Company to offer $1 alternative to cancer pill hiked 5,000%
SAN DIEGO (Oct. 22, 2015)– A drugmaker said Thursday it will sell a version of Daraprim for $1 after Turing Pharmaceuticals hiked the price by over 5,000 percent to $750 a pill.
The pill is currently sold by Turing, a company that has been around for 62 years. Its CEO, Martin Shkreli, made headlines in August when he purchased the company and increased the price of Daraprim from $13.50 to $750.
Imprimis Pharmaceuticals said Thursday the company will offer a customizable compounded formulation of the costly drug in the form of an oral capsule.
The company said, “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.”
Unlike Daraprim, the formulation is not FDA approved, and can only be used prescribed with a physician prescription.
The thing is, Shkreli is hardly the first or only person to hike drug costs. A new analysis by an activist group called Hedge Clippers shows that at least 19 other drugs have experienced stunning price hikes of between 300% and 1,200% in just the past two years.
In most of the cases, the drugs are produced by firms that have either been backed by hedge funds, private-equity firms or venture capital firms.
“It’s not just one unethical guy. It’s this broader winner-take-all mentality in hedge funds and private-equity firms that is infecting public health,” said Michael Kink, one of the leaders of the Hedge Clippers and executive director for the union-backed Stronger Economy For all Coalition.
To compile the list, Hedge Clippers analyzed branded drugs listed in the Medicaid National Average Drug Acquisition Cost (NADAC) survey from the past two years.
Horizon jacks up prices on arthritis drug
The most stunning price increase occurred in an arthritis drug made by Horizon Pharma. The cost of each Vimovo 500-20 MG tablet went from $1.88 in 2013 to $23.86 this year, CNNMoney confirmed. That represents a surge of about 1,170%.
Horizon told CNNMoney that pricing is not — nor has it ever been — a key driver for its business. The company said 97% of all Vimovo patients pay $10 or less out of pocket (which still represents a 430% hike from the previous price).
The patients who pay the sticker price are those that don’t have health insurance. In general, insurance companies negotiate a discounted rate.
Valeant ‘optimizes’ lots of drug prices
Valeant Pharmaceuticals owns nearly half of the top 19 drugs with the fastest-rising prices. For example, the price on Parkinson’s drug Tasmar has surged 575% since 2013, while vitamin deficiency drug nephrocaps rose 523%.
Last year, Valeant teamed up with hedge fund billionaire and major shareholder Bill Ackman to attempt a hostile takeover of Botox maker Allergan.
“One of Valeant’s major strategies is to optimize the price. That means to raise the price to what the market can bear. Not what is best for all stakeholders,” said John Schroer, who leads healthcare stock coverage at Allianz Global Investors.
“That is a short-term, maximize immediate cash flow strategy that does not invest in the business and will eventually come home to roost,” Schroer said.
Valeant declined to comment to CNNMoney. However, Valeant told investors on Monday that a large portion of its revenue growth came from more drugs sold rather than price hikes. Out of the 156 total drugs in Valeant’s portfolio of U.S.-branded drugs, 85 had an average price increase of 24%, the company said.
Heart disease drug sticker shock
The price of high blood pressure drug Dutoprol has increased by 913% since 2013.
A group of private-equity firms sold Dutoprol to Concordia Healthcare in April 2015, after which it jacked up the price even more. The company said it raised the price in line with other drugs in its category.
“Concordia does not take lightly the decision to change price and strives to ensure the patient is not affected,” the company said.
Hedge Clippers don’t like hedge funds
Hedge Clippers has a serious gripe with hedge funds whose only goal is to make profits. It sees such funds and how they invest as one of the main causes of income inequality.
The activist group has worked previously with Occupy Wall Street and is backed by community groups and unions, including the American Federation of Teachers.
Kink conceded that private capital can “absolutely make a difference” by supporting cutting-edge research by drug makers. But that’s not the case with these recent price hikes.
“Something is deeply wrong when a small number of people can get rich by driving up the prices on drugs that thousands of people need to survive,” said Kink.
Has scrutiny changed the game?
The good news for consumers is the days of ridiculous price hikes in the pharma world may be nearing an end amid scrutiny from politicians, the media and now law enforcement.
Last week Valeant shares tumbled after the company said it received subpoenas from federal prosecutors over its pricing strategy.
“Valeant’s strategy just can’t work long term. Now that all eyes are on them, they will change their behavior,” Schroer said.
Due partially to “recent events,” Valeant told analysts on Monday that it’s likely to “pursue fewer, if any, transactions that are focused on mispriced products.”