Turing Pharma Caves; Says Drug Price Will Move In Generally Downward Motion At Some Point In The Future

from the and-will-only-do-so-because-the-public-doesn't-understand-business dept

Wed, Sep 23rd 2015 3:32am — Tim Cushing

Martin Shkreli -- who became the personification of a deeply-reviled industry thanks to his insanely-exorbitant price hike on a 60-year old drug -- has heard the disapproving roar of the crowd and will do… something… at some point in the future… to make things right. Or at least a bit more right-ish.

In an interview with ABC, Shkreli announced Daraprim's $750/pill price will be rolled back to something less extortionate.

“We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,” he told ABC News. “We think these changes will be welcomed.”

With nothing else to go on (other than Shkreli's continued assertions that the drug is still underpriced), the public will just have to assume that the new price point, whenever it arrives, will be barely above cost. (Considering it was produced for a $1/pill before Turing's purchase, one would think a significant reduction in price would still leave plenty of room for profits and additional R&D.)

Turing's mini-debacle has damaged the pharmaceutical industry. It has drawn even more heat from legislators and presidential candidates. It has even negatively affected more tangible aspects, like stock prices. Shkreli's actions have also drawn attention to the oft-ignored regulatory procedures that allow companies to fully exploit old drugs and medications, even without the protective power of active patents. Derek Lowe at Science Magazine explains the route to securing post-patent monopolies.

By various means, old generic compounds have ended up as protected species, and several companies have made it their business to take advantage of these situations to the maximum extent possible. The FDA grants market exclusivity to companies that are willing to take “grandfathered” compounds into compliance with their current regulatory framework, and that’s led to some ridiculous situations with drugs like colchicine and progesterone. (Perhaps the worst example is a company that’s using this technique to get ahold of a drug that’s currently being provided at no charge whatsoever).

Combine this with the bottleneck Turing generously refers to as "distribution" (via a single specialty pharmacy or directly from Turing itself) and you have everything you need to demand any amount you want for a lifesaving drug with a limited market. Everything being said about R&D investment is just smoke until proven otherwise.

Following his short statements promising unquantified price drops at an unspecified point in the future, Martin Shkreli -- who seemed to relish praising himself/insulting his detractors from this social media platform -- took his Twitter ball and went home.

Turns out the market will bear far less than Turing thought, even with the benefits of a tightly-controlled distribution chain and the FDA's assistance in keeping competitors off the playing field. A whole lot of people who will never use the drug managed to nudge the price downward, and all within 48 hours.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: daraprim, drug prices, drugs, martin shkreli, monopoly, pharmaceuticals, pricing
Companies: turing, turing pharmaceutical

41 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Anonymous Coward, 23 Sep 2015 @ 3:38am

>In an interview with ABC, Shkreli announced Daraprim's $750/pill price will be rolled back to something less extortionate.

$749 and 100 cents.
[ link to this | view in chronology ]
- That One Guy (profile), 23 Sep 2015 @ 4:16am
  
  Re:
  No no, I'm guessing, due to the kindness of their hearts, they'll break up the costs into multiple payments. Say four easy payments of $190 each. Much more affordable, even if the decreased cost will barely allow them to keep the lights on.
  [ link to this | view in chronology ]
  - Anonymous Coward, 23 Sep 2015 @ 5:56am
    
    Re: Re:
    Serious question, apart from running the production line and distribution (ok, ok and lobbying budget) exactly WTF is that money being spent on.
    
    It's not like they have monthly Health & Safety reviews / FDA checkups.
    
    Also I'm pretty sure if their situation is so precarious
    they can't afford to pay out dividends so no yachts here.
    
