Some drug pricing is justifiable. But likely not all.

You’d have to be living under a rock not to have seen the NYT story on how Daraprim just jumped from $13.50 a tablet to $750 after being bought out by a new pharmaceutical company. The NYT is on the case, and you should go read the article.

I’ve written about drug company costs in bringing drugs to market before. That has caused many to think I’m anti pharma, even though I don’t think I am (see today’s Upshot column on how much I love the drug I take). But this practice, of buying an old drug and then jacking up the price, is more common than many think:

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.

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.”

Cycloserine, a drug used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 after its acquisition by Rodelis Therapeutics. Scott Spencer, general manager of Rodelis, said the company needed to invest to make sure the supply of the drug remained reliable. He said the company provided the drug free to certain needy patients.

In August, two members of Congress investigating generic drug price increases wrote to Valeant Pharmaceuticals after that company acquired two heart drugs, Isuprel and Nitropress, from Marathon Pharmaceuticals and promptly raised their prices by 525 percent and 212 percent respectively. Marathon had acquired the drugs from another company in 2013 and had quintupled their prices, according to the lawmakers, SenatorBernie Sanders, the Vermont independent who is seeking the Democratic nomination for president, and Representative Elijah E. Cummings, Democrat of Maryland.

Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1,849 by April 2014, according to the two lawmakers.

Some companies find a drug that has a small market, but can’t be replaced. They buy up all the places that make it, giving themselves a virtual monopoly. Then, they jack up the price.

This may be legal – you’d have to ask Nick. But it sure isn’t going to be popular. Many people also think it isn’t right. Often high drug prices are argued for to cover the costs of drug development. But in this case, the company raising the prices did none of the development whatsoever. They bought a drug that was making money at $13.50 and then jacked up the price. Why?

Martin Shkreli, the founder and chief executive of Turing, said that the drug is so rarely used that the impact on the health system would be minuscule and that Turing would use the money it earns to develop better treatments for toxoplasmosis, with fewer side effects.

“This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business,” Mr. Shkreli said. He said that many patients use the drug for far less than a year and that the price was now more in line with those of other drugs for rare diseases.

“This is still one of the smallest pharmaceutical products in the world,” he said. “It really doesn’t make sense to get any criticism for this.”

“Trying to stay in business”? If the company couldn’t make money at the same price the old company was, then why did they buy the drug? And asking people to pay WAY more to fund other drug development seems like gouging sick people with no choice. I’m having trouble understanding the optics of this.

By the way, Medicaid and many hospitals will get the drug cheaper because of federal rebates and discounts. This will hit those with private insurance, Medicare, and hospitalized people. I’m curious to see how this plays out.


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