CEO changes course on Daraprim® pricing after gouging claims spread

After claims of price gouging were directed at the CEO of Turing Pharmaceuticals, who had previously announced his intention to raise the price of the drug Daraprim® from $13.50 to $750 per pill, the CEO has indicated that the price hike will not take place. The CEO and founder of the drug company, Martin Shkreli, admitted that this new decision not to carry out the planned price increase was a reaction to the public outrage caused by the proposed rise in price.

Daraprim and Turing Pharmaceuticals

In August 2015, Turing Pharmaceuticals acquired Daraprim, a drug used to treat toxoplasmosis, a life-threatening parasitic infection that is especially dangerous for those with a weakened immune system, such as AIDS patients and pregnant women. The drug has been in use for 65 years and is the standard course of treatment for toxoplasmosis. After paying $55 million to the drug’s previous owner, Impax Laboratories, Shkreli announced an overnight price increase of approximately 5,000 percent. The CEO said the increase was necessary because the profits from the drug would go toward development costs for a similar drug with fewer side effects. He also argued that drugs like Daraprim could not exist if small companies such as his could not make a profit to act as a return on their investment in the drug.

Reactions

Initially, Shkreli, a former hedge fund manager, attempted to defend the attacks against this dramatic rise in price, arguing, “this isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business.” However, after pushback from the media and the public, he announced his change of heart in a phone interview with NBC News. When asked whether the change in course was a reaction to the pushback he responded, “Yes, it is absolutely a reaction. There were mistakes made with respect to helping people understand why we took this action. I think that it makes sense to lower the price in response to the anger that was felt by the people.” However, Shkreli also added that “it is very easy to see a large price increase and say ‘gosh, those people must be gouging,’ But when your company is not really making any money, what does that mean? It’s very hard stuff to understand.”

Political pushback

Presidential hopeful Hillary Clinton was also quick to respond to the proposed price hike, calling the increase “outrageous” and announcing her intention to put together legislation that would guard against such high prescription drug prices. Before the spread of the proposed price increase, Clinton brought up concerns about “skyrocketing prescription drugs” on a recent edition of CBS’s Face the Nation. A study released in May of 2015 found approximately 576,000 Americans spent more on prescription drugs than the median household income in 2014 (see For some, prescription drug costs outpace household income, Health Law Daily, May 13, 2015).

Though Shkreli has vowed to not carry out the intended increase to $750 per pill for Daraprim, he has not indicated what the final price will be.