In what may go down in history as the textbook example of how dangerous an unregulated free market can be when a company decides it wants to be greedy, Turing Pharmaceuticals of New York hiked the cost of a powerful drug used to treat people with life-threatening illnesses like AIDS and cancer by over 5,000 percent overnight. Why? Because it will make the start-up company’s investors rich – and there is nothing patients and doctors could do about it.
Daraprim is used to treat a nasty parasite that attacks those suffering from ailments that have compromised their immune systems. As such, it can be a vital treatment in keeping those patients alive and comfortable. The price for Daraprim had been the costly, but not unaffordable, at $13.50 per pill, but health experts and patients alike were shocked to discover that the sole company that manufactures the drug shot the price up to $750 per pill in one day.
The change came just a month after Turing Pharmaceuticals acquired the “exclusive rights” to manufacture the drug, and did what any company would do when it had a monopoly over a product customers needed: Jack up the price and use patience suffering as leverage to get them to pay the higher price. If that sounds like something you’d see in a tech company and not from people who presumably got into the business to provide people with medicine, that’s because Turing Pharmaceutical is more of the former. AsThe New York Times highlighted, its CEO is a 32-year-old former hedge fund manager who doesn’t see what the big deal is.
“This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business,” Mr. Shkreli said. He said that many patients use the drug for far less than a year and that the price was now more in line with those of other rare disease drugs.“This is still one of the smallest pharmaceutical products in the world,” he said. “It really doesn’t make sense to get any criticism for this.”
Note that at $750 a pill, even one dose per day for a month would cost a person well over $20,000. For those of us who have watched in horror as healthcare costs, even for routine procedures, have skyrocketed, it makes a lot of sense to be critical.
Even more disturbing is Daraprim’s 62-year history. For most of its lifespan, the drug was virtually free. Even well into the 21st century, one could purchase the drug for under a dollar. Then one company bought the rights to it and hiked the price. Then another. And now Turing, whose only difference is it got greedy enough to do so at 5,000 percent of its former cost.
President Obama has recently tried to take steps to crackdown on this shameful drug profiteering. He asked Congress to let Medicare officials help set the prices in order to keep everything above board, but the usual suspects (read: Republican lawmakers) have made that compromise a pipe dream. Instead, Republicans insist that the invisible hand of the market is working as intended. Drugs like Daraprim are, they argue, priced exactly where they need to be.
What happened with Daraprim is exactly why the “free market” should not be carte blanche for companies in the drug industry. In other sectors, customers have the choice to buy a product or not. If a company sets their prices too high, people just won’t buy. It doesn’t work that way for medicine. If a dying person is offered a drug to help them, his options are far more limited. When the alternative is death or suffering, the customer becomes a slave to the price gouges. Turing knows exactly what it is doing when it tells its sick customers that they need to fork over 5,000 percent more if they want to feel better. Extortionists always do.