Anger grows in U.S. over surging prescription drug prices

TRENTON, N.J. — Hillary Rodham Clinton was among the patients and politicians who reacted this week to news that the price of a 62-yearold drug used to treat a lifethreatening infection had been raised by more than 5,000 percent.

But drug price increases like that have happened increasingly over the past few years. And they could become even more common because of decreasing competition in the pharmaceutical industry, among other factors.

The issue was highlighted in a Sunday New York Times article on drug price increases.

The story featured Turing Pharmaceuticals, a startup that paid Impax Laboratories $55 million in August for rights to Daraprim. It’s the only approved treatment for a rare parasitic infection called toxoplasmosis that mainly strikes pregnant women, cancer patients and AIDS patients.

Turing’s chief executive officer, former hedge-fund manager Martin Shkreli, soon raised Daraprim’s price from $13.50 to $750 per pill.

The price increase generated responses from patients and industry groups. Clinton, a candidate for the Democratic presidential nomination, called the move “price gouging” and released proposals to address some aspects of rising drug prices.

Late Tuesday after the public outcry, Shkreli said he would reduce the price of Daraprim. A Turing spokesman told The Associated Press on Wednesday that Turing is committed to “a serious price adjustment” but hasn’t decided how much or set a timetable.

But rising drug prices are likely to remain an issue for the industry.

Companies generally charge what they want for approved drugs because the U. S. government doesn’t regulate medicine prices, as other countries do. The pharmaceutical lobby has repeatedly fended off proposals that would cut into profits, from setting up price controls to allowing Medicare to negotiate discounts on drugs it buys for beneficiaries.

That means the primary check on medicine prices is large buyers — insurance companies, big hospital chains and group purchasing organizations that negotiate sizable discounts off the manufacturer’s wholesale price. That happens when several companies make the same generic drug or similar brand-name drugs. When patents on popular brand-name drugs expire, multiple

generic versions usually go on sale within a year, and then the generics cost much less, as little as 10 percent of the brand-name drug’s price.

When there’s no competition, big buyers and payers can’t rein in prices.

For many generic drugs, industry consolidation has left only one or two companies making a particular medicine. That’s led to shortages of an increasing number of medicines, driving up prices, particularly for drugs for infections, blood pressure and seizures. Even without shortages, prices have jumped tenfold or more for generics only made by one or two companies.

The Turing case highlights a recent trend in which a drugmaker buys a smaller one or just its rights to an old brand-name drug, intending to sharply increase the price, said Dr. Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan-

Kettering Cancer Center.

He said this works only when the drug is essential, there’s little or no competition and no good alternative medicine, and the number of potential patients is too small for a rival drugmaker to spend a few years and tens of millions of dollars to get Food and Drug Administration approval to sell the same drug.

Bach noted that Canadian drugmaker Valeant Pharmaceuticals International Inc. twice this year bought heart drugs and then raised the wholesale price threefold or more. Other companies have used the same strategy, including for pain drugs.

“It’s all legal,” Bach said. “It is the worst kind of capitalization on the needs of the sick.”

The higher prices initially mainly hit people paying out of pocket, said Rob Frankil, owner of Sellersville Pharmacy in southeastern Pennsylvania, who testified last fall at a

congressional hearing about big increases in generic drug prices. Over time, the spikes affect the whole health system.

“We pay for it in the end,” through rising insurance premiums and deductibles, plus taxes that fund federal health programs, said Frankil, who now regularly sees patients, in sticker shock over an increase, decide to go without their medication, ration it or switch to a cheaper, less-effective drug.

Analysts said drug prices could well be a major issue in the presidential race, though proposals by Clinton and one of her Democratic opponents, Bernie Sanders, are unlikely to pass in the current Republican-controlled Congress.

Most price-control legislation has been rejected. But the increasing complaints from patient groups may make industry executives hesitant to attempt such huge price increases, analysts said.