Could outrage over Martin Shkreli push pharma companies to change?
As the former Turing Pharmaceuticals executive laughed off questions from lawmakers Thursday, another company's interim head admitted to being 'too aggressive,' in increasing prices.
As former Turing Pharmaceutical head Martin Shkreli laughed off questions about rapid price hikes for a potentially life-saving drug, angering lawmakers at a Congressional hearing on Thursday, the head of another drugmaker acknowledged that companies had been “too aggressive” in setting prices.
"Where we have made mistakes, we are listening and changing,” Valeant Pharmaceuticals interim head Howard Schiller said during opening remarks before members of the House Committee on Oversight and Government Reform. “In a number of cases, we have been too aggressive" about price increases, he added.
Documents from Valeant, Canada’s largest drug company, and New York-based Turing obtained by lawmakers show that the two companies made a practice of buying and then dramatically increasing prices for low-cost drugs given to patients with a number of life threatening conditions, including heart disease, AIDS, and cancer.
Mr. Shkreli, who became the object of widespread scorn after raising the price of Daraprim, the only drug approved to treat a rare and sometimes deadly parasitic infection, by more than 5,000 percent overnight in August, appeared openly contemptuous of the hearing.
He invoked his Fifth Amendment right against self-incrimination four times, and was dismissed less than an hour into the hearing.
Lawmakers quickly grew furious, with Rep. Jason Chaffetz (R) of Utah shouting down a request by Shkreli’s attorney to speak.
“I call this money blood money ... coming out of the pockets of hardworking Americans," said Rep. Elijah Cummings (D) of Maryland, as Shkreli sat through the lecture. "I know you are smiling, but I am very serious, sir," Representative Cummings said. "I truly believe you can become a force of tremendous good. All I ask is that you reflect on it. No, I don't ask, I beg that you reflect on it. “
With Shkreli’s refusal to testify, Nancy Retzlaff, another Turing executive, was asked to explain the price hikes. She and Mr. Schiller of Valeant insisted they were committing to ensuring that cost isn’t a factor for people who need the drugs.
Ms. Retzlaff said about 3,000 people are treated by Daraprim and only 25 percent are covered by commercial insurance, saying the drug’s overall impact on the the budget of commercial health plans “is very, very small.”
Documents obtained by the lawmakers show Turing had planned to turn the six-decade-old drug into a $200 million-a-year-drug as early as May, purchasing the drug from Impax Laboratories in August for $55 million and promptly raising the price, which Shkreli wrote in an email to one contact was “a very handsome investment for all of us.”
“Kind of hard to paint us as greedy if we have removed financial barriers for patients," wrote Valeant executive Jeff Strauss, in one message obtained by lawmakers, arguing the company was providing Daraprim to patients at a cost of no more than $25 for a 30-day supply. The House panel said the company used patient assistance programs to distract from negative publicity and justify the price hikes.
But beyond Shkreli, who also received public scorn a year earlier for raising the price of Thiola, which is used to prevent the formation of kidney stones, price hikes aren’t uncommon, The Christian Science Monitor’s Corey Fedde reported in September.
In 2011, KV Pharmaceutical won government approval to become the exclusive supplier of Makena, a drug intended to prevent preterm labor. Its price then immediately increased from $10 to $20 per injection to $1,500 per injection. But recent public outrage has also forced other companies to return the drugs to the non-profits that originally produced them, as happened with the tuberculosis drug Cycloserine.
Previously, some observers have said Shkreli’s actions – and his unapologetic attitude following widespread public condemnation – could help reform the way pharmaceutical companies price drugs.
“He bought this patent and he's milking it for all it's worth,” Uwe Reinhardt, a healthcare economist from Princeton University, told The Washington Post in September. “In a way, I thank him.... Sometimes you need some sentinel effect that wakes people up."
This report contains material from Reuters and The Associated Press.