Dr. Mary J. Ruwart: The $750 Pill: Corporate Greed, Excessive Regulation—or Both?

Mary RuwartFrom Dr. Mary J. Ruwart’s website, original to be found here.

Over the last couple of days, the media has been aghast as Turing Pharmaceuticals CEO, Martin Shkreli announced his plan to increase the price of daraprim from $13.50 to $750 a pill. Daraprim was patented in the 1950s, and is used for treating parasitic infections in fewer than 13,000 people a year in the U.S. Turing bought exclusive rights to distribute the drug in the U.S. from Impax for $55 million; drug sales are less than $10 million/year. Impax itself bought daraprim several years earlier. It upped the price from $1 to $13.50/pill, causing the number of prescriptions to drop about 30%.
Shkreli’s assertion that the profits would be used to develop a better drug for treating toxoplasmosis was met with skepticism. Shkreli is a former hedge fund manager, not a pharma veteran, and might not be aware that the new drug will have to be tested against daraprim itself. Testing against placebo would be unethical, given that daraprim is part of the treatment standard. Showing superiority, in terms of effectiveness or side effects, is much more difficult against another drug than placebo. Indeed, given the small number of patients who need the drug, it might be impossible to show the “statistical significance” required by the FDA, since large numbers of patients can’t be tested.

Why, you might ask, can Shkreli price his drug so high and not fear that a generic competitor will undercut him? After all, the daraprim no longer has patent protection.

The answer: Turing Pharmaceuticals has a de facto monopoly, courtesy of the ever-increasing costs of gaining FDA approval, both for new drugs (over $1 billion and 11 years) and generics. Any generic company could make daraprim; its patent expired decades ago.

However, the FDA would require that the company demonstrate that its pill released the drug into the blood stream at the same rate as the original daraprim. Coupled with the cost of setting up FDA-approved manufacturing facilities for the new drug, a turn-around time of a couple years or so due to regulatory red-tape, and the expensive clinical trials, a generic company would need to commit to spending many millions, perhaps tens of millions, even with the special exemptions that the FDA gives drugs that have small or “orphan” patient populations. After jumping through all of these costly hoops, the competitor might be unable to take a substantial part of the market from Turing should it choose to lower its prices for the sole reason of preventing the competitor from getting a foothold.

The $750 pill might be considered an example of “corporate greed.” However, Turing probably wouldn’t have even attempted such a price hike without high cost of FDA-mandated drug development, both new and generic, which virtually eliminated his competition.

Mary J. Ruwart, Ph.D., is a former pharmaceutical researcher; she currently chairs an Independent Review Board, which oversees ethical aspects of drug studies. For more about the detrimental impact of FDA regulation on life-saving drugs, see Deadly Secrets Behind Soaring Pharmaceutical Prices in Dr. Ruwart’s Free Library and Chapter 6 in her award-winning book, Healing Our World.

Dr. Ruwart was also a Presidential candidate for the Libertarian Party in 1983 and 2008 and a Vice-Presidential candidate for the Libertarian Party in 1992.

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Caryn Ann Harlos is a paralegal residing in Castle Rock, Colorado and presently serving as the Region 1 Representative on the Libertarian National Committee and is a candidate for LNC Secretary at the 2018 Libertarian Party Convention. Articles posted should NOT be considered the opinions of the LNC nor always those of Caryn Ann Harlos personally. Caryn Ann's goal is to provide information on items of interest and (sometimes) controversy about the Libertarian Party and minor parties in general not to necessarily endorse the contents.

14 thoughts on “Dr. Mary J. Ruwart: The $750 Pill: Corporate Greed, Excessive Regulation—or Both?

  1. Jonny Stryder

    The only regulation needed in this market can be provided by product liability, more exactly, liability for selling or prescribing medications that are labeled or advertised in a false and misleading manner, negligently manufactured, or negligently prescribed. But so many people can’t image a medication market without “Big Brother” FDA. More’s the pity.

  2. jim

    My question is why is this drug still on-patent. I’ve heard it said it’s been around for many decades. Patents generally last 20 years these days. Why doesn’t somebody else make it?

  3. jim

    Sorry for the delay. I read the article, but the “explanation” as to why nobody else manufactures the drug wasn’t sufficient. The standard required by the FDA, drug delivery at least the level of the existing drug, is considered quite easy to meet and test for. As for the “FDA approved manufacturing facility”, I doubt whether this is a problem for any drug company: Their facilities are ALREADY approved.

    But I notice that the lefties are using this as an example of greed by companies. Yet, they purchased the rights to produce this drug. “purchased the rights”? I asked? There were no “rights” to purchase. Maybe they bought the facilities to do so.
    Notice that nobody publicly complaining about this provides anything close to an “explanation” that this article does. At the very least, the media should explain that anybody could make this drug today.

  4. jim

    Well, that’s an excellent article, but no surprise since it’s from Reason magazine. They put the blame on the FDA, and manufacturers whose misdeeds are enabled by the FDA.

    I am trying to fight a similar battle. There is an anti-MS drug called “Tecfidera”, which I believe costs about $40,000 per year, and is 100% dimethyl fumarate, a very simple compound, which sells for about $100 per year. I would like to inform some MS groups that they could get a virtually free treatment by bypassing the drug manufacturer.

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