Congress Offers New Details on Drug Price Spikes

Ahead of a Thursday hearing with US Food and Drug Administration (FDA) CDER Director Janet Woodcock sitting beside former Turing CEO Martin Shkreli, the House Oversight Committee has released documents where the former hedge fund manager calls the price hikes of a toxoplasmosis treatment “a very handsome investment.”

“We raised the price from $1,700 per bottle to $75,000 … So 5,000 paying bottles at the new price is $375,000,000—almost all of it is profit and I think we will get 3 years of that or more,” Shkreli wrote to an unidentified contact outside his company in August. “Should be a very handsome investment for all of us. Let’s all cross our fingers that the estimates are accurate.”

And unlike with other pharmaceutical companies, which often claim such price hikes are justified because of how much is invested in research and development, the price hikes from Turing were completely unrelated to any R&D. Turing purchased the drug in August, spiked the prices and ensured that no other competing generic drugs are marketed.

The committee documents note that a director of specialty pharmacy development at Walgreens forwarded a request for financial assistance for a dog that had been prescribed Daraprim to treat its toxoplasmosis. Jon Haas, director of patient access at Turing, responded: “You can buy Pyramethamine/Sulfa [sic] combo pills from a vet meds website for about $80.”

Closed Distribution

A company presentation also noted another case where Shkreli, then working as head of pharmaceutical company Retrophin, hiked the price of the old rare disease drug Thiola, and noted in a company slide: “Case Study: Thiola (tiopronin),” which stated: “Significant revenue growth driven by increases in price and volume … moved the product into a closed distribution to improve access and extend the product lifecycle.”

The closed distribution of the drug also means that generic companies cannot get access to samples for generic versions of Daraprim. The Federal Trade Commission has previously called such closed distribution that restricts generic competition “improper.”

In addition to the fact that the price increases had no justification, they were felt by patients, who were forced to cover some of the cost of the increase in some cases, or were switched to another drug.

On 9 September, 2015, a Turing account manager said that Jackson Memorial Hospital in Miami reported they were unable to afford the $750 per 25mg price tag “when the induction therapy typically begins at 200mg and subsequently 75mg/day. … As of now, they have switched 3 patients to Bactrim since they have exhausted their current supply of Daraprim.”

Almost a month later, Turing received another complaint from Massachusetts General Hospital: “After over a week of trying to secure Daraprim for an uninsured patient requiring Daraprim at Massachusetts General Hospital, I need immediate assistance with expediting this case. … We have been provided with inaccurate/misleading information by the dedicated Daraprim Team. … This is a critical matter, visible at the highest levels of our Infectious Disease Department.”

An associate professor of infectious disease at the University of North Carolina also refused to meet with Turing representatives and urged colleagues at UNC, as well as at Duke, ECU, Wake Forest and other clinical centers across North Carolina “to do likewise, until Turing announces a reasonable and ethical reduction in the price of this important medication—a drug we rely on most to treat toxoplasmosis.”

Dr. Rima McLeod of the University of Chicago also sent an email to Nancy Netzlaff, chief commercial officer at Turing, noting issues with some delays of getting Daraprim to patients: “This sounds like smoke and mirrors when someone’s sight and life are threatened and is not acceptable. … There really cannot be delays. People will really be hurt lifelong. You have a monopoly on safe reliable medicine right now and it truly matters for people’s lives.”

In addition to Shkreli, who’s expected to use his 5th Amendment rights at Thursday’s hearing to avoid incriminating himself as part of an indictment for securities fraud, Woodcock, Retzlaff, Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, and Howard Schiller, CEO of Valeant Pharmaceuticals, will testify.

Valeant Documents

Schiller will likely discuss how his company (which was most recently run by J. Michael Pearson) increased the prices of two drugs – Isoprel and Nitropress, used to treat heart conditions – by 525% and 212%, just months after the previous owner of the drugs made a similar price hike in 2013.

“Information obtained by the Committee shows that Mr. Pearson utilized this strategy with many more drugs than Isuprel and Nitropress. From 2014 to 2015, Valeant increased the prices of more than 20 additional ‘U.S. Prescription Products’ by more than 200%. Valeant raised the prices of several of these products multiple times from 2014 to 2015, in some cases by as much as 800%,” according to the Oversight Committee.

Other documents from the company show how Valeant, like Turing, focused on developing a public relations strategy to try to divert attention away from its price increases to its patient assistance programs (PAPs), particularly for orphan drugs treating small patient populations.

“The documents also indicate that Valeant believed PAPs could actually generate increased revenues by closing distribution channels and allowing Valeant to continue increasing prices,” the committee said.

Documents Obtained from Turing Pharmaceuticals

Documents Obtained from Valeant Pharmaceuticals

Hearing Info