Turing Pharmaceuticals: A Price Raise, a Name Change, and an Outrage

BY INDIRA FLORES

As of September 2017, notorious ‘pharma bro’ Martin Shkreli has taken up residence in a federal prison in Brooklyn, New York.¹² After bragging that he would only ever be sent to a luxurious, low-security ‘Club-Fed’ for his earlier convictions of fraud, he was sent to a federal prison for a completely separate reason: posting a message asking his followers to try to “grab” a strand of Hillary Clinton’s hair for him. These Facebook posts, after being deemed as potentially threatening to Clinton by the judge ruling over his case, resulted in Shkreli’s imprisonment without bail. During this time, Shkreli was originally meant to be quietly awaiting his sentencing, scheduled for January of 2018, after being convicted of one count of conspiracy and two counts of fraud for his hedge fund dealings. Perhaps the reason why Shkreli has demonstrated such aggressive hostility toward Clinton is because she is an influential public figure who, like most American citizens, vehemently condemned him for increasing the price of Daraprim, a medication used to fight parasitic infections, by 5000 percent overnight in 2015. Shkreli’s recent incarceration has provided an opportunity to re-investigate the timeline of the Daraprim outrage and review the effects that it still has today.

The story of the complications surrounding Daraprim begins in February of 2015. During this month, Shkreli officially launched Turing Pharmaceuticals, named after famous computer scientist Alan Turing.⁶ Shkreli served as the company’s chief executive officer. The company was initiated by the acquisition of three medical products from Retrophin Inc, another pharmaceutical company that Shkreli had originally founded. Several months later, in August, Turing Pharmaceuticals purchased exclusive rights to pyrimethamine, the drug marketed as Daraprim, in the United States from Impax Laboratories. When Impax Laboratories owned the rights to Daraprim, its cost was $13.50 per pill. Once Turing Pharmaceuticals gained ownership of the drug, they dramatically raised the price to $750 per pill—a 5000 percent increase. This marks the beginning of the controversy. By September, major news networks had begun reporting on the price increase, bringing it to the attention of the general public. It was at this time that Clinton also began making an enemy out of Turing Pharmaceuticals and referring to them as proof of the corruption that permeates the pharmaceutical industry to amass support for her own drug plan while campaigning for the 2016 presidential election.¹¹ This frustrated the leaders of other American pharmaceutical companies, who claimed that Turing was not representative of the industry as a whole and feared that the villainous image of “big pharma” would begin spreading through the population like the viruses these companies produce drugs to treat. With so many different groups of people affected and angered by this situation, it was no surprise that Shkreli felt justified in beginning to refer to himself as “the most hated man on the Internet.”

In November of 2015, Turing Pharmaceuticals announced that the company would be changing the price of Daraprim to $375 per pill for hospitals.⁵ The Clinton campaign suggested that the presidential candidate’s open criticisms and condemnation of the company was in part responsible for Shkreli’s decision to reduce the price. Although Turing reduced the drug’s cost to half the level it had originally set, it still marked a 2500 percent increase from the price that the pill had originally been when Impax Laboratories owned it.

December of 2015 marked an even more significant change for Turing Pharmaceuticals and its founder: Martin Shkreli was arrested. However, it was not related to the controversial price hike of Daraprim or for any business he conducted as CEO of Turing Pharmaceuticals. He was actually arrested on securities fraud charges; the investor reportedly paid off his hedge funds’ money-losing investors using the funds of his prior pharmaceutical company, Retrophin.¹⁰ Immediately following his arrest, Shkreli resigned as chief executive officer of Turing Pharmaceuticals. The man who was previously the board chairman of the company, Ron Tilles, was announced as Shkreli’s replacement.² Medical providers and patients who were required to take Daraprim were hopeful that this would result in a return to the original price of the drug, but no such price drop occurred.

Shkreli himself was not indicted for dramatically hiking the price of Daraprim. However, around the same time that he was arrested, the news that Turing Pharmaceuticals was undergoing investigation by the US Federal Trade Commission was released.² The FTC began conducting their investigation of the company to determine if the Daraprim price hike might be connected to antitrust violations. In February of 2016, Shkreli and other representatives from Turing attended a House Oversight Committee hearing on rising drug prices in the US.⁴ They claimed that the company’s decision to raise the price of Daraprim was ethical and reasonable because the additional profits earned would be used to fund further drug research. They also claimed that the uninsured, low-income users of Daraprim would benefit from the funds of an assistance program put in place by the company, and approximately 67 percent of the people who use Daraprim would only be paying pennies per pill due to a discount offered through Medicare and Medicaid. This still left patients who did not qualify for the assistance program, as well as hospitals and insurance companies, paying up to $30,000 for a single bottle of the Daraprim pills.⁴ In the end, Turing Pharmaceuticals was not forced to shut down business or lower the price of Daraprim; the company came out largely unscathed, save for a tarnished reputation. Perhaps in an attempt to relinquish their baggage from the past, in September of 2017, the company changed its name to Vyera for all business conducted in the United States. However, the baggage has not completely disappeared, as the price of Daraprim remains high.

