WASHINGTON — Shannon and Joshua Weston had always wanted a family, and when she gave birth to a beautiful baby girl, they were overjoyed. Their joy quickly turned to anxiety when they learned that their baby had a rare disease: congenital toxoplasmosis.
The good news was that a year’s treatment with an effective drug called Daraprim, which had been on the market since 1953, would save their infant daughter from death or a lifetime of disability. The bad news? Daraprim had been acquired by a firm called Turing Pharmaceuticals, headed at the time by Martin Shkreli.
When Turing acquired Daraprim in 2014, the drug was selling for $13.50 per pill. Turing raised the price of this life-saving medicine to an astounding $750 per pill. Instead of facing a cost of $6,500 for a year’s treatment for their daughter, a cost that would be daunting enough, the Westons would now have to pay over $360,000, an impossible amount for them to afford.
Last fall, the Senate Aging Committee, which I chair, launched a bipartisan investigation into the sudden, enormous price increases on decades-old prescription drugs, like Daraprim, whose patents had expired. We discovered that certain companies like Turing Pharmaceuticals and Valeant Pharmaceuticals operate more like hedge funds than they do traditional pharmaceutical companies. The committee is investigating how these companies devised a scheme to impose and protect egregious price hikes, and what policy changes are needed to respond to their actions.
Our investigation has determined that these companies follow a business model with five key elements.
• First, the companies identify an older, brand-name, sole-source drug. They choose a drug whose patents have long since expired and which has no generic competitor.
• Second, they select drugs that are the “gold standard” for the conditions they treat, so that health care providers can’t prescribe a substitute treatment or won’t feel comfortable doing so.
• Third, they select a drug that serves a small patient population. Fewer patients mean less scrutiny and less incentive for a competitor to enter the market.
• Fourth, they put the drug in a closed distribution system, or specialty pharmacy, which gives the companies a monopoly. This move is key because it prevents generic companies in most cases from obtaining the supply required to conduct bioequivalence tests needed for approval of a generic equivalent by the Food and Drug Administration.
• Fifth, they accomplish their ultimate goal of driving up the price of the drug, in some cases by as much as 5,000 percent, and watch the money roll in.
At our recent Aging Committee hearing, we heard the sworn testimony of three Turing insiders – one who protested the unjustified price increase and lost his job as a result, and two who stayed and helped carry out the greedy scheme that caused hardship for patients and providers, prevented generic competitors and enriched the company, which had not invested a single penny in the research and clinical trials that led to Daraprim. In fact, Turing did not even exist until 2014, more than 60 years after Daraprim first came onto the market.
The decisions made by Turing did not play out in a vacuum, as the experience of the Westons demonstrates. Shannon Weston, who works at Fort Bragg in North Carolina, gave heart-wrenching testimony about her search for funds to save her infant daughter.
She explored taking a second mortgage on her home, cashing in her retirement account and going on TV to plead for help. Fortunately, a physician at the University of North Carolina at Chapel Hill connected her with its pharmacy program, which allows her to pay a highly subsidized cost of $218 a month for the desperately needed Daraprim. And today, her baby daughter is doing well.
Daraprim is not the only drug whose price has soared with no justification for the enormous increase. Thiola, a medicine that treats a rare kidney disease, Isuprel, needed to treat bradycardia, and Nitropress, used for congestive heart failure, are other essential drugs that have been subjected to this price manipulation scheme.
The actions of these “hedge fund pharma” companies may be legal, but their unethical behavior harms patients and hospitals, represents a market failure and is a call to action. Sen. Claire McCaskill, the ranking Democrat on the committee, and I are determined to reform the system so that parents like the Westons do not have to purchase monopoly drugs that cost $13.50 a pill one day and $750 for the exact same pill the next.
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