When last we checked in with Martin Shkreli -- founder of Turing Pharmaceuticals and the personification of everything that's wrong with the pharmaceutical industry and mankind -- he was feebly defending his company's decision to jack up the price of a 60-year-old medication some 5000%. Shkreli became America's least liked human being after his company increased the price per pill of Daraprim (used by both AIDS and cancer patients) from $13.50 per pill to $750 per pill. After relentless criticism, Shkreli appeared to backpedal, claiming last September the company would lower prices:
"We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,” he told ABC News. “We think these changes will be welcomed."
Yeah, or not.
Hoping to bury any criticism ahead of the Thanksgiving holiday, Turing released a dodgy press release on Wednesday implying the company had finally seen the error of its ways and would be reducing the cost of Daraprim. Except it's not actually doing anything of the sort. While the company will offer hospitals a 50% discount (now only a 2500% mark up) and is engaging in a few superficial efforts most companies already offer via their patient assistance programs, the press release buries the lede in that the core price of Daraprim isn't going anywhere.
And, just to add insult to injury, a company spokesman insists that's a good thing because (I kid you not) lower drug prices don't benefit patients:
"Drug pricing is one of the most complex parts of the healthcare industry. A drug's list price is not the primary factor in determining patient affordability and access. A reduction in Daraprim's list price would not translate into a benefit for patients."
There's nothing complex about being a raging asshole. There's also nothing complex about a former hedge fund manager jacking up the price of an essential drug 5000% (as is happening with many previously-inexpensive generics), pretending he'd seen the error of his ways, then feebly trying to hide his total lack of integrity ahead of a long holiday weekend.
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Here on Techdirt we often write about pharmaceutical companies doing what they can to string out their drug monopolies as long as possible, sometimes resorting to quite extraordinary approaches. But whatever tricks they use to extend their monopolies, one day those end, and at that point generic manufacturers can make the drug in question without needing a license. You'd think governments would be delighted by the downward pressure this exerts on prices, since it means that they can provide life-changing and life-saving treatments much more cheaply. But last week, we had the bizarre spectacle of a UK government health minister filibustering a Bill that would have encouraged doctors to prescribe more off-patent medicines. As the Independent newspaper reports:
A Conservative health minister has deliberately blocked a new law to provide cheap and effective drugs for the [UK's National Health Service] by championing medicines whose patents have expired.
Alistair Burt spoke for nearly half an hour to "filibuster" the proposed Off-Patent Drugs Bill, a plan that had cross-party support from backbenchers.
The Off-Patent Drugs Bill attempted to address a particular problem that off-patent drugs suffer from. Although anyone can manufacture and sell them for their original purpose, more innovative uses require a new license for that application. Since the drugs are off-patent, the profit margins are lower, and generic manufacturers are reluctant to pay for the re-licensing process. An article in the online law journal "Keep calm and talk law", reporting on an earlier unsuccessful attempt to have off-patent drugs used more widely, gave the following examples of how cheap drugs could have a major impact:
Simvastatin was originally licensed for treating individuals with high cholesterol and although recently shown to slow brain atrophy in later stages of multiple sclerosis by over 40 per cent, it has not been relicensed for that purpose. Further, Lixisenatide and liraglutide, two common diabetes drugs, have been found to have a use in the prevention of Alzheimer's but is now also off patent.
The Bill in question would have required the UK government to carry out the re-licensing, thus allowing generic manufacturers to market the cheap off-patent drugs for new treatments. But the UK government minister rejected this approach, saying "there is another pathway", without spelling out what that might be. Perhaps he had in mind the possibility of prescribing off-patent drugs "off label", which in theory is an option open to UK doctors. But doing so means they would assume the legal responsibility for both negligent and non-negligent harm to the patient -- something that many are understandably reluctant to do. However, the "Keep calm and talk law" article offers a possible solution to that problem:
the introduction of a charitable organisation which would insure doctors against any negligence claims resulting from the prescription of specified off-patent drugs for unlicensed purposes. This could reassure doctors enough that they would more readily prescribe some useful off-patent drugs such as the examples given above. Although much research would still need to be done into whether a charity such as this could work in reality, in principle this is a solution which seems sensible.
