Question

Martin Shkreli was CEO of Turing Pharmaceuticals when it purchased the 62-year-old drug called Daraprim and quickly raised the price of one pill from $13.50 to $750. As a result the average cost of treatment with the drug rose from about $1,130 to $63,000. Experts suggest it could rise to $634,000 for some patients.132

What is Daraprim? According to a Vanity Fair reporter, “Daraprim is on the World Health Organization’s List of Essential Medicines because it treats toxoplasmosis, a parasitic infection that is particularly dangerous to pregnant women, people with compromised immune systems, and the elderly. In that vulnerable population it can lead to seizures, blindness, birth defects in babies of infected mothers, and, in some cases, death. For decades, there wasn’t any competition to Daraprim for the simple reason that there wasn’t much money to be made selling it.”133

During a CBS interview Shkreli was asked why he raised the price of the drug so dramatically. He responded, “Well, it depends on how you define so drastically. Because the drug was unprofitable at the former prices, so any company selling it would be losing money. And at this price it’s a reasonable profit. Not excessive at all.”134 He went on to say that he was being altruistic because other pharmaceutical companies have not focused on this drug. He indicated that the profit would be spent on research into curing toxoplasmosis.

Dr. David Argus, an oncologist and CBS News commentator, disagreed. “Patients shouldn’t be taxed for and charged for future research and development. Patients should pay for the drug they’re getting and what they need in the situation that they are in,” he said. Argus believed Shkreli was using a “predatory practice” that was “inappropriate.”135

The US government’s House Committee on Oversight and Government Reform studied this case and concluded that Shkreli “purchased it [Daraprim] for the purpose of increasing the price dramatically and making hundreds of millions of dollars by exploiting monopoly before any competitors could enter the market.”136

Shkreli told the board chair at Turing that “Turing was making big progress toward acquiring Daraprim.” Shkreli was ecstatic, writing, “$1 bn here we come.” In another e-mail he wrote, “I think it [the acquisition] will be huge. We raised the price from $1,700 per bottle to $75,000. . . . So 5,000 paying bottles at the new price is $375,000,000—almost all of it is profit and I think we will get three years of that or more.”137

What Would You Recommend if You Were a Member of the US Government’s Oversight Committee?

Answer 1