Martin Shkreli became the “poster child” for high drug prices this week after raising the price of a decades-old treatment almost overnight, but the data show he is far from the only generic drug maker to quickly raise prices.
Shkreli received a massive public backlash against his attempt to increase the price of a generic version of the drug Daraprim from $13.50 to more than $700. But his company Turing Pharmaceuticals, which acquired rights to the decades-old drug in August, received attention because it went too far to jack up prices, as opposed to other drug makers that raise prices more discretely, one expert said.
“The other ones are setting very high prices but not quite as outrageous,” said Gerard Anderson, professor at Johns Hopkins University’s Bloomberg School of Public Health. “Had he done it 10 times or 20 times [the old price] he would have probably gotten away with it.”
“He was the poster child,” Anderson said, describing the 32-year-old former hedge fund manager.
Shkreli relented to the public criticism and agreed late Tuesday to lower the price of the decades-old treatment for a parasitic infection. He told various news agencies that he did the price hike to get additional funding for research into a new treatment.
There is a growing trend over the past five years of generic drug companies snagging old drugs with no competition and raising the price.
Take the price of the drug albendazole, used to treat a tapeworm infection. In 2010, the daily dose cost nearly $6. But in 2013, the listed price had increased to $119, according to a 2014 paper in the New England Journal of Medicine.
Another generic called captopril used for hypotension increased by more than 2,800 percent from 2012 to 2013, the journal article added. It increased from a little more than a penny to nearly 40 cents per pill.
Generics are still a low-cost alternative to brand-name drugs, and a drug that has lots of competition can’t raise prices dramatically without losing customers, Anderson said.
It’s the drugs that have been on the market for decades and have zero competition, like Daraprim, that see increases, Anderson said.
“When there is only one manufacturer of a drug they have learned they can raise their price at least before a competitor gets in,” he added.
There are antitrust laws to protect consumers, but only from anticompetitive strategies such as price-fixing among competitors, according to the journal article from researchers at Brigham Women’s Hospital in Boston.
“Manufacturers of generic drugs that legally obtain a market monopoly are free to unilaterally raise the prices of their products,” the researchers said. “The Federal Trade Commission will not intervene without evidence of a conspiracy among competitors or other anticompetitive actions that sustain the increased price.”
Anderson was at a loss for what to do to deal with the issue, saying that a new payment model for generic drugs may be needed. He said a push for mergers and acquisitions in the generic drug industry could also fuel this problem since there will be fewer competitors to push down prices.
“There used to be five to six large generic companies and now we are sort of down to two to three,” he told the Washington Examiner.
The issue has gotten attention from some lawmakers, most notably Rep. Elijah Cummings, D-Md., and presidential candidate Sen. Bernie Sanders, I-Vt. Last year, the two lawmakers opened an investigation into the price increases of certain generic drugs.
Their investigation found that the prices of ten generic drugs rose significantly from 2013 to 2014. For example, the antibiotic doxycycline, which in 2013 cost an average of $20 and in 2014 rose to $1,849.
Cummings on Wednesday wrote to Shkreli regarding serious allegations that his company violated federal anti-discrimination regulations because AIDS patients use Daraprim. “Boosting corporate profits at the expense of AIDS patients is reprehensible,” he said.
Sanders recently filed legislation that introduces a series of reforms for combating drug prices. Among them are requiring generic drug makers to offer Medicare rebates for their products, something now only brand-name drug makers have to do.
Companion legislation will be introduced in the House, but sources say the legislation is unlikely to move in either chamber.
Sanders’ main opponent in the Democratic primary, Hillary Clinton, issued a plan on Tuesday to lower drug prices. It also includes the generic drug rebate.
Drug prices have also become a pressing concern for the American public, according to recent polls. A lot of the attention has been on the high prices of brand-name drugs to treat life-threatening diseases such as cancer or hepatitis.
But there are key differences between the price debate for brand-name drugs and generic drugs, Anderson emphasized.
For one thing, the markets are different as brand-name drugs have a monopoly for a certain period of time before the drug’s patent protection expires. For generic drugs it is more of an issue with competition, while brand-name drug makers say they need the high prices to recoup their steep investment costs.
“I think you have to separate out generics and brands because they are totally different animals,” Anderson said.