It's possible that the UK government minister had precisely this approach in mind when he unceremoniously blocked a Bill that was trying to save both lives and money. But it's hard not to suspect that his "another pathway" might turn out to involve lots more lucrative pharma patents instead.
from the so-much-for-the-'it's-only-profitable-if...'-argument dept
When Turing Pharmaceuticals jacked up the price of a toxoplasmosis-fighting drug (commonly used by AIDS and cancer patients) to $750/pill (a previous company sold it for $1/pill), CEO Martin Shkreli defended the move, saying the money would be dumped into research for a new and better drug. Of course, this is the usual defense offered by any pharmaceutical company that institutes a rate hike, but these claims are rarely followed through on. (And when they are, the R&D costs tend to be very overstated.)
Daraprim has been on the market since the 1950s and does its job well. The patent has long expired but the FDA's policies make it difficult for anyone to formulate a generic version of this "sole supplier" drug. When there's no competition, it's a seller's market, and Martin Shkreli is making the most of it.
Turing CEO Martin Shkreli became “the most hated man in America” last month after raising the cost of the drug, commonly used to treat parasitic infections in immunocompromised patients, from $13.50 per pill to a staggering $750 per dose, claiming the company’s exorbitant price hike was justified. Now Imprimis will offer their alternative to those who need Daraprim for less than $1 per tablet.
Imprimis is now offering customizable compounded formulations of pyrimethamine and leucovorin in oral capsules starting as low as $99.00 for a 100 count bottle, or at a cost of under a dollar per capsule. Compounded medications may be appropriate for prescription when a commercially-available medicine does not meet the specific needs of a patient.
There's more detail in the disclaimer towards the end of the press release.
Imprimis' finished compounded drug formulations do not have an FDA-approval label for recommended use. Imprimis compounded formulations are not FDA approved and may only be prescribed pursuant to a physician prescription for an individually identified patient consistent with federal and state laws governing compounded drug formulations.
So, those looking for a cheaper variant of Daraprim will have to find a physician willing to prescribe a drug that doesn't have the FDA's blessing for this particular use. The compound will likely work as well as Daraprim, but it does open doctors up to additional liability. That being said, some doctors may be willing to do this as the only other option for some patients will be no medicine at all.
The other problem is that the FDA could come down aggressively on pharmaceutical companies who market drugs for non-FDA-approved purposes. Imprimis is exploiting a loophole in the system, albeit one much more easily closed than the FDA's loophole-esque sheltering of "sole supplier," off-patent drugs -- the sort that most often see astronomical price hikes post-acquisition.
But for now, it's the market system at work -- the same market system Shkreli used as a justification for raising Daraprim's price. Zero competition led to Turing's $750/pill price. A little competition might push Shkreli to drop Daraprim's retail price lower than he actually wanted to. (And, again, no price drop has been instituted at this point.) But given Shkreli's past use of the FDA as his unofficial partner in stock-shorting moves, it's far more likely he'll be asking the agency to eject his new competitor from the playing field.
We've mentioned before how yeast can produce a bunch of useful stuff, beyond bread and beer. Synthetic biology promises to give us engineered microorganisms that can make almost any specialty chemical or even some biofuels. Brewing medicine might not be too far away, and it might be incredibly difficult to control "controlled substances" in the very near future.
from the and-will-only-do-so-because-the-public-doesn't-understand-business dept
Martin Shkreli -- who became the personification of a deeply-reviled industry thanks to his insanely-exorbitant price hike on a 60-year old drug -- has heard the disapproving roar of the crowd and will do… something… at some point in the future… to make things right. Or at least a bit more right-ish.
“We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,” he told ABC News. “We think these changes will be welcomed.”
