4/10/2019 Price of drug Daraprim increases 5,000 percent overnight - CBS News

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Drug price increases 5,000 percent overnight

BY BIANCA SEIDMAN
U P D AT E D O N : S E P T E M B E R 2 2 , 2 0 1 5 / 2 : 4 7 P M / C B S N E W S

A dramatic increase in the price of a decades-old drug called Daraprim has

sparked protest among infectious disease doctors and advocates.

The rights to Daraprim were purchased in August by a new company, Turing

Pharmaceuticals, which promptly increased the price from $13.50 per tablet to

$750 per tablet -- a 5,000 percent jump -- the New York Times reported.

Daraprim, the common name for the drug pyrimethamine, is the only
medication for treating toxoplasmosis, an infection contracted from cat parasites
that can cause birth defects. It is also used as a co-treatment for HIV infections,
some cancers and malaria.
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4/10/2019 Price of drug Daraprim increases 5,000 percent overnight - CBS News

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Infectious disease physicians and advocates wrote a letter to the company urging
them to reconsider the price increase. "Under the current pricing structure, it is
estimated that the annual cost of treatment for toxoplasmosis, for the
pyrimethamine component alone, will be $336,000 for patients who weigh less
than 60 kilograms [132 pounds] and $634,500 for patients who weigh more than
60 kilograms," the letter said. "This cost is unjusti able for the medically
vulnerable patient population in need of this medication and unsustainable for
the health care system."

The jump in cost is particularly surprising because Daraprim is an o -patent drug

developed more than 60 years ago.

Turing Pharmaceuticals CEO Martin Shkreli told "CBS This Morning" the drug is
not overpriced compared to its peers. "The drug was unpro table at the former
price... at this price it's a reasonable pro t, not excessive at all," Shkreli said. He
claimed the money would allow the company to develop newer, better drugs.

"Our rst and primary stakeholder is patients," he said.

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4/10/2019 Price of drug Daraprim increases 5,000 percent overnight - CBS News

Drug costs at record high

Generic drug-makers keep their research and spending costs lower because their
drugs are already developed. They bene t from FDA allowances for faster and
less rigorous approvals introduced in the Hatch-Waxman Act of 1984. The law
was meant to provide both protection for the original makers of drugs to recoup
their costs and, then, to help bring more generic substitutes to market for drugs
that are no longer under patents.

Daraprim is part of a recent trend in increasing costs among older

pharmaceuticals, which has roused the attention of Congress.

The reasons behind increasing generic drug prices are not related to research or
development costs, as new drugs would be; instead, experts say it's more about
economics.

In some cases, the raw materials to make the molecules are in short supply
because the drugs were developed years ago or the company has created a
unique formulation that no one else has, both of which allow the companies to
raise prices. In other cases, more insured patients under the A ordable Care Act
have increased demand.

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4/10/2019 Price of drug Daraprim increases 5,000 percent overnight - CBS News

Daraprim generic medication label.

NIH

But very commonly, as with Daraprim, the price increase is triggered by one
company buying another or purchasing the rights to the drug and resetting the
prices because they now have a monopoly on the most common treatment for a
given disease.

"In the case for drugs for rare diseases where the market is small, you're more
likely to see this behavior because the market is not large enough to sustain a
large number of producers," Frank Lichtenberg, a professor in the Healthcare
and Pharmaceutical Management Program at Columbia Business School, told
CBS News. "Therefore an incumbent can try to exploit its market power."

The companies o er discounts for patients who cannot a ord the medication, as
required for public health care payers. But some medical providers say applying
for the discount can be complicated.
"Manufacturers of generic drugs that legally obtain a market monopoly are free to
unilaterally raise the prices of their products," the authors of a New England
Journal of Medicine editorial on rising generic prescription costs wrote last year.
"There is little that individual consumers can do. Some drug companies...o er
assistance programs for indigent patients, but these programs often have
complicated enrollment processes, and they do not o er an e ective general
safety net."
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4/10/2019 Price of drug Daraprim increases 5,000 percent overnight - CBS News
safety net.

A Senate committee hearing focused on the rise of generic drug prices last year.
Rep. Elijah E. Cummings, D Maryland, and Sen. Bernie Sanders, I Vermont and a
Democratic presidential candidate, introduced the "Medicaid Generic Drug Price
Fairness Act" in July, aimed at addressing possible price gouging in the low- or no-
competition market where patients can be captive consumers.

Generic drug products were dispensed for 77 to 85 percent of all outpatient

prescriptions in 2012 and 2013, according to the report presented to the Senate
last year by lead researcher Stephen W. Schondelmeyer, a professor at the
University of Minnesota. Many of those drugs are for common conditions, not the
more rare infectious diseases for which there is only one known medication.

But Lichtenberg says for more common drugs like heart medications, cholesterol
drugs and others that have a very large market, especially among seniors, it won't
be possible to raise drug prices that high because there's too much competition.
He believes the sharp price increases by makers of the rare disease therapies
could be calculated short-run pro t-making, because they know the market won't
sustain the in ated generic drug prices inde nitely, even if they have the only
drug for a speci c condition.

"If you think they are making obscene pro t, there's reason to believe this could
attract other generic rms, let's say in India where there's a very large generic
industry," Lichtenberg said. "That's not going to happen overnight, but it could be
that these companies see the possibility of a short-ride windfall."

Editor's note: This story has been corrected to re ect that Daraprim is not a
generic drug; it is no longer under patent but there is no generic on the market.

First published on September 21, 2015 / 4:35 PM

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