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Daraprim Underscores Need for Drug Pricing Reform

Tony Hagen @oncobiz
Published: Thursday, Sep 24, 2015

Erin Fox

Erin Fox

The attempt by Turing Pharmaceuticals to boost the price of the anti-parasitic pyrimethamine (Daraprim) 5500% is now under reconsideration, owing to a firestorm of public and institutional protest, but it doesn’t solve the problem of no limits on what manufacturers can charge and the lack of drug pricing transparency.

“This is where business meets patient care,” says Erin Fox, director of the Drug Information Service at the University of Utah. “In the United States we have a free market for drugs and no price controls. Businesses like drug companies are allowed to charge whatever they like and this is the end result.”

The story of Daraprim is legendary now. The valuable drug for helping people with weakened immune systems — such as cancer and AIDS patients — saw its per pill price raised from $13.50 to $750 last month after Turing Pharmaceuticals purchased US rights to the drug from Impax Laboratories.

The drug is a treatment for toxoplasmosis and many millions of people harbor the parasite that causes this infection, though their immune systems are usually strong enough to keep it at bay, according to the Centers for Disease Control. For those whose immune systems are overcome, treatment with an effective medication is essential.

“Unfortunately, Daraprim isn’t a commodity that you can choose to buy or not to buy,” says Fox. “There really aren’t good alternatives for some of these drugs we have seen major price increases for — and patients, hospitals, and clinics end up in the middle.”

In India and the United Kingdom, the drug is available for far less than a dollar a pill.

After engaging in a spirited social media debate, Turing CEO Martin Shkreli backed off from the price increase this week and promised to make the drug more affordable. It wasn’t the first time Shkreli was involved in a case of alleged exploitation of patients with no alternative but to pay for medicine his company was producing; this time, however, not only were his business instincts wrong, his timing couldn’t have been worse.

The massive groundswell of opposition to soaring drug prices, particularly in oncology, where the price of a medication now sometimes exceeds $150,000 a year, was already well under way. Presidential candidate Hillary Clinton saw the Turing moment as an occasion to announce a package of drug pricing reforms, many of which have already been widely discussed, that she would attempt to bring before the Legislature for action if elected.

Those are summarized as follows:
  • Eliminating tax breaks for consumer advertising and requiring pharmaceutical companies to invest US taxpayer dollars in research and development. Firms that receive federal research dollars would be required to reinvest a percentage back into research.
  • Limiting out-of-pocket drug costs to $250 per month for patients with certain chronic or serious health conditions. This responds to complaints from the nation’s oncologists that life-saving drugs are off-limits to many cancer patients due to high co-payments, and oncologists are seeing poor adherence for certain therapies.
  • Promoting generic drug production by trimming the amount of time companies can exclusively produce new treatments.
  • Letting Americans import drugs from Europe if the safety standards are similar. In recent weeks, for example, a new class of cholesterol-fighting medications, the PCSK9 inhibitors were approved in Europe at lower prices than manufacturers are charging in the United States, where the drugs’ wholesale prices were listed above $14,000 a year.
  • Giving Medicare negotiating power, especially for drugs with limited competition. The Affordable Care Act specifically excluded this provision but instead gave Medicare an additional discount, but rising overall prices have wiped out its effect it some cases.
Similarly many individual states have begun efforts to increase drug pricing transparency by instituting reforms.

New York is among them, with a bill introduced in the state Senate in May that would require drug cost disclosures for prescription products with wholesale acquisition costs of $10,000 or more annually or per course of treatment, so that consumers, payers and others would be able to understand how market prices were determined.

“Pharmaceutical companies have long maintained that the exorbitant prices are needed in order to cover the costs associated with research, development and clinical trials. However, neither the consumers who need these prescriptions, or insurance companies, including Medicare nor Medicaid who pay for them, have any idea if what the pharmaceuticals contend is actually true,” states the bill, which is one of several introduced in state legislatures around the country over the past year.

John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of American (PhRMA), said Clinton’s initiative would stifle innovation and reduce patient access. “The sweeping proposals outlined in Secretary Clinton’s plan to regulate prescription drug prices would restrict patients’ access to medicines, result in fewer new treatments for patients, cost countless jobs across the country and could end our nation’s standing as the world leader in biomedical innovation,” he wrote in a blog post.

PhRMA’s objections to the specifics of Clinton’s plan do not address the overwhelming public frustration with high drug prices; the sentiment is not limited to consumers but has extended to physicians who cannot get patients to stick with medication due to cost. Meanwhile, President Barack Obama has called for giving Medicare negotiating power in the 2016 budget and HHS Secretary Sylvia Mathews Burwell has made similar pleas in public remarks.

Polling by the Kaiser Family Foundation found in April that three-quarters of the public believed making drugs affordable for those with chronic conditions should be a priority, and later polling found most Americans blame drug companies for high prices.

Earlier this year, a group of the nation’s leading oncologists signed an editorial in the Mayo Clinic Proceedings calling for solutions to rising drug costs. They suggested that the best action would be a grassroots movement by patients and their advocates who, the oncologists said, are less affected by political and business ties that would curtail their freedom to lobby for reform.

American Journal of Managed Care Editor Mary Caffrey contributed to this report.



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