With nothing else to go on (other than Shkreli's continued assertions that the drug is still underpriced), the public will just have to assume that the new price point, whenever it arrives, will be barely above cost. (Considering it was produced for a $1/pill before Turing's purchase, one would think a significant reduction in price would still leave plenty of room for profits and additional R&D.)
Turing's mini-debacle has damaged the pharmaceutical industry. It has drawn even more heat from legislators and presidential candidates. It has even negatively affected more tangible aspects, like stock prices. Shkreli's actions have also drawn attention to the oft-ignored regulatory procedures that allow companies to fully exploit old drugs and medications, even without the protective power of active patents. Derek Lowe at Science Magazine explains the route to securing post-patent monopolies.
By various means, old generic compounds have ended up as protected species, and several companies have made it their business to take advantage of these situations to the maximum extent possible. The FDA grants market exclusivity to companies that are willing to take “grandfathered” compounds into compliance with their current regulatory framework, and that’s led to some ridiculous situations with drugs like colchicine and progesterone. (Perhaps the worst example is a company that’s using this technique to get ahold of a drug that’s currently being provided at no charge whatsoever).
Combine this with the bottleneck Turing generously refers to as "distribution" (via a single specialty pharmacy or directly from Turing itself) and you have everything you need to demand any amount you want for a lifesaving drug with a limited market. Everything being said about R&D investment is just smoke until proven otherwise.
Following his short statements promising unquantified price drops at an unspecified point in the future, Martin Shkreli -- who seemed to relish praising himself/insulting his detractors from this social media platform -- took his Twitter ball and went home.
Turns out the market will bear far less than Turing thought, even with the benefits of a tightly-controlled distribution chain and the FDA's assistance in keeping competitors off the playing field. A whole lot of people who will never use the drug managed to nudge the price downward, and all within 48 hours.
from the just-another-symptom-of-a-diseased-system dept
Martin Shkreli -- founder of Turing Pharmaceuticals and overnight poster boy for everything that is wrong with the pharmaceutical industry -- spent a lot of yesterday defending his 5000% price hike on Daraprim, a drug that treats victims of toxoplasmosis. That the drug has a nexus with cancer and AIDS sufferers (basically anyone with a diminished immune system) made the price increase seem even more unconscionable.
Dr. Wendy Armstrong, professor of infectious diseases at Emory University, questions Turing’s claim that, after more than 60 years of physicians using Daraprim, there is a need for a better version of the drug.
“I certainly don’t think this is one of those diseases where we have been clamoring for better therapies,” says Armstrong.
Next, there's the inherent ridiculousness of this assertion, which portrays Turing's plans for Daraprim as a reverse pyramid scheme, in which future "investors" will benefit from the gouging of those who got in on the ground floor.
On top of that, Shkreli claims the drug is still underpriced, despite having been sold for $1/pill before its acquisition by the company Turing acquired it from.
While it's true that drug research and development can be expensive, it is nowhere near as costly as this price hike would indicate. Shkreli tossed out the easily-debunked claim that it costs $1 billion to bring a new drug to market. The actual cost is considerably lower (~$55 million), according to research using the same data drug companies provided to backup their claims of $1.3 billion in R&D costs per new drug.
Data also shows pharmaceutical companies spend far more on marketing than research and development. They have to. Most "new" products on the market aren't actually new. They're just variants on what's already available. It's tough to sell a "new" drug that doesn't outperform a competing product, hence the increased marketing expenditures.
Shkreli also used a variant of "everyone else is doing it" to defend the price jump. He pointed to the existence of other cancer drugs costing "over $100,000" per treatment as justifying Turing's price increase. But being slightly less exortionate than competitors isn't the same thing as being "good."
Shkreli has little interest in being good, no matter what altruistic assertions he makes. His former company -- from which he was ousted over accusations of stock price manipulation -- also jacked up the price on an essential drug just because it could.
