In August, Turing Pharmaceuticals bought the rights to the drug Daraprim from Impax Laboratories, Inc. This drug is the standard drug used to treat a parasitic infection, toxoplasmosis, which can be life threatening for people with compromised immune systems, such as AIDS and cancer patients.
After acquiring the rights to Daraprim, Martin Shkreli, the founder and chief executive of Turing Pharmaceuticals, raised the price of the drug Daraprim from $13.50 a tablet to $750 a tablet, an increase of almost 5,000 percent.
Immediately, infectious disease specialists protested this dramatic overnight increase in price. Doctors were concerned that the expense of the drug would force hospitals to use other treatments which would not be as effective.
This is not a new drug; the drug has been available for 62 years. What caused this dramatic increase in price? In some cases, when there is a shortage of a particular drug, price increases will result. However, in other cases, the increase in price is due to a strategy of companies which buy the rights to older drugs and turn them into a “specialty” drug. This is not an uncommon strategy.
Martin Shkreli, the founder and chief executive of Turing Pharmaceuticals, is a former hedge-fund manager. In an interview with CBS new, he defended the company’s actions, explaining that he is a capitalist and stating “I’m trying to create a big drug company, a successful drug company, a profitable drug company. We’re trying to flourish.”
After the protests against the dramatic increase in the price of Daraprim hit the news media, Martin Shkreli announced that he would reduce the price of the drug from $750 per pill However, he did not state at what new price the drug would be offered, nor when the price reduction would take place. To date, the company has not yet lowered the price of the drug.
The New York Times has reported that the New York attorney general has begun an inquiry into Turing Pharmaceuticals. The inquiry is not based on the price increase itself. The attorney general is looking into whether Turing has violated antitrust rules by attempting to restrict competition by taking the drug off the regular distribution channels. This would make it much harder for companies which make generics of drugs to acquire a sample of Daraprim, thus preventing the generic companies from copying the drug and making new generic versions of Daraprim.
The current debate about the topic of Turing’s actions includes those who advocate government regulation of pharmaceutical drug pricing. Would this be taking government involvement too far? Would this reduce the incentive for pharmaceutical companies to spend money on new drug development?
Should pharmaceutical drug pricing be regulated by the government? Assuming that Turing Pharmaceuticals did not in fact violate any antitrust laws and simply raised the price of Daraprim, is this unethical?