[Ip-health] NY Times: NY Attorney Gen. Examining Whether Turing Restricted Drug Access

Andrew S. Goldman andrew.goldman at keionline.org
Tue Oct 13 08:31:43 PDT 2015


New York Attorney General Examining Whether Turing Restricted Drug Access

The New York attorney general has begun an inquiry into Turing
Pharmaceuticals, whose fiftyfold overnight increase in the price of a
62-year-old infection drug stoked a backlash against high pharmaceutical

The attorney general’s office is looking not so much at the price increase
itself but at whether Turing may have violated antitrust rules by
restricting distribution of the drug, Daraprim, as a way to thwart generic
competition, according to a letter sent by the attorney general’s office to
Turing on Monday.

“While competition might ordinarily be expected to deter such a massive
price increase, it appears that Turing may have taken steps to prevent that
competition from arising,” said the letter, a copy of which was obtained by
The New York Times.

Martin Shkreli is the founder and chief executive of Turing
Pharmaceuticals, which raised the price of the drug Daraprim to $750 a
tablet from $13.50. Martin Shkreli of Turing Pharmaceuticals said the
company would sell a drug to treat serious infections for less than $750 a
tablet, though he did not specify what the new price would be.

The letter was addressed to Martin Shkreli, the 32-year-old former hedge
fund manager who runs Turing, and was signed by Eric J. Stock, the chief of
the antitrust bureau. It asks that Turing contact the attorney general’s
office immediately to discuss the situation and tells the company to
“retain all documents that are potentially relevant to this inquiry.”

Turing did not immediately respond to a request for comment sent to both
Mr. Shkreli and the company’s media spokesman.

Turing, which is based in Manhattan, acquired the rights to Daraprim in
August and raised the price to $750 a tablet from $13.50, drawing protests
from infectious disease specialists. The drug is the preferred treatment
for toxoplasmosis, a parasitic infection that can be especially dangerous
for people with AIDS and for babies whose mothers are infected during

Mr. Shkreli said that Turing would spend the money from the higher price to
develop better drugs for toxoplasmosis and that his company was already
providing better access to Daraprim, with lower out-of-pocket costs for

Still under fire late last month, he said that Turing would lower the price
of Daraprim, though more than two weeks later, no new price has been

Daraprim is no longer protected by patents. But until now the market has
been so small, with annual sales in the United States below $10 million,
that generic drug makers were not interested.

With the higher price now they might be interested. But the drug has been
removed from distribution by the usual wholesalers and by retail
drugstores. Patients can get the drug from Walgreens’ specialty pharmacy,
and hospitals have been given a special phone number to order it.

Such restricted distribution can make it more difficult for generics
manufacturers to get the samples of a brand-name product they need to do
the required testing to show that their generic copy is equivalent to the

At his previous company, Retrophin, which also acquired older drugs and
raised their prices, Mr. Shkreli talked openly about using restricted
distribution to deny samples to generics manufacturers. While the move to
restricted distribution for Daraprim occurred in June, before Turing
acquired the drug, it might have been a prerequisite for the sale.

Still, there can be other reasons to move drugs to narrower distribution.
Drugstores, for instance, typically do not want to carry a product that is
rarely used, making it logical to distribute it centrally.

Eric T. Schneiderman, the New York attorney general, is not the only one
looking at this issue. Last week, Senator Amy Klobuchar, Democrat of
Minnesota, called on the Federal Trade Commission to investigate whether
Turing and other drug companies were violating antitrust laws by using
restricted distribution.

“Some companies may be combining a substantial price increase for a
prescription medication with a closed distribution system,” Ms. Klobuchar
wrote in a letter to Edith Ramirez, the chairwoman of the trade commission.
“If the restricted distribution prevents or delays generic competition, it
could subject consumers to unnecessarily high prescription drug prices.”

When questioned by Ms. Klobuchar at a Senate hearing on Wednesday, Ms.
Ramirez said that monitoring the pharmaceutical industry was a “top
priority for us.”

The F.T.C. filed an amicus brief last year in a case in which Mylan, a
generics manufacturer, claimed that Celgene was using restricted
distribution to deny it access to its cancer drugs Thalomid and Revlimid.
In those cases, the drug distribution is controlled because of safety
issues. The F.T.C. said such behavior may nonetheless violate the law.

Turing missed the deadline of last Friday to provide information about its
price increase that had been requested by Senator Bernie Sanders of
Vermont, who is seeking the Democratic presidential nomination, and
Representative Elijah Cummings, Democrat of Maryland. The two lawmakers are
investigating sharp increases in drug prices.

Mr. Shkreli’s former company, Retrophin, has disclosed in regulatory
filings that it is cooperating with a federal criminal investigation into
certain financial transactions by Mr. Shkreli during his tenure there.

Andrew S. Goldman
Counsel, Policy and Legal Affairs
Knowledge Ecology International
andrew.goldman at keionline.org // www.twitter.com/ASG_KEI
tel.: +1.202.332.2670

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