic that went from $20 per bottle in October 2013 to $1,849 by April 2014.
Does Martin Shkreli Deserve the Hate?
Maybe it’s because Shkreli has such a punchable face. Maybe it’s the smirk he has on his face in interviews. Or maybe it’s because he’s a former hedge fund manager – a title that has had negative stigma attached to it since the 2008 recession.
Whatever the reason may be, Shkreli certainly deserves most of the criticism that comes his way – but he’s not the only one engaging in these morally questionable practices to make lots of money.