When Retrophin acquired rights to Thiola, the drug cost about $1.50 per pill. [Patients take multiple pills per day.] Now, Retrophin has decided to charge more than $30 for the same Thiola pill. Retrophin says it has plans to change the Thiola dose and develop an extended release version of the drug, but I have seen none of those changes yet. To my knowledge, Retrophin hasn't yet done any of this work -- except to drastically increase Thiola's price.
And indeed, Retrophin never did. From a 2015 presentation, it's generating sales for Retrophin, but nowhere in it is any indication the company is actually working towards an extended-release version of the drug.
I asked Shkreli about this and he claimed the company ditched the R&D plans after it ousted him. Maybe this is true, but it doesn't exactly instill any confidence in Shkreli's latest claims that price hikes are being done with an eye on increased R&D spending. Instead, they look like nothing more than the normal deflection performed by drug companies after controversial price increases.
Other circumstantial evidence does little for consumer confidence. Not only is Shkreli being sued by his former company for fraudulent behavior, he's previously been taken to court (by Lehman Brothers) for a $2.3 million loss he incurred (but never repaid) when his bet on a market decline went south. The complaint accuses him not only of failing to pay Lehman what was owed, but of pushing through the transaction without actually possessing the funds to cover the original purchase.
Shkreli also has a history of thriving on market failure. He has made money shorting pharmaceutical stocks while simultaneously engaging in questionable behavior. Here's a "treatise" he wrote detailing the negative aspects of one company's research efforts, which clearly states at the top of each page (for legal reasons) that he stands to personally gain if the company's stock price drops.
DISCLAIMER: The authors of this article have a conflict of interest and will benefit financially if the stock price of VTL falls. The authors reserve the right to change their investment if the price of VTL changes dramatically. Please read the Disclosure at the end of this paper for more information.
(This was tracked down from a deleted tweet by Martin Shkreli. Other Twitter users had commented on it, so it was recoverable from Google cache. Here's a screenshot, because the cache won't stay live for long.)
But he's also been accused of actions that are more than simply treading the edge of legality. A heated Twitter exchange implies Shkreli talked the FDA out of a drug approval -- something that hurt the company producing the drug, but paid off for Shkreli's stock short.
Shkreli's history does little to back up his assertions of altruistic goals and a future full of well-funded research and development. Instead, it shows someone who's willing to exploit every last dollar out of something and leave its dessicated corpse behind.
On top of that, share prices for several drug companies fell the day the Daraprim price hike went viral. That this may have worked out well for Shkreli can't be ignored, considering his prior experience with shorting pharmaceutical companies. Maybe this was part of the plan: Short pharma stocks. Jack price up on newly-acquired drugs. Play the villain while cashing in on the market decline.
That's all speculation, of course. What is certain is that Martin Shkreli is not THE problem. (He's not even "Big Pharma," even though several editorials have placed him in this group.) He's part of the problem, but his specific actions are more about exploiting obscure drugs that competitors aren't interested in. His actions shed little light on the genesis of high drug prices.
The original issue is patents. That has been mostly ignored by legislators and opinion pieces during the most recent push for some sort of drug pricing controls. And it will continue to be ignored because Daraprim's price hike is completely unrelated to patent monopolies. Turing's exclusive license for Daraprim includes only the use of the trademarked name. The patents have expired. Anyone can make it, but no one's been particularly interested in offering an alternative. (Maybe this will change now that a company has a chance to take on the villain du jour…)
But it's patents that make drugs unaffordable in the first place. New drugs are given, at minimum, 20 years of competition-free sales. That's two decades (at least) where drug companies can charge whatever they want because no one else can offer a competing product. Companies -- like Shkreli -- will claim they need this exclusivity to recoup "massive" research and development costs. But this simply isn't true. Pharmaceutical companies enjoy massive profit margins, much more than would be expected if they were faced with meaningful competition. The lie is exposed when patents expire. Prices fall dramatically once the market is opened, including that of the original manufacturer's.
