09 October 2015
The Daraprim Outcry and the Cost of Medication
The recent outcry when Turing Pharmaceuticals raised the price of the drug Daraprim by more than 5000% was entirely justified.
Turing acquired the drug in August 2015 and immediately raised the price from $13.50 to $750 a tablet. The CEO of Turing, Martin Shkreli, a former hedge fund manager, explained the move in simple terms by comparing the drug to a luxury car, stating that in his view, Daraprim was not being sold at a price that reflected its status.
Daraprim is not a new drug. It has been on the market for more than 60 years and is used to treat toxoplasmosis, an infection caused by a parasite that can cause serious problems for babies born to women who become infected during pregnancy, and for people with compromised immune systems such as patients with AIDS and certain cancers.
Daraprim is highly effective and there is concern that the cost hike will put the drug beyond the financial reach of many institutions and lead to patients suffering. The difficulty for patients who rely upon Daraprim is that it is considered to be the most effective drug on the market. Whilst there are others, they do not have same potency.
Following the public outcry and concerns voiced by a number of politicians, Turing agreed to reduce the price to a more “affordable” figure but this has still not yet been settled on. Mr Shkreli has defended his actions by saying that the drug is supplied free of charge to many patients and that it would now be available to more patients than ever before.
The reality here is that Turing’s move is neither new nor surprising. Drug companies are primarily beholden to their investors and shareholders and rapid price hikes have occurred on many occasions before when drugs have come out of exclusive patent rights and become generic.
With scope for other companies to replicate the drugs, there is increasing pressure to make the most of them. It does however seem that in recent years, such increases have become more and more prevalent. Examples include:
- February 2010 - Valeant Pharmaceuticals International Inc. bought the rights to a pair of life-saving heart drugs, Nitropress and Isuprel. The same day, their list prices rose by 525% and 212%;
- October 2013 - the price of Doxycycline, an antibiotic, increased from $20 a bottle to $1,849 by April 2014;
- May 2015 - Mallinckrodt PLC raised the price of Ofirmev by 140% after buying Cadence Pharmaceuticals, who developed the drug, in March 2014;
- August 2015 – the price of Cycloserine increased from £500 to $10,800 for 30 pills after it was acquired by Rodelis Therapeutics.
There is no doubt that researching and developing new drugs can be extremely costly. For every drug that makes it to market, there will be dozens that fail. With such a poor hit ratio, a company has to make back its money somehow. The question though is one of degree and reasonableness. Should a drug company be able to unfairly exploit its position to the detriment of mankind? Is there a right to benefit from the invention/discovery of others?
Sadly, I don’t think the world can yet expect that level of altruism and it will only be market forces that will serve to modify the price of Daraprim and other drugs. Until such time, or until there is a change in the licensing laws and an opening up of drug patents, the situation is unlikely to change.
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