[Ip-health] Bloomberg: Shkreli Was Right: Everyone's Hiking Drug Prices

Thiru Balasubramaniam thiru at keionline.org
Wed Feb 3 03:26:48 PST 2016


Shkreli Was Right: Everyone's Hiking Drug Prices

Robert Langreth
Rebecca Spalding

February 2, 2016 — 11:00 AM CETUpdated on February 2, 2016 — 7:06 PM CET

After Martin Shkreli raised the price of anti-parasitic drug Daraprim more
than 50-fold to $750 a pill last year, he said he wasn’t alone in taking
big price hikes.

As it turns out, the former drug executive was right. A survey of about
3,000 brand-name prescription drugs found that prices more than doubled for
60 and at least quadrupled for 20 since December 2014.

Among the biggest increases was Alcortin A, a combination steroid and
antibiotic gel to treat eczema and skin infections: The price soared 1,860
percent, or almost 20-fold, during the period. And a vial of Aloprim, a
Mylan NV drug for cancer complications, more than doubled, according to the
survey by DRX, a provider of price-comparison software to health plans.

Skyrocketing prices are getting increased scrutiny ahead of a U.S.
congressional hearing this week: Democratic Representative Elijah Cummings,
ranking member on a committee that is probing drug pricing, said Tuesday
that pricing “tactics are not limited to a few ‘bad apples,’ but are
prominent throughout the industry.”

Even after soaring prices became an issue in the U.S. presidential
campaign, the cost of many drugs has continued to rise at annual rates of
more than 10 percent. Drugmakers raised the prices of products as
wide-ranging as erectile dysfunction drug Viagra, heart treatments,
dermatology medicine and even brands that long have lost their patents.
While specialty companies have had the steepest hikes, giants such as
Pfizer Inc. and GlaxoSmithKline Plc kept pushing through smaller rises.

“The data shows that price increases are an integral part of the business
plan,” said Jim Yocum, executive vice president at DRX.

Pharmaceutical companies often boost prices around the end and the start of
the year, and the scale of recent increases was higher than what Yocum has
seen in the past few years. About 400 formulations of brand-name drugs went
up at least 9.9 percent since early December, according to DRX.

Drugmakers say that they offer significant discounts off of list price to
insurers, and inexpensive generic alternatives are available. And they say
they invest large amounts in research & development to come up with new

Among recent increases by the world’s biggest pharmaceutical companies is
AstraZeneca Plc’s blockbuster cholesterol drug Crestor, up 15 percent ahead
of the arrival of a generic version in May. AstraZeneca said that it
decides on price changes annually based on market conditions, a common
industry practice, and it offers a savings program on Crestor that reduces
co-payments to as little as $3 per prescription.

Pfizer raised prices for 24 drugs by 12 percent or more in the past two
months, with Viagra increasing about 13 percent and two heart drugs whose
price went up 44 percent and 86 percent, according to DRX. The New
York-based drugmaker said that list prices don’t reflect discounts offered
to the government, managed-care organizations, commercial health plans and
programs that restrict any increases above the inflation rate. In the U.S.
biopharma business, the average price increase was 6 percent last year,
Pfizer said in an e-mail.

Meanwhile GlaxoSmithKline increased prices by 15 percent on 22 products
over the past two months, including Lamictal XR for epilepsy, according to

“Price increases for some medicines are a reality in a competitive U.S.
marketplace and we strive to handle them thoughtfully,” Glaxo said by
e-mail. After discounts, the London-based company said U.S. prices declined
from 2014 to 2015.

Mylan declined to comment.