    Maybe Mr. Shkreli spends the money on gear for his LoL Team... LOL IDK !?
    [ link to this | view in chronology ]
    - Anonymous Coward, 23 Sep 2015 @ 6:07am
      
      Re: Re: Re:
      Cocaine isn't cheap, you know.
      [ link to this | view in chronology ]
      - John Fenderson (profile), 23 Sep 2015 @ 6:29am
        
        Re: Re: Re: Re:
        And all those hookers use more coke than you might think.
        [ link to this | view in chronology ]
        
        Anonymous Coward, 23 Sep 2015 @ 12:15pm
        
        Re: Re: Re: Re: Re:
        I feel like I should link to the Frankenhooker "SuperCrack Exploding Prostitutes" scene here, but it just doesn't feel right on TD...
        [ link to this | view in chronology ]
    - Anonymous Coward, 23 Sep 2015 @ 10:37am
      
      Re: Re: Re:
      He is being sued for spending his previous company's money on himself and his friends. I would say odds are he is embezzling most of that cash for himself again
      [ link to this | view in chronology ]
    - Anonymous Coward, 27 Nov 2015 @ 3:52am
      
      Re: Re: Re:
      "Serious question... exactly WTF is that money being spent on?"
      
      http://www.luerssen-yachts.com/
      [ link to this | view in chronology ]
That One Guy (profile), 23 Sep 2015 @ 4:20am

Good times
I can't help but laugh at the tantrum at the end. "Oh yeah, well if you don't want to play nice, I'll just stop talking on twitter entirely, that'll show you all!"

Everyone grows older, but it's clear not everyone grows up.
[ link to this | view in chronology ]
- Anonymous Coward, 23 Sep 2015 @ 4:46am
  
  Re: Good times
  You think that's bad, out_of_the_blue's going to throw an even bigger one.
  [ link to this | view in chronology ]
  - Wendy Cockcroft, 24 Sep 2015 @ 5:55am
    
    Re: Re: Good times
    ...over all those undeserving people who might suddenly find they can afford it after all.
    [ link to this | view in chronology ]
- Anonymous Coward, 23 Sep 2015 @ 10:02am
  
  Re: Good times
  He's done his job, and made millions from intentionally short-selling Pharma stock.
  
  He tweeted three weeks ago to sell stock in that arena, and then,,,well, we can see clearly what ahppened next.
  
  I'm pretty sure that's criminal activity.
  [ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 4:54am

Lies
First it was "you all don't understand how it works and it will cost less" then it was "but research!" and after people pointed out that the drug is 50+ years old and questioned where all this research money went, now he wants to reduce the price to $2 ($1 production + $.50 distribution. leaves $.50 aka a small profit) in the future. The future is anything from now until the end of the universe so I guess don't hold your breath.

Mysterious voice across the universe: "The Universe will end in 3," "Price of Daraprim is 1 cent now" ",1..."

Sorry but all I'm hearing is "Pay or die!" But a thumbs up for capitalism. The guy understands it.
[ link to this | view in chronology ]
- hegemon13, 23 Sep 2015 @ 7:22am
  
  Re: Lies
  This isn't capitalism. This is cronyism and regulatory capture creating an artificial monopoly. It's nearly a polar opposite of capitalism.
  [ link to this | view in chronology ]
  - John Fenderson (profile), 23 Sep 2015 @ 7:40am
    
    Re: Re: Lies
    This is capitalism in its purest form.
    [ link to this | view in chronology ]
    - Anonymous Coward, 23 Sep 2015 @ 7:46am
      
      Re: Re: Re: Lies
      Pure capitalism would only have one barrier to entry into a market, the ability to raise the capital needed. When laws and regulations are used to protect the incumbents in any industry, the system has become protectionist, and is well on its way to becoming a feudal like system, where an elite own and control all resources.
      [ link to this | view in chronology ]
      - Anonymous Coward, 23 Sep 2015 @ 8:50am
        
        Re: Re: Re: Re: Lies
        Which any good capitalist would take advantage of. People have to remember that in general corporations are amoral constructs with the purpose of making as much money as is possible.
        
        Blaming them for acting like money-grubbing dirtbags is like blaming the scorpion when it stings. To them it's not a matter of right or wrong, it's about performing a natural function.
        [ link to this | view in chronology ]
        
        Anonymous Coward, 23 Sep 2015 @ 9:54am
        
        Re: Re: Re: Re: Re: Lies
        The very antithesis of capitalism is protectionism. This is the very thing that Adam Smith argued against when advocating free market capitalism. Should governments grant exclusivity? Should they limit competition? The answer is no.
        