Daraprim has been a life-saving drug since its beginnings over six decades ago, so its price changes have certainly affected its users. The common name for the drug is pyrimethamine.³ The drug is most commonly prescribed to treat toxoplasmosis, an infection caused by a virus that may invade human tissues and damage the brain. In certain less common cases, the drug is used to treat acute malaria. Although an estimated twenty-three percent of adults in the US have toxoplasmosis and do not require treatment, individuals with diseases such as HIV and AIDS who have weakened immune systems are especially susceptible to the infection.¹ These patients are typically prescribed two to three pills every day for a period lasting from several weeks to several months.

The price hiking of Daraprim actually began even before Turing Pharmaceuticals purchased the rights to the drug. Before 2010, rights to the drug were owned by the company GlaxoSmithKline, who priced it at just one dollar per pill.⁸ Then, when the company Impax Laboratories and its subsidiary CorePharma acquired rights to the drug, they raised the price to $13.50 per pill in order to increase their profits. In 2015, Turing bought the rights to Daraprim from CorePharma, which is when they hiked the price up to $750 per pill. These price hikes most directly affect patients who require Daraprim to recover from infections. Those who are not covered by the company’s assistance program or who otherwise lack adequate health coverage cannot afford to pay such an outrageous amount of money for the medication. Considering that these patients are typically individuals who also have diseases such as AIDS, they are already paying large amounts of money each year to treat the symptoms of those diseases and others that accompany them. To take the full course of their Daraprim prescription as recommended by their doctors would cost them an additional $336,000 to $634,500 per year, depending on the weight of the patient.⁹ As the prices of drugs such as Daraprim increase, those who are required to take these drugs are not the only ones affected. The pharmaceutical companies expect health insurance providers to shoulder the majority of the additional costs. Health insurance providers in turn claim that this justifies the rising costs of insurance premiums and copays for everyone—including both those health insurance holders who use the more expensive drugs and those who do not.

In a free market system such as that of the United States, it may seem surprising that a single company can raise the cost of a drug so dramatically and have no apparent competitors marketing similar drugs at lower prices. The issue is that the disease that Daraprim treats, toxoplasmosis, does not need to be treated as often as many other diseases do. The demand for this drug is somewhat low when compared to the demand for other drugs, so other pharmaceutical companies have not viewed pyrimethamine as a lucrative drug to devote resources to begin producing; there is no generic version of the drug available in the United States. This is why Turing Pharmaceuticals was able to purchase exclusive rights to the drug and essentially have a monopoly over its production so they could raise its price dramatically while still retaining its consumers. One pharmaceutical company, Imprimis, markets a pyrimethamine/ leucovorin capsule as an “option… for individualized compounded medications in the face of drug prices that have recently significantly increased”—a thinly-veiled jab at Turing and their Daraprim price spike.⁷ Although the Imprimis capsule is significantly less expensive than Daraprim, priced at under ten dollars per pill, it is also not nearly as effective.

Fortunately, the implications of Turing Pharmaceuticals’ Daraprim price hike have not had harmful consequences on a global scale. In other countries, pyrimethamine still remains available at the price of only one or two dollars per pill because Turing only has rights to distribute the drug in the United States.⁸ Medical professionals from around the world have been very willing to send the drug to American doctors whose patients could no longer afford it after the price hike.

The entire situation involving the sudden rise in the price of Daraprim by Turing Pharmaceuticals calls attention to some startling issues with the pharmaceutical industry. Firstly, there are issues with the people who are leading the pharmaceutical industry in the United States. The fact that someone with motives as questionable as Shkreli’s could found, lead, and abandon several different biomedical and pharmaceutical companies is a major point of concern. Additionally, there is an issue with the role of monopoly in the American pharmaceutical industry. The United States has tried to place regulations on monopolies and trusts, and the FTC investigation and subsequent Congressional hearings seemed as though they might enforce those regulations, but both of these governmental actions resulted in more questions than answers, and no real progress resulted from them. In other countries, the same drug that was marketed here for $750 was being marketed for less than ten dollars per pill; there was no Turing Pharmaceuticals monopolizing health insurance providers or consumers of the drug abroad. These findings explain and warrant the recent rise in calls for reform of governmental regulations on “Big Pharma” in the United States.

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References:

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9. Muoio, D. (2015, September 17). Daraprim price jump raises concerns among ID groups, providers. Retrieved from https://www.healio.com/infectious-disease/hiv-aids/news/online/%7B745d9cc5-df37-4139-b1ac-6dde7b8ae463%7D/daraprim-price-jump-raises-concerns-among-id-groups-providers
10. Pollack, A. (2015, December 18). Martin Shkreli Resigns From Turing Pharmaceuticals. Retrieved from https://www.nytimes.com/2015/12/19/business/martin-shkreli-resigns-turing-drug-company.html
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