Study: Drug Companies Addicted To Steep Drug Price Increases

U of M doctors see “new business model” for niche market medications.

Researchers from the University of Minnesota Medical School are calling attention to steep drug price increases in niche markets where patients and providers have limited options for other treatments.
In one recent case at the University hospital, an immigrant patient had a diagnosis of HIV-AIDS and toxoplasmosis, a parasitic infection. Turing Pharmaceuticals, with offices in New York and Switzerland, acquired the U.S. rights to Daraprim, long a primary treatment for toxoplasmosis, in August 2015.

The company immediately increased the price of the drug from $13.50 per tablet to $750 per pill, an increase of more than 5400 percent. The company’s price for 100 pills for the University was a prohibitive $75,000, says Jonathan Alpern, an infectious disease fellow at the University of Minnesota.
“They were basically saying ‘We’re not going to give you enough pills just for this patient, we’re going to require you to buy more pills’,” Alpern recalled. He said that in the case in question, the patient ultimately received an alternative, “second-line therapy” instead of Daraprim.
“The price increases are hitting everyone, from the taxpayer down to the uninsured patient,” said Alpern. “This is a really important issue because it’s affecting vulnerable patients.”
The drugs in question are generally medications that have been used for decades. But because the drugs are used to treat conditions which are not as prevalent in the U.S., there is often little – and sometimes zero – competition for what are considered niche markets.
The concerns about skyrocketing prices for select drugs are outlined in “Essential Medicines in the United States – Why Access is Diminishing,” which was published in the New England Journal of Medicine in May. Alpern is the lead author; he collaborated with associate professors Dr. John Song and Dr. William Stauffer.
Alpern argues that the Daraprim case is no exception, but appears to be a new business model for some pharmaceutical companies.
“I think there’s been a shift in the business model: you have a drug that treats a niche population and there’s no competition so increasing the price of that drug to any extent that you wish and reaping profit as a result of that price increase is the new model that we tried to expose,” said Alpern. “I think the recent examples show that it’s become more of a popular approach.”
Other drugs also saw steep prices increases in 2015. The price for Seromycin, used to treat multidrug-resistant tuberculosis, increased more than 2200 percent. Biltricide, used to treat schistosomiasis, a parasitic infection, increased 356 percent. 
In the article for the New England Journal of Medicine, Alpern and colleagues noted: “What makes this business model particularly disturbing is that vulnerable patients – such as immigrants, refugees, and people of low socioeconomic status – are often disproportionately affected, since many of the medications are for tropical and opportunistic infections. These patients often have limited or no access to insurance, or have access only through public programs, so already stark health disparities are compounded.”
One potential solution that the University of Minnesota doctors suggest is the possibility of importing the drugs from Europe or Canada, where the medications remain much cheaper.
In the wake of sharp criticism, Turing Pharmaceuticals announced in November that it was cutting the price of Daraprim up to 50 percent for hospitals.
But Alpern and colleagues noted: “The drug remains prohibitively expensive for many patients.”
Turing CEO Martin Shkreli resigned in December amid a firestorm of media coverage. Unrelated to the drug price increases, Shkreli is currently facing a fraud investigation from the U.S. Securities and Exchange Commission and criminal charges from the U.S. Attorney’s Office for the Eastern District of New York in connection with his work as a hedge fund manager.