Few Decreases

DRX, a unit of Connecture Inc., looked at prices for more than 6,300 doses
of about 3,000 brand-name drugs from December 2014 through Jan. 15. It
included patented drugs as well as old brand drugs whose patents have
expired, but not generics. Half the drugs got a price increase -- including
1,100, almost a third, above 10 percent. Only about 50 had a decrease, DRX

Valeant Pharmaceuticals International Inc., which in recent months has been
under fire for its pricing was among the most aggressive, with 13 drugs
that doubled or more since December 2014. That’s more than any other large
company, the survey found. The heart drug Isuprel soared 720 percent over
the period, including 525 percent right after Valeant bought the rights to
sell it.

In a December 2014 e-mail released Tuesday by the House Committee on
Oversight and Government Reform, a Valeant official wrote to a senior vice
president that a potential purchase of Isuprel and another drug,
Nitropress, “would also have to be a price play.”

In a statement, Valeant said that it heard feedback from hospitals that it
set the prices too high for the drugs and responded by offering discounts
of as much as 30 percent. On Friday, Valeant said in a separate statement
that it sets prices based on factors such as the cost of development or
acquisition of a drug, its benefits versus alternative treatments, and the
availability of substitutes or generics.

‘Gouge Patients’

The scrutiny on prices is only going to increase after Democratic
presidential candidate Hillary Clinton vowed again to crack down on
companies that “gougepatients with pricing” in a Jan. 28 tweet. Valeant and
Turing Pharmaceuticals AG, Shkreli’s former company, are expected to
testify at the hearing Thursday. Shkreli, who faces federal fraud charges
unrelated to Turing, was subpoenaed to appear, although he has said he
plans to invoke the Fifth Amendment, which allows people to avoid
incriminating themselves. He declined to comment for this story via text

Turing said that it offers hospitals discounts of up to 50 percent on its
Daraprim treatment and invests 60 percent of net revenue in R&D.

Prices for three skin gels from the small company Novum Pharma LLC,
including Alcortin A, have soared 1,700 percent of more. Novum, founded in
2015, is “focused on acquiring and licensing under promoted/mature
products,” according to its website. DRX data show that the majority of the
increases occurred in May 2015, after Novum acquired the drugs.

Novum said list prices don’t reflect the cost for insurers and patients.
Commercially insured patients get Novum’s products for $0 copayment, and
cash-paying patients pay only $35, the Indianapolis-based company said in a

Old Drugs

Even prices for some brand drugs that have long lost patent protection are
rising sharply. AstraZeneca sold U.S. rights to two old blood pressure
drugs, Zestril and Tenormin, to Alvogen in January 2015. Alvogen has raised
the prices for Zestril by about 800 percent and Tenormin by about 600
percent, according to DRX.

“As the price of many of these products had remained unchanged for 10-15
years, there was a need to bring up the prices,” the company said in a
statement. Even after the increases, the prices are lower than some
competing brands, Alvogen said.

Mission Pharmacal Co., based in San Antonio, said the price of Lithostat, a
drug used for a type of kidney stone, went up more than 10-fold after the
supply of a key ingredient ran out and it had to find a new supplier.
Mission considered pulling Lithostat off the market, but decided to keep
selling it, reflecting its commitment to patients, said Drew Deeter, an
outside spokesman for the company. “The raw ingredients are challenging to
acquire, the product is difficult to distribute, and it remains a minimal
revenue generator for the company,” Deeter said.

Price Doubles

Among cancer medicines that doubled in price is leukemia drug Oncaspar,
which Baxalta Inc. boosted by 125 percent after acquiring it from Sigma-Tau
Finanziaria Spa. Baxalta said the price adjustment will help fund testing
of new formulations, and that it plans to pursue clinical research to
explore the benefits of Oncaspar in other cancers.

Spending on prescription medicines isn’t growing faster than overall
health-care spending, partly because of the use of generics and
negotiations on discounts, according to the Pharmaceutical Research and
Manufacturers of America, an industry group known as PhRMA.

While insurers and health plans do negotiate discounts, the list price is
usually the starting point of the negotiation with drugmakers, DRX’s Yocum

“Even if they don’t get all of that price increase, they will get some of
it,” he said

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