After Turing, the industry’s biggest price gougers

Throughout the past three days’ escalating furore about Turing Pharmaceuticals’ proposed 4,000% price hike for the toxoplasmosis drug Daraprim the biopharma sector has been deafening in its near-silence on drug pricing.

And well it might have been; cynics would say that it suits the industry to have a neat scapegoat in Turing, all the while hiking drug costs in its own right. But now a new analysis of EvaluatePharma data can reveal that, when it comes to escalating prices Turing is by no means the only culprit (see tables below).

The analysis, from EvaluatePharma’s sales and volume pricing module, comprises the more than 30,000 Medicaid-covered drugs for which US pharmacy acquisition cost data are compiled weekly. The drugs are ranked in order of difference in their national average drug acquisition cost (NADAC) in the second quarter of this year versus 12 months earlier.

Of course the data are not entirely exhaustive, and exclude further rebates as well as, of course, hospital drugs. But they provide a good indication of where companies have, for various reasons, hiked prices of drugs that address far bigger indications than Turing’s, posing a greater burden on payers.

Drugs with no US generic availability
Drug Company Price increase*
Dutoprol Concordia  928%
Sprix Egalet 479%
Zelapar Valeant 242%
Treximet GlaxoSmithKline 149%
Fanapt Vanda 117%
Riomet Sun Pharmaceutical 103%
Ertaczo Valeant 79%
Duexis Horizon Pharma 75%
Noritate Valeant 66%
CombiPatch Noven 65%
*Pharmacy acquisition cost, Q2 2015 vs Q2 2014.
Drugs with generics available
Drug Company Price increase*
Zonegran Eisai 387%
Tasmar Valeant 346%
Vandazole Upsher-Smith  309%
Carac Valeant 200%
Wellbutrin XL Valeant 143%
Cardizem CD Valeant 130%
Verapamil HCl Pfizer 121%
Betapace Bayer/Bristol-Myers Squibb 105%
Ultravate X Sun Pharmaceutical  101%
Paxil CR GlaxoSmithKline 86%
*Pharmacy acquisition cost, Q2 2015 vs Q2 2014.
Generic drugs
Drug Company Price increase*
Econazole nitrate Taro/IGI Laboratories 991%
Propranolol HCl Ipca Laboratories 891%
Amitriptyline HCl Endo 647%
Allopurinol Endo 505%
Clobetasol propionate Wockhardt 451%
Ofloxacin Akorn/Valeant 419%
Methylphenidate HCl Mallinckrodt 403%
Ursodiol Epic/Lannett 399%
Sulfamethoxazole & trimethoprim Akorn 354%
Nicardipine HCl Epic Pharma 338%
*Pharmacy acquisition cost, Q2 2015 vs Q2 2014.

The data suggest that, while Turing and its embattled chief executive, Martin Shkreli, might have made a convenient lightning rod for the growing anger about pricing, for biopharma the problem will not go away any time soon.

Already the debate has escalated quickly. An issue that was previously of interest mainly to pharma sector watchers has gone mainstream, yesterday eliciting a plan from the Democratic presidential candidate Hillary Clinton to address “price gouging”. The intervention prompted a market selloff, pushing the Nasdaq biotech index down 4% on Monday and off another 2% yesterday.

Turing seems now to be considering a U-turn on Daraprim’s pricing; and a few days ago Rodelis Therapeutics ran up the white flag over the TB drug cycloserine, which it had bought from The Chao Center.

Pricing power

However, the furore has shone a light on pharma’s remarkable pricing power in the US, where drugs tend to carry as high a price tag as a company thinks it can get away with. All Turing illustrates is that the US lacks any mechanism to control drug pricing, and takes this point to its logical conclusion.

Of course, it is vital to remember the dangers of generalising. The arguments for putting pressure on the price of an innovative, patent-protected drug are much weaker than those for doing so to one that is decades off-patent, or indeed itself a generic. Most importantly, high drug costs are necessary to enable R&D to be funded, and this point was made repeatedly by Mr Shkreli.

The differences aside, Turing is one of several small groups that have followed in the footsteps of Questcor, now part of Mallinckrodt, which acquired the old drug Acthar and then exploited a legal loophole to gain protection for it via orphan drug status, selling it at a much inflated price.

Turing’s strategy is just a variation: Daraprim is relatively safe from competition simply because its US distribution is tightly controlled, so even though it is off-patent it is hard for generics companies have a blueprint to copy.

Before founding Turing, Mr Shkreli headed up Retrophin, a group with a broadly similar strategy to Questcor. In its wake have come others, including Rodelis, Perlstein Lab, Marathon Pharmaceuticals and Catalyst Pharmaceutical.

Democrat pledge

Yesterday Mrs Clinton put some detail behind Monday’s pledge to lower drug costs, proposing that drug makers be required to invest in research, and suggesting prohibition of “pay for delay” arrangements with generics groups, allowing Medicare to negotiate drug prices, and lowering the data exclusivity for biological drugs from 12 to seven years.

There might be little new here, not forgetting that the actual chances of a 2017 Democratic president getting drug pricing legislation through Congress are extremely slim. But it shows how live the issue has become, and just how much is at stake in an overheated market.

From hiking the price of an ancient, off-patent small molecule to moving to cut exclusivity on biologicals in the space of 24 hours is quite a ricochet for the Turing bullet. But this is where the US drug pricing debate now stands, and the whole of biopharma has Turing and Mr Shkreli to thank for it.

This story has been amended to clarify the proposed changes to US biological data exclusivity.

To contact the writer of this story email Jacob Plieth in London at [email protected] or follow @JacobPlieth on Twitter

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