        Yet this is exactly what we have today with excessive IP and other laws that attempt to give those willing to buy regulators, through back door dealings, exclusivity. We have a very very corrupt FDA. If it were up to them just about all dietary supplements would be banned by now or greatly monopolized thanks to the FDA. Even herbs. But the dietary supplement health and education act limited the FDA's ability to regulate dietary supplements and added a grandfathered date that all herbs and dietary supplements before that date can't be banned by the FDA. Even then the FDA has managed to regulate naturally occurring supplements like red yeast rice in ways that limit their medicinal effectiveness by limiting the amount of naturally occurring effective ingredients that they contain to trace amounts. Despite the fact that these alternatives have been shown to be safe unregulated (and have been around for hundreds of years), especially relative to pharmaceuticals. and why do they do this? So they can push prices of pharmaceuticals up by restricting competition. The FDA is a corrupt corrupt organization that has absolutely no right to take away my health freedoms. They have no right!!!! It's none of their business. If I want to try an unadulterated herb, with whatever naturally occurring ingredients it has, for whatever health problem I may have the FDA needs to mind its own business instead of telling me that they don't want to give me the opportunity to try and see if it works for me. It's my decision. Their medical authority be darned because they don't have my best interest in mind, only their own. and if I want to sell that herb on a free market they should also get out of the way so long as the contents of whatever it is that's being sold matches the label so that the buyer knows what they are buying. Otherwise when the FDA tries to limit the number of sellers of something they are effectively making something more expensive for me as a buyer and they really have no business doing that.
        
        but this entire country has turned into nothing but a protectionist country. From excessive IP to taxi-cab medallion laws to cableco monopolies to even attempts by the FDA to limit the generic market very little about this country is capitalistic anymore. It's all exactly what Adam Smith warned against.
        [ link to this | view in chronology ]
        
        John Fenderson (profile), 23 Sep 2015 @ 10:38am
        
        Re: Re: Re: Re: Re: Re: Lies
        "The very antithesis of capitalism is protectionism."
        
        I don't think so. But I suspect that when you say "capitalism" what you're really meaning is the "free market".
        
        Capitalism and free market economics are two different things.
        [ link to this | view in chronology ]
        
        Wendy Cockcroft, 24 Sep 2015 @ 5:58am
        
        Re: Re: Re: Re: Re: Re: Re: Lies
        Adam Smith himself argued that there'll never be a truly free market.
        [ link to this | view in chronology ]
        
        Anonymous Coward, 23 Sep 2015 @ 1:39pm
        
        Re: Re: Re: Re: Re: Re: Lies
        Regulatory capture and corruption of this sort is an inevitable outcome of unfettered capitalism. Which is why most modern countries openly recognise the need for market regulation.
        [ link to this | view in chronology ]
      - Wendy Cockcroft, 24 Sep 2015 @ 5:57am
        
        Re: Re: Re: Re: Lies
        No amount of sophistry on your part can make this sound okay. Ladies and gentlemen, I give you PURE capitalism:
        
        http://capitalismmagazine.com/2014/12/altruism-means-self-sacrifice-not-benevolence/
        [ link to this | view in chronology ]
Ninja (profile), 23 Sep 2015 @ 4:55am

He already got what he wanted (if the conspiracy theories are right) so it doesn't matter anymore, right?

Besides, I've been seeing it in food prices: throw the price through the roof, let outrage ensue, scale prices back to slightly more than normal. People rejoice prices are back down but don't realize it is significantly higher than before the massive hike.
[ link to this | view in chronology ]
- John85851 (profile), 23 Sep 2015 @ 7:50am
  
  Re:
  I was just about to say this.
  
  The same thing happens to gas prices:
  Starting price: $2.00 a gallon.
  Then prices go to up to $2.50 because of "reasons".
  People complain.
  Then the gas companies "bow to public pressure" and reduce the price to $2.25.
  People rejoice because they "won" because they got the big gas company to lower the price.
  
