It was 2021 when Martin Shkreli, then CEO of Turing Pharmaceuticals and also the notorious “pharma bro,” jacked up the cost of the lifesaving drug Daraprim by 5,000 percent. Overnight, its cost tag skyrocketed from $13.50 a pill to $750.
The move drew criticism from all corners. Congress hauled Shkreli in for questioning on television. Media outlets shamed the practice. The Pharmaceutical Research and Manufacturers of America (PhRMA), the powerful trade group for branded drugs, distanced itself, saying Turing “does not represent the of @PhRMA” and kicked off an offer it described as “more lab coat, less hoodie.”
Shkreli, 35, has become serving a seven-year prison term for securities fraud (unrelated to Daraprim). Turing has renamed itself Vyera Pharmaceuticals.
But Daraprim, that amounted to pennies to make and it is used to treat the parasitic infection toxoplasmosis – that is rare in the usa – still retails in excess of $750 per pill, according to drug website GoodRx.com. Vyera did not respond to multiple requests for comment.
The continued high cost of the drug is a cautionary tale to those who hope that public shaming of some “bad actors” can curb escalating drug prices, since the problem is rooted within the market's underlying financial incentives.
Drug prices are “easy to raise and harder to reduce, particularly if there is no competition,” said Nicholson Price, a helper professor in the University of Michigan School. “The mystery isn't, 'Why don't drug prices drop?' It's more, 'Why don't you think go up more?'”
That's especially the case having a product like Daraprim, which benefits a comparatively small group of individuals – about 2,000 Americans per year. That means less profit incentive for others to build up a competitor that may lower prices.
Joey Mattingly, an assistant professor in the University of Maryland School of Pharmacy, uses Daraprim like a example inside a university course he teaches on pharmaceutical business strategy, highlighting the way the industry functions under current incentives.
“The market kind of sets up where, if you want it, you have to pay for it,” he said. “A for-profit entity will enhance the price.”
Branded drugs like Daraprim are more likely to cost high with no clear justification, noted David Howard, any adverse health economist and professor at Emory University.
Daraprim was initially authorized by the Food and Drug Administration a lot more than 50 years ago, and also the patent has long since expired for the drug and its active ingredient. There is however no generic equivalent in the usa.
Even with generic-drug competition, costs don't always drop. In 2021 alone, 300 generic drugs – off-patent medications, which are typically cheap to create – saw price increases of more than 100 %, based on a 2021 Government Accountability Office report.
“We posess zero good model for pricing pharmaceuticals within this country and, consequently, we keep spending much more money,” Price said. “We avoid considering it, or avoid dealing with it, and as a result things get more problematic.”
As prices climb, Vyera has followed what's become a familiar pharmaceutical playbook to shift attention and charges, launching what it really calls the Daraprim Direct program.
Commercially insured patients can get a company-sponsored coupon that guarantees they'll don't pay more than $10 out-of-pocket. Uninsured patients at 500 percent or less of the government poverty level – about $82,300 for any family of two – won't pay anything.
People with Medicare Part D coverage can use for copay assistance from an “independent charitable foundation” to which Vyera has donated money. This option shows up on the Daraprim Direct website. Technically, Medicare beneficiaries cannot use company coupons, but many drug companies skirt that regulation by sending assistance via a separate intermediary – for example a completely independent charity. It is common enough that the practice has come under federal scrutiny.
Critics are quick to point out that such programs – often deployed for high-priced drugs – may enable patient access but do nothing to deal with overall expense. Private insurers, Medicare or Medicaid must pay the tab, whether through increased premiums or strained public health budgets.
On average, Medicaid programs in 2021 paid $35,556.48 per Daraprim prescription, based on a Kaiser Health News analysis of federal data covering that year's first three quarters.
That figure doesn't take into account any rebates state Medicaid programs likely receive from Vyera, which is undisclosed proprietary information. In Massachusetts, those deals mean the state's net costs for Daraprim have remained largely unchanged since 2021, although the price tag is 75 times what it was, said a spokeswoman for the agency's Executive Office of Health and Human Services.
But states have variable negotiating leverage and skills in pressing for discounts. And paying for high-cost drugs – especially those without a competitor – remains a serious challenge, she said.
Generally, Medicaid likely pays 100's of dollars per Daraprim pill, said Matt Salo, executive director of the National Association of Medicaid Directors. A typical starting dose of two to three pills each day lasts 1 to 3 weeks. And that is prone to generate costs much higher than they were before Shkreli started selling Daraprim.