My thoughts must be relaxed, be able to maintain / Cause times is changed and life is strange / The glorious days is gone, and everybody’s doing bad / Yo, mad lives is up for grabs –Ghostface Killah (1993)
Yesterday U.S. Representatives on the House Committee on Oversight and Government Reform scored rhetorical points on Martin Shkreli, the Pharma Bro whose Turing Pharmaceuticals raised the price of toxoplasmosis drug Daraprim from $13.50 per tablet to $750.
This is the same Congress, taking in $30 million a year in pharm contributions, that dismantled the sector’s regulatory infrastructure, legalizing the price spike.
As Johns Hopkins’s Catherine DeAngelis described last month,
What has accounted for the pharmaceutical companies’ very large profit margins? For one thing, the United States, unlike other developed countries, allows pharmaceutical companies to charge whatever they want as long as they do not collude with one another in setting the prices. In other words, these companies can charge whatever the market will bear. For example, Solvadi, Gilead’s hepatitis C drug, costs $1,000 for each pill, which amounted to sales of $3.5 billion between April and June of 2015.
Making matters worse, the US Congress, influenced by pharmaceutical lobbyists, has not allowed Medicare to negotiate drug prices, as do most health care systems, HMOs, and some insurance companies. In those countries that negotiate the prices of their national insurance plans with Big Pharma, most drugs sell for much less. Obviously, lobbyists for the pharmaceutical industry in the United States have been very successful.
DeAngelis directly connects Daraprim’s spike to another structural facet,
Another trend contributing to the high prices that Americans pay for drugs are the mergers and acquisitions of drug companies. One recent example of this practice was the November 2015, $150 billion merger of US-based Pfizer and Irish-based Allergen, a move, known as an “inversion transaction,” that allows Pfizer to give up its corporate citizenship in the United States so that it may reduce its tax bill by billions of dollars. Another effect of mergers is the reduction in the number of competitors, which has led to the doubling or tripling of drug prices and, in some cases, to a 1000% increase in cost. Normally, new drug prices are set only slightly higher than those of rival drugs already on the market, which typically ends up raising the price of the older drug. But if a company has few competitors or merges with its competitor, the resulting lack of, or diminished, competition means that the price of a drug can be whatever the company wants.
An interesting example of the result of mergers involves the drug Daraprim, an antiparasitic drug frequently used by patients with suppressed immune systems, such as people with HIV or cancer. In 2010 GlaxoSmithKline sold the marketing rights of Daraprim to CorePharma, which in turn sold the rights to Turing Pharmaceuticals in 2015. Turing almost immediately announced that the price of a Daraprim pill would be raised to $750 from the previous $17.50, a 40-fold increase.
Turing could corner the market on a drug that doesn’t face a generic competitor, circumventing even such a muted punishment for price-gouging. It’s a market failure the newly negotiated TPP trade agreement, supplementing TRIPS, now regularizes as a matter of international law, including for the kinds of AIDS drugs for which Shkreli was slammed yesterday.
Shkreli is hardly the only sociopath. There is among us a veritable army. The New York Times identified several ghostface killahs, Valeant Pharmaceuticals International’s J. Michael Pearson among them,
Cuprimine is just one of many Valeant drugs whose prices have spiked as part of the company’s concerted strategy, which has richly rewarded its investors and made it one of Wall Street’s most popular health stocks. But Valeant’s habit of buying up existing drugs and raising prices aggressively, rather than trying to develop new drugs, has also drawn the ire of lawmakers and helped stoke public outrage against the growing trend of higher and higher drug prices imposed by big drug companies. This year alone, Valeant raised prices on its brand-name drugs an average of 66 percent, according to a Deutsche Bank analysis, about five times as much as its closest industry peers.
Indeed, Shkreli isn’t in trouble for Daraprim. He’s up on federal charges for a different set of shenanigans that until the recent public outrage were treated as “creative business practices,”
A filing made in November 2014 with the U.S. Securities and Exchange Commission showed Shkreli pulled in nearly $3 million in gross proceeds as he continued selling company stock while simultaneously urging investors to buy into Retrophin — which the rapper-quoting then-CEO hyped on his Twitter account. Shkreli began plundering Retrophin after his hedge fund — which eventually collapsed — made a “disastrous” investment in Orexigen, reported FierceBiotech. MSMB Capital Management lost more than $7 million and went ‘virtually bankrupt’ after the 2011 investment, but Shkreli formed a health care-focused branch of the hedge fund to keep the company afloat rather than telling investors he lost their money.
But Shkreli’s dismissive smirks yesterday–honorable bitches, puh-lease–are in truth a gift, in direct contradiction to the memed outrage. They are the Lacanian confutation at the heart of the hearing. He’s protected by the very people who condemn him, he knows it, and he’s telling us what is right in front of us but we refuse to see.
The price spikes aren’t a bug, they’re a feature, and now codified in U.S.-led international treaties. And a Congress that takes Pharma Bro to task on moralistic grounds it doesn’t itself accept aims at deflecting its central role in monetizing the sick.