Techdirt has been covering India's complex relationship with pharma patents since at least 2009. In particular, we've been following for years India's use of compulsory licenses to provide its people with access to life-saving drugs at affordable prices. Naturally, Big Pharma companies in both the US and EU hate that, not least because it might encourage other countries to do the same. As a result, the US pharmaceutical industry in particular has been applying political pressure to get India to stop using compulsory licenses, even though they are a perfectly legitimate policy tool under the WTO TRIPS Agreement. Two years ago, Techdirt noted that India was already becoming more cautious on the compulsory licensing front, and a new report from Reuters suggests it may finally have bowed to US pressure:
India has given private assurances that it will not grant licences allowing local firms to override patents and make cheap copies of drugs by big Western drugmakers, a U.S. business advocacy group said.
The comments were revealed in a submission last month by the U.S.-India Business Council (USIBC) to the U.S. Trade Representative (USTR), which is reviewing global intellectual property laws for an annual report identifying trade barriers to U.S. companies.
There's been no official confirmation from the Indian government of that decision, nor an explanation of why it has decided to give in, assuming it has. The Reuters article mentions the fact that India had been placed for two years in a row on the infamous Special 301 Report's "Priority Watch List". That's one of the favorite ways in which PhRMA, the Pharmaceutical Research and Manufacturers of America, tries to bully countries -- or even entire continents -- into doing its bidding. But giving up compulsory licenses just to stay off the Special 301 naughty step seems an incredibly high price to pay, for reasons explained by Knowledge Ecology International (KEI):
"If such an agreement [between the Indian government and the US drug industry] in fact exists, this is extremely troubling news ... this sort of pressure is basically a declaration of war on poor cancer patients," KEI said in its own submission to the USTR last week.
Given the USIBC document that Reuters says it has seen, it seems likely that the Indian government has indeed given some sort of assurance to the US companies. But the fact that it has been kept quiet shows that the politicians are fully aware of how unpopular the move will be once the Indian public finds out about it. That provides some hope the policy could be reversed if enough people in India start complaining, as happened recently with software patents.
In 2015, an estimated 1.6 million patients were diagnosed with cancer and over half a million died from it. We've previously pointed out some cancer research that could lead to promising new treatments, and it looks like we're making significant progress in the fight against the many forms of this deadly disease. Using the body's own immune system to fight cancer is a growing strategy that seems to be working. Check out a few of these minor successes.
When last we checked in with the internet's least-liked human being, the CEO of Turing Pharmaceuticals was backpeddaling on his promise to lower the cost of the AIDS and cancer fighting drug Daraprim, and hiding it ahead of the Thanksgiving holiday in the hopes that fewer people would notice (it worked relatively well). CEO Martin Shkreli, you'll recall, increased the price for Daraprim from $13.50 per pill to $750 -- a 5000% or so mark up for a sixty-two-year-old medication. Shkrelli brought renewed attention to the skyrocketing prices of generics thanks to (ab)using restricted distribution to deny samples to generics manufacturers.
But there may be a small ray of sunshine in what's an otherwise dismal tale of greed. Prescription drug manager Express Scripts has indicated that the company will soon promote use of a compounded medicine that contains the same active ingredient as Daraprim, and offer it at a fraction of the price. Express Scripts manages prescriptions for tens of millions of Americans and will be pushing the compounded alternative made by Imprimis Pharmaceuticals. The new compounded alternative includes Daraprim’s active ingredient, pyrimethamine, as well as leucovorin, included to treat side effects.
"Compounded drugs are customized formulations made by pharmacies for particular, named patients. That requirement restricts how directly Imprimis can compete with Turing. For instance, hospitals cannot stock the compounded version to use for patients coming to the emergency room.
Imprimis, which is publicly traded, is not allowed to make a direct copy of Daraprim. So its capsule contains both pyrimethamine and leucovorin, a drug that is often prescribed with Daraprim to ease certain side effects. If a doctor writes a prescription for Daraprim, Express Scripts or pharmacies cannot substitute the compounded drug produced by Imprimis. So physicians will have to write a prescription specifically for the compounded drug and fax it to Imprimis."
It's a bit of a cumbersome tap dance (so glad we're still using faxes in the age of gigabit fiber), but at least it's an alternative. Impremis has stated it plans to offer the compounded drug for as low as 100 capsules for $99. Express Scripts in turn will help speed delivery of the cheaper option, working with the Infectious Diseases Society of America and the HIV Medicine Association to inform medical professionals about the alternative. Turing has so far responded by telling media outlets that "in addition to being potentially unsafe and ineffective, the compounded product is unnecessary."
Granted, the actual impact may still be low; Express Scripts states it only had 350 patients who used Daraprim last year. Still, it's the principle of the thing, and it's nice to see the market -- even if it has to jump through hoops to do so -- giving Shkreli and Turing a few quick kicks to the shins.
When last we checked in with Martin Shkreli -- founder of Turing Pharmaceuticals and the personification of everything that's wrong with the pharmaceutical industry and mankind -- he was feebly defending his company's decision to jack up the price of a 60-year-old medication some 5000%. Shkreli became America's least liked human being after his company increased the price per pill of Daraprim (used by both AIDS and cancer patients) from $13.50 per pill to $750 per pill. After relentless criticism, Shkreli appeared to backpedal, claiming last September the company would lower prices:
"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."
Yeah, or not.