  Yet the price is still higher than it was before this started. Sure, it's not as high, but the company is still making more money.
  [ link to this | view in chronology ]
- Anonymous Coward, 23 Sep 2015 @ 7:51am
  
  Re:
  Why not it worked for oil and gas.
  [ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 5:03am

And this is why countries that aren't in the grip of Pharma companies either negotiate drug prices or allow the importation of cheaper ones
[ link to this | view in chronology ]
- Anonymous Coward, 23 Sep 2015 @ 6:55am
  
  Re:
  What? - allow competition in the marketplace?
  You a commie or something? wth!
  
  /s
  [ link to this | view in chronology ]
Capt ICE Enforcer, 23 Sep 2015 @ 5:06am

Justice system
Wish we could press criminal charges against companies and CEO who do this. After all, instead of extortion it seems to me that murder would be more appropriate. Think of the choice these companies give. 1) Pay us a ton of money and lose your house, put your kids in the street lose any hopes of retirement and struggle for the rest of your life. 2) Die!
Yup criminal charges
[ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 7:00am

The whole thing was a ploy to short biotech stocks.
[ link to this | view in chronology ]
- Anonymous Coward, 24 Sep 2015 @ 5:56am
  
  Response to: Anonymous Coward on Sep 23rd, 2015 @ 7:00am
  This reeks of a reverse pump and dump. If he traded any pharma stocks during this circus, the SEC could have a field day with him, if they choose.
  [ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 7:15am

He is a greedy scumbag!
[ link to this | view in chronology ]
- sorrykb (profile), 23 Sep 2015 @ 10:58am
  
  Re:
  Let's not all jump on the criticism bandwagon.
  Sociopaths have bills to pay too, you know.
  [ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 7:16am

R&D on a 60+ year old drug , I find it hard to believe , my guess is Turing will add a few dashes of food coloring and smack a unicorn sticker on the bottle and say "Look we created a Rainbow".
[ link to this | view in chronology ]
techflaws (profile), 23 Sep 2015 @ 7:23am

Seem to have missed this somehow so here it goes: if the patent's expired long ago, what's hindering anyone to import the generic drug that's being sold in India for < 1 USB/pill?
[ link to this | view in chronology ]
- Anonymous Coward, 23 Sep 2015 @ 7:30am
  
  Re:
  US laws, which limit drug distribution to US based companies, and the necessity to get FDA approval for a generic version.
  Welcome to the world run by corporations for the benefit of corporations; where laws and regulations are used to protect the incumbents.
  [ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 7:37am

You'll get pie in the sky, when you die...
[ link to this | view in chronology ]
John85851 (profile), 23 Sep 2015 @ 7:53am

Price it out of the market
Or alternatively, this guy could be even more of a jerk and find a price point that's still high for patients, but too low to make it un-profitable for other drug companies to make a competing drug.
And even then, how long will it take for a competitor to make their own drug- 2 or 3 years or longer? In the meantime, the guy enjoys the monopoly the previous company created by selling the drug for such a low price.
[ link to this | view in chronology ]
Jigsy, 23 Sep 2015 @ 8:40am

As time goes on, people are becoming more and more like the Ferengi.

And to quote the 23rd rule of Acquisition: "Nothing is more important than your health... except for your money."
[ link to this | view in chronology ]
capitalmonger (profile), 23 Sep 2015 @ 8:41am

Just in case anybody wants to express their support for the scumbag that runs Turin Pharmaceuticals, the domain name "Martin Shkreli Is A Greedy Pig.com" is still available!!!!
[ link to this | view in chronology ]
Anonymous Coward, 23 Sep 2015 @ 9:18am

would this have been gotten away with if it were over a product that those that make these ridiculous laws or do you think there would have been something else happen?
i dont blame the guy for trying to make money, but not like this. i also think that the fucking plums that continuously make laws that basically just screw ordinary people to the wall should be brought to account! they sure as hell wouldn't be so keen to do this sort of thing if it affected them!!
[ link to this | view in chronology ]
dogwitch (profile), 23 Sep 2015 @ 2:07pm

the drug that pharma need is money... they dont care about anything else....
[ link to this | view in chronology ]