Clinton vows to address ‘price gouging’ in drug industry

Democratic presidential frontrunner Hillary Clinton said she’ll soon release a plan to address “price gouging” in the industry.

Clinton’s announcement on Twitter followed news that drugmaker Turing Pharmaceuticals hiked the price of a 53-year-old drug for a potentially deadly parasitic infection from $13.50 per pill to $750. Because the drug, Daraprim, treats patients with compromised immune systems, the price hike of more than 5,000 percent sparked outrage from medical groups representing doctors who care for patients with HIV and other infectious diseases.

Biologic drugs are produced in living cells and specialty drugs treat complex, chronic conditions, usually need to be injected and sometimes refrigerated, and also are very expensive.

Many new drugs for cancer, hepatitis C, rare disorders and even a new class of cholesterol drugs have prices in the range of $80,000 or more for a year or course of treatment. Some are major medical advances, saving lives and other medical costs. Others are minor improvements, such as cancer drugs that add a few months’ survival over existing medicines.

The Turing price hike is only the latest – though perhaps most outrageous – example of price hikes, or sky-high prices for newly launched drugs.

Insurance companies, politicians, advocates for patients and other critics have been blasting those prices as outrageous and unsustainable for the health care system, not to mention patients who sometimes must pay up to 30 percent of the cost.

In the case of Turing’s Daraprim, the company obtained rights to sell the drug, the only U.S.-approved treatment for toxoplasmosis, in August and hiked the price overnight.

The company, run by a former hedge fund manager named Martin Shkreli, on Sept. 21 repeated comments meant to justify the increase, saying that Turing hopes to improve the drug’s formulation and develop new, better drugs for the infection. It also stressed that some patients can get financial aid from the company to obtain the drug.

Chad Griffin, the president of the Human Rights Campaign, wrote to Turing on Sept. 21: “Your greed in raising the single-pill price from less than $15 to more than $750 is unconscionable. It immediately puts at risk scores of medically vulnerable people, including those living with HIV, and women who are pregnant. Medical organizations have estimated that this predatory move could increase the average cost per year for an adult patient reliant on the drug to more than $630,000.”

He continued, “Your action is an appallingly egregious example of deep, damaging problems in our nation’s drug pricing system–a problem we will continue to urge our nation’s elected officials to tackle with vigor and care. Instead of taking advantage of our system to turn a profit, I call on you to restore fair pricing for Daraprim.” The HRC is the nation’s largest LGBT civil rights group.

Biotech analyst Steve Brozak, president of WBB Securities, said that because of the furor over Turing’s action, pharmaceutical and biotech drugmakers will have to defend themselves “against the coming onslaught.”

“I don’t think Turing has a defense,” Brozak said, adding, “As long as this is debated, nothing good for the biotech industry and biotech investors can happen.”

Clinton’s chief rival for the Democratic nomination, Vermont Sen. Bernie Sanders, has been railing about high drug prices for about a year and recently reintroduced legislation that would enable the Medicaid program to get lower prices for some drugs and allow U.S. residents to buy cheaper drugs from Canada.

Trade groups representing pharmaceutical and biotech companies oppose letting Americans buy drugs overseas and have repeatedly said in the past couple of years that price controls would limit the amount of money their companies can spend on research, limiting the number of new drugs developed.

While small companies trying to win their first approval might have trouble money raising capital from investors, many of the top makers of biologic and specialty drugs are flush with cash and spend more on marketing than research and development.