Turing Pharmaceuticals caused uproar in political and medical communities with its price increase from $13.50 to $750 per pill in August for Daraprim, a toxoplasmosis treatment that was developed in 1953. It has added fuel to the already hot debate over prescription drug pricing. Turing’s CEO Martin Shkreli called the move a “smart business decision”, hardly a formulation that eases criticism in an environment where healthcare funding decisions are increasingly emotional and tough. “Price gouging” and “unscrupulous” are some of the terms used in reactions that have been dominating the news over the last few days.
The price increases themselves certainly seem outrageous and it is hard to imagine that a closer examination reveals a justification that would pass muster with anybody. It fuels populist calls for price controls and serves as a great opportunity for politicians in search of endorsement from a much divided electorate in the presidential primaries.
Guilt by association
News coverage of the Turing’s price increase has hit drug industry employees and their C-suites just as much as the broader public. Unfortunately, it is not the first case that entrepreneurs have exploited opportunities to make a quick buck over off-patent drugs that have some unique manufacturing or distribution status. It makes an industry that is struggling to address complex challenges with respect to affordability of innovative drugs look really bad.
The R&D based drug industry association PhRMA and individual pharmaceutical companies have been hesitant to make statements about these practices. “Guilt by association” or “silence is consent” come to mind as a basis for public interpretation of industry inertness. For this reason, I believe that Big Pharma can no longer afford to not take specific action fast.
What should Pharma do?
In my recent article in The Pharmaceutical Executive, I raised the need for industry to address the current public pressure on drug pricing with four specific initiatives. After this event, it seems more urgent than ever for the industry to take a stance and to move to action. Senior leaders should express their upset and concern over these practices in public rather than keeping it indoors. In addition, they should reach out to regulators to address these specific loophole situations that provide opportunities for excessive price hikes for essentially old technology drugs and provide assistance for alternate options where possible. It will ultimately result in a broader discussion of healthcare funding and pricing, but that discussion is long overdue anyhow.
If industry does not choose to be part of the solution, it will be seen as part of the problem and it will be faced with rudimentary regulatory consequences that will ultimately hurt industry and patients alike.
Ed Schoonveld is author of The Price of Global Health. He is a Managing Principal and leader of the Market Access & Pricing practice at ZS, based in New York. He can be reached at email@example.com.