As healthcare costs continue to rise, more and more people have entered the debate over escalating drug prices. One situation that has captured the attention of many involves the drug Daraprim®. Daraprim® (pyrimethamine) is used to treat toxoplasmosis in patients with weak immune systems, such as HIV patients.1 Although Daraprim® has been around for over 60 years, the marketing and selling of this life-saving drug has only been performed by one company at a time. Turing Pharmaceuticals (Turing) acquired Daraprim® in August 2015 and increased its price from $13.50 per pill to $750 per pill, an increase of more than 5,000 percent. When news of the overnight price increase happened, it caught the attention of high-ranking politicians, including Hillary Clinton, who tweeted, “[p]rice gouging like this in the specialty drug market is outrageous.”
After negative reactions by doctors, patients, politicians, and other third parties, Turing’s then CEO defended the price increase, citing the high costs of research and development, but later stated that the company would reduce the price. However, in November 2015, Turing issued a statement that the company would not lower the price per pill, but rather would offer discounts of up to 50 percent to hospitals.2 Even with a 50 percent discount, the cost to third parties for Daraprim® is still more than 2,500 percent higher than previous prices. Express Scripts, one of the largest pharmacy benefit management (PBM) organizations in the United States, recently stated that it is partnering with Imprimis Pharmaceuticals to make an alternative treatment to Daraprim®, which would be available for only $1 per capsule.3
Daraprim® is not the only drug with a significant price tag. For example, prices of other drugs to treat hepatitis C, HIV, and cancers are also extremely costly on a per pill/treatment basis. With U.S. healthcare costs of approximately $3 trillion in 20144, continued scrutiny of rising drug prices is here to stay.
Gleason IP works regularly on issues regarding pharmaceutical economics. Our team understands the complex characteristics of pricing and demand in the pharmaceutical industry and is often called upon to provide economic consulting on complex issues involving the life sciences industry.
1. FDA label for Daraprim® and http://www.daraprimdirect.com.