Why a drug company raised a pill’s price 4,100 percent

This is Martin Shkreli, who today became the face of the perceived problem with the health care industry– drug makers.

Shkreli, a hedge fund manager by trade, is CEO of Turning Pharma, which bought the rights to Daraprim, for 62 years has a standard treatment for a food-borne illness caused by a parasite, and raised the price per pill from $18 to $750.

Shkreli has been making the rounds on TV business channels today, and has said the drug is still “at the low end” of what it should cost.

“Profits are a great thing to sustain your corporate existence,” he told CNBC.

Some doctors have said patients won’t be able to afford the drug.

When the CNBC host asked if he feels badly about the situation, Shkreli replied, “No,” saying the company is giving the pill away to low-income people.

In an earlier interview with Bloomberg, Shkreli said under the old price, the cost per course of treatment “to save your life was only $1,000, and these days cancer drugs can cost $100,000.”

Shkreli said the company will never deny anyone treatment. “That’s something the previous company wasn’t doing,” he said.

He said the company would use its profits to develop a better drug to treat the illness.

  • Why develop new cures when treating the sick is so lucrative? Fixing cancer, diabetes, etc. would ruin an entire industry.

  • Moocherin_and_Looterin

    A parasite that kills it’s own host can’t expect much of a life beyond making that big killing.

    • Paul

      As long as it kills the host after it has reproduced and its spawn have had the chance to infect others to continue the cycle it has fulfilled its mission in life.

  • Mike Worcester

    The mind reels at the circular logic and sense of entitlement. And dude, what’s with the hair? If you are going to be a corporate b–tard, try to at least in some basic grooming. Or is it inappropriate to comment on the looks of people who are profiting on the suffering and desperation of others?

    • jon

      If trump and Bill gates can have their hair cuts this guy can too… Corporate bastard doesn’t embue people with a sense of style.

  • tboom

    Capitalism doesn’t always work well. Artificially created monopolies without an end I s a problem.

  • Gary F

    Economics 101. The cure for high prices is high prices.

    Kinda surprised there isn’t a generic or competitor for a similar product if this has been on the market for 62 years.

    • jon

      If there isn’t a generic there will be one soon. Unless the free market doesn’t work any more…

      • tboom

        >>…bought the rights to Daraprim, for 62 years …<<

        Part of the reason our version of capitalism sometimes works poorly. Regulations fix one set of problems (the right to make an honest profit on products requiring expensive research) but inadvertently create another problem (in this case an artificial monopoly open to profiteering).

    • Tyler

      Stolen from elsewhere on the internet:

      This particular drug is what is called an “orphan drug”, one that is not widely used enough for a bunch of companies to be producing.

      A company can always develop a generic version, but in order to do so they have to file an ANDA (abbreviated new drug application) with the FDA, in which they are able to show bioequivalence (I.e. the drug works the same way in the body as the branded drug).

      The problem here isn’t that a company is unable to develop a generic, it’s that the time and cost to do so doesn’t make sense because of its “orphan drug” status.

      This would not be a profitable move for the generic company, so it won’t happen.

      https://www.reddit.com/r/business/comments/3lvlui/ceo_who_raised_price_of_a_drug_used_to_treat/cv9rzlb

      • John

        At that price point (or half the price point of the current name brand), I wonder if the profitability starts to look a lot better for the generic.

        • Matthew

          The issue is time. It will take a while for a generic version to make it through the FDA approval process, and as soon as it’s approved, *poof*, Turning Pharma can drop the price back down to something reasonable. Now the new generic manufacturer can’t recoup the expense of the FDA approval process, which disincentives anyone from trying to bring a generic to market, since there is no guarantee of making money on it.

          • John

            That’s a good point.

  • Anna

    Since when do drugs have “peers”? I guess they are “people” like corporations when campaign finance reform was overturned by the Supreme Court.

    What the market will bear and what is humane and just are on opposite sides of the spectrum with the pharmaceutical “cartel.”

    There is no honor among thieves. I am sure his fellow “thieves” will take his entitlement attitude down a peg or two.

    This guy is in the same league as the drug cartels in Mexico.

    I wonder how Francis would weigh in on this low life’s interpretation of capitalism.

    • ec99

      If Francis is so enthused about redistribution of the wealth, he could start by cataloguing Vatican art for auction, with the proceeds going to the poor.

  • John

    Pharmaceuticals is an interesting industry. You have many millions of upfront costs, and years of development to maybe build a medication that helps people. Then, you need to make all that money back, because the people who paid for it up front want to see some return on their investment. High risk, high reward (high cost/probability of failure). I read somewhere that it costs close to a billion dollars to develop and get a new drug through the approval process.

    You typically have 20 years to make that up – actually, you have 5-10 years to make your investment back, because patent protection only lasts 20 years from the filing date, and you have to file your patent pretty early in the process. Well before you’ve gone through several years of FDA approval.

    I don’t understand how this group can jack up the price of a 62 year old drug. I don’t know the rules for patents filed before 1995, but I would think protection should have expired by now. If it has expired, then someone will start manufacturing the generic, and drive the price back down.

    While it would be nice for people to enter into pharma for purely noble goals, I think it unlikely that you will find enough really wealthy people willing to invest the money it costs to develop a drug with zero return. Do you have a few million lying around that you want to donate? How about a few thousand?

    I don’t think we’re doing it right, but I don’t know what the right way is. This guy, however, is clearly doing it wrong from a humanitarian standpoint. He might even be so brazen that he’s doing it wrong from the pharmaceutical company’s perspective.

  • Paul

    Someone here grew up on Gordon Gecko’s teachings.

    Wallstreet should have had NR-17 ratings.