Pharmaceutical industry can dictate drug prices
You’ve got to be working awfully hard to be the subject of more derision and contempt than Walter Palmer, the Minnesota dentist who gunned down Cecil the lion in Zimbabwe a few months ago.
But Martin Shkreli, the CEO of Turing Pharmaceuticals, may well have pulled it off. Give that man a cigar and a crash course in reputation management.
Seeming profoundly self-satisfied and too clever by half, Shkreli’s company acquired the rights to Daraprim, which is little used but nevertheless crucial in treating toxoplasmosis, a parasitic infection. Once costing as little as $1 per pill when Daraprim was controlled by another company, Shkreli recently jacked up the price from $13 to $750 a pill, a 5,000 percent increase.
Was there a sudden run on Daraprim, or some other fluctuation in the marketplace that would have demanded such a pronounced hike in its price tag? No. Shkreli dismissed one journalist as a moron for even asking why. He later offered up the “research and development” fig leaf, even though there’s little evidence that the 32-year-old’s company is animated by anything other than the making of profits on a huge scale. Perhaps realizing that large swatches of America were affixing his photo to their dartboards and creating their own Martin Shkreli voodoo dolls in which to stick pins, the “pharma bro” CEO backed off, saying he would reduce the price of Daraprim, though he didn’t specify by how much.
Shkreli turned out to be a perfect villain in this scenario – “health care’s Gordon Gekko,” in the estimation of The Washington Post, referring to the amoral stockbroker played by Michael Douglas in the 1987 movie “Wall Street.” But what Shkreli and his company did is not unique. Many companies in the United States raise and lower drug prices because, well, they can.
Daraprim has been around since the 1940s, and is no longer patented, but there are no generic alternatives on the market because the condition it treats is, thankfully, not all that common and thus not likely to yield much of a profit for other drug manufacturers. Shkreli has a monopoly on the drug, and the people who need it have nowhere else to go.
He is treading down a path that is well worn. Earlier this year, The Wall Street Journal reported on how one pharmaceutical company boosted the price of two heart drugs by 212 percent and 525 percent on the same day. Another company recently raised the price of 30 capsules of a drug that combats tuberculosis from $500 – not as cheap as a bottle of asprin, but a manageable expense – to an eye-popping $10,800 for the same 30 capsules.
Peter B. Bach, who directs the center for health policy and outcomes at Memorial Sloan Kettering Cancer Center in New York, told the Post that “it reflects a widespread appreciation that pricing for drugs is entirely irrational in this country and the pharmaceutical industry has total control over prices and there’s no rationality to the system.” The outrageous price increase on Daraprim is “such a perfect, crystalline example of everything that can be done, given the lack of rationality in the system, and the total bankruptcy of the justifications for high drug prices in the first place.”
Much of this is the result of our fragmented health care system, where pharmaceutical companies negotiate with a panoply of hospitals and insurance providers. In countries with national health care systems, like Britain and Canada, prescription drug prices are lower because there is only one purchaser. In theory, Medicare should have the same kind of power, but it is restrained by law from negotiating with pharmaceutical companies. Both Hillary Clinton and Bernie Sanders are arguing in their respective presidential campaigns that this should be changed. And there’s evidence that it would work – not only do other nations provide proof of success, but the Veterans Administration is able to negotiate prices that are 10 to 20 percent lower than what you would find elsewhere in the United States.
Prescription drugs have been a blessing, extending lives and alleviating conditions that once would have been debilitating. Americans who need them most shouldn’t be fleeced on their way to the pharmacy counter.