So, if the government really wants to tackle the problem of overpriced drugs, it needs to start with the protections it grants that allow this to happen. But this seems unlikely to happen because drug companies have significant "buying power" when it comes to legislation, no matter how many people come forward to testify about being priced out of essential treatments.
Shkreli, however, is specializing in finding "orphan drugs" -- drugs for rare conditions that are no longer under patent protection (which would raise the acquisition price significantly) but which have seen little to no competitive movement over the years. His decision to implement a 5000% price increase, despite minimal costs (and benefiting from R&D performed 60 years ago), is one he can make because there's no market force in place to stop him. So, he may be the poster boy for everything that's wrong with the pharmaceutical industry, but he's not really indicative of the ongoing problem.
What he is, however, is an opportunist with a hedge fund background and a history of market exploitation. Any claims of altruism or searches for better treatments should be met with intense skepticism.
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Did you know you can occasionally find people discussing narcotics on the Internet? Russian Internet regulator Roskomnadzor (the Kremlin's "Federal Service for Supervision in the Sphere of Telecom Information Technologies and Mass Communications") is pretending to have only recently figured this out, and is working tirelessly to purge this naughty behavior from the Internet. Of course, they're ingeniously doing so in a way that breaks the Internet for everybody else, often taking entire websites offline simply because of one yahoo's heady pontifications on dope.
"Wikipedia refused to comply with the request and instead made a small change to the URL of the charas hashish article, technically putting it in compliance with Russian law. The old page now features a list of seven different Wikipedia entries on the various meanings of the word “charas,” while the original text about charas hashish is completely intact, but is now accessible at a new URL on the encyclopedia's website."
As of yesterday, Roscomnadzor wasn't satisfied, saying it would (re-)ban all of Wikipedia. Unless, of course, the site was willing to make one notable change:
"Roscomnadzor's press-office also said they didn't intend to block the whole website, and would be able to only block the offending content and pages, provided Wikipedia's management “cooperated” and removed the HTTPS encryption protocol that puts the whole website in danger of being blocked."
So yeah, this isn't just another government being stupid and filter happy. Russia is filtering these websites under the authority embedded in a 2012 censorship law, whose purpose was purportedly to protect the children from the Internet's naughty bits. The bill's real purpose, of course, was to create an intentional, obfuscated slippery slope, designed specifically to aid in expanding control over the Internet. So Russia's sudden interest in playing pointless drug content Whac-a-mole is actually an attempt to reduce the overall use of encryption and make snooping easier:
"This is an important case because it’s part of the general offensive against https. Roskomnadzor and the FSB [security services] don’t know what to do with it,” said Andrei Soldatov, a journalist and author of Red Web, a book about the Russian internet. Soldatov said SORM, the system Russia uses for internet surveillance, does not work with the more secure https protocol, also used by sites such as Facebook and Gmail...
Soldatov speculated that the move against Wikipedia could be part of a test of another strategy: by threatening the site with bans over single pages, the site could be forced off https to ensure that the whole site is not affected when only one page is banned. Soldatov said: “There are two options for https: the first is to have access to the data before encryption, which explains the demand to store servers in Russia. The second is to try to force services to give up on https, which is what is happening with Wikipedia.”"
So basically, the Russian government is assaulting encryption, expanding Internet surveillance power and cracking down on critics -- under the pretense of protecting the children from bonghits. Remember, though, killing journalists, encouraging violent homophobia and pumping the Internet full of propaganda twenty-four hours a day are still on the recommended hobbies list in Putin's Russia.
Getting a shot isn't the worst thing in the world, but it's not exactly enjoyable, either. Early phlebotomists used leeches to draw blood from patients, but doctors don't generally recommend that anymore -- and sterile hypodermic needles are far more commonly used. However, if you've ever had one of your veins pierced (sometimes multiple times due to human error), you may have wondered why needles can't be as painless as a mosquito bite. Well, maybe they can in the near future -- it might cost a little more, though.