Old drugs, new problems
Non-patented drugs, too, need robust policies to protect patients and public health systems from price gouging
There should be checks and balances to protect patients from over-priced, nonpatented old drugs
FOR A hedge fund manager, Pharma Bro has invited the kind of opprobrium reserved for people who commit vile crimes. He has been called a “scumbag”, “garbage monster” and “morally bankrupt sociopath” among other epithets. Pharma Bro’s real name is Martin Shkreli and he shot to notoriety in 2015 after his start-up Turing Pharmaceuticals acquired the drug called Daraprim in a US $55 million deal. Turing immediately raised the price from $13.50 a tablet—it cost just 65 pence in the UK—to $750. Daraprim became an instant money spinner for Shkreli but the cost of treatment for some patients shot up to hundreds of thousands of dollars. This caused widespread outrage because the medicine has been in the market since 1953 and costs less than a dollar to make.
Daraprim is used mainly to treat a serious parasitic infection in babies born to women who are infected during pregnancy, and also patients with compromised immune systems, like those with aids and cancer. The drug is also used in the treatment of malaria. The puzzle is why such an old drug is now at the heart of a social and medical storm instead of the usual suspects, that is, exorbitantly priced new therapies for cancer and other life-threatening conditions, such as Hepatitis C. Shkreli was jailed and fined in early March—not for his price gouging on drugs but for misleading investors about the hedge funds he operated.
The fact is Shkreli’s drug business is perfectly legitimate in the US which does not prescribe to price controls. Nor is he the lone shark profiteering from an old drug. Of late, there have been spikes in prices of many older, generic drugs, needed for a range of diseases. In a wellhoned business strategy, investors home in on old drugs with a small but captive market and push up their prices hugely. Investors view many off-patent drugs as undervalued assets because patients and insurance companies can be made to pay the high costs of such treatment.
Among the drugs captured thus is Cycloserine that is used to treat multidrug-resistant tuberculosis. The price was jacked up from US $500 for 30 tablets to US $10,800 almost immediately after it was acquired by Rodelis Therapeutics. Ditto for heart drugs Isuprel and Nitropress, whose prices were increased by over 500 percent after they were bought by the Canadian firm Valeant Pharmaceuticals.
What makes some drugs easy prey for market sharks? Naren P Tallapragada of the Department of Systems Biology at Harvard Medical School, US, thinks it is all about shortages: “most commonly, a shortage of patients to take these drugs and/or a shortage of drugmakers to make them”. In other words, no firm found it worthwhile to make a generic version of Daraprim these many decades because the market was not big enough. However, with prices at the level set by Turing, this could change. Testing the waters is San Diego-based Imprimis Pharmaceuticals which is planning to supply capsules containing Daraprim’s active ingredients at much lower prices. Imprimis, however, is a compounding firm, which means it mixes approved drug ingredients to fill individual patient prescriptions, and its foray would have a limited impact.
In India, a huge array of generics manufacturers does provide generic versions of most old drugs. I will hark back to my favourite thesis that there is no substitute for a state-owned drug firm to ensure access to medicines. Whether it is to make use of a compulsory licence in case of a public health emergency or as a lever against drug multinationals to bring down prices there is no better safeguard than a robust public sector. China, Brazil, Egypt and some Southeast Asian nations have proved this. On the other hand, India’s largest pharma public sector undertaking, the Indian Drugs and Pharmaceuticals Ltd, is so sick that it’s been written off.