Hoping to bury any criticism ahead of the Thanksgiving holiday, Turing released a dodgy press release on Wednesday implying the company had finally seen the error of its ways and would be reducing the cost of Daraprim. Except it's not actually doing anything of the sort. While the company will offer hospitals a 50% discount (now only a 2500% mark up) and is engaging in a few superficial efforts most companies already offer via their patient assistance programs, the press release buries the lede in that the core price of Daraprim isn't going anywhere.
And, just to add insult to injury, a company spokesman insists that's a good thing because (I kid you not) lower drug prices don't benefit patients:
"Drug pricing is one of the most complex parts of the healthcare industry. A drug's list price is not the primary factor in determining patient affordability and access. A reduction in Daraprim's list price would not translate into a benefit for patients."
There's nothing complex about being a raging asshole. There's also nothing complex about a former hedge fund manager jacking up the price of an essential drug 5000% (as is happening with many previously-inexpensive generics), pretending he'd seen the error of his ways, then feebly trying to hide his total lack of integrity ahead of a long holiday weekend.
Here on Techdirt we often write about pharmaceutical companies doing what they can to string out their drug monopolies as long as possible, sometimes resorting to quite extraordinary approaches. But whatever tricks they use to extend their monopolies, one day those end, and at that point generic manufacturers can make the drug in question without needing a license. You'd think governments would be delighted by the downward pressure this exerts on prices, since it means that they can provide life-changing and life-saving treatments much more cheaply. But last week, we had the bizarre spectacle of a UK government health minister filibustering a Bill that would have encouraged doctors to prescribe more off-patent medicines. As the Independent newspaper reports:
A Conservative health minister has deliberately blocked a new law to provide cheap and effective drugs for the [UK's National Health Service] by championing medicines whose patents have expired.
Alistair Burt spoke for nearly half an hour to "filibuster" the proposed Off-Patent Drugs Bill, a plan that had cross-party support from backbenchers.
The Off-Patent Drugs Bill attempted to address a particular problem that off-patent drugs suffer from. Although anyone can manufacture and sell them for their original purpose, more innovative uses require a new license for that application. Since the drugs are off-patent, the profit margins are lower, and generic manufacturers are reluctant to pay for the re-licensing process. An article in the online law journal "Keep calm and talk law", reporting on an earlier unsuccessful attempt to have off-patent drugs used more widely, gave the following examples of how cheap drugs could have a major impact:
Simvastatin was originally licensed for treating individuals with high cholesterol and although recently shown to slow brain atrophy in later stages of multiple sclerosis by over 40 per cent, it has not been relicensed for that purpose. Further, Lixisenatide and liraglutide, two common diabetes drugs, have been found to have a use in the prevention of Alzheimer's but is now also off patent.
The Bill in question would have required the UK government to carry out the re-licensing, thus allowing generic manufacturers to market the cheap off-patent drugs for new treatments. But the UK government minister rejected this approach, saying "there is another pathway", without spelling out what that might be. Perhaps he had in mind the possibility of prescribing off-patent drugs "off label", which in theory is an option open to UK doctors. But doing so means they would assume the legal responsibility for both negligent and non-negligent harm to the patient -- something that many are understandably reluctant to do. However, the "Keep calm and talk law" article offers a possible solution to that problem:
the introduction of a charitable organisation which would insure doctors against any negligence claims resulting from the prescription of specified off-patent drugs for unlicensed purposes. This could reassure doctors enough that they would more readily prescribe some useful off-patent drugs such as the examples given above. Although much research would still need to be done into whether a charity such as this could work in reality, in principle this is a solution which seems sensible.
It's possible that the UK government minister had precisely this approach in mind when he unceremoniously blocked a Bill that was trying to save both lives and money. But it's hard not to suspect that his "another pathway" might turn out to involve lots more lucrative pharma patents instead.
When Turing Pharmaceuticals jacked up the price of a toxoplasmosis-fighting drug (commonly used by AIDS and cancer patients) to $750/pill (a previous company sold it for $1/pill), CEO Martin Shkreli defended the move, saying the money would be dumped into research for a new and better drug. Of course, this is the usual defense offered by any pharmaceutical company that institutes a rate hike, but these claims are rarely followed through on. (And when they are, the R&D costs tend to be very overstated.)
Daraprim has been on the market since the 1950s and does its job well. The patent has long expired but the FDA's policies make it difficult for anyone to formulate a generic version of this "sole supplier" drug. When there's no competition, it's a seller's market, and Martin Shkreli is making the most of it.
This pirce hike set off a wave of backlash that included several presidential candidates. So, Shkreli hit the airwaves, promising to walk back the price to something more reasonable, whenever he got around to it. What he considered "reasonable" was never explicitly stated and, to date, the price has yet to come down. Now, another company is stepping in to offer patients something much more affordable. (via MetaFilter)
Turing CEO Martin Shkreli became “the most hated man in America” last month after raising the cost of the drug, commonly used to treat parasitic infections in immunocompromised patients, from $13.50 per pill to a staggering $750 per dose, claiming the company’s exorbitant price hike was justified. Now Imprimis will offer their alternative to those who need Daraprim for less than $1 per tablet.
Imprimis is now offering customizable compounded formulations of pyrimethamine and leucovorin in oral capsules starting as low as $99.00 for a 100 count bottle, or at a cost of under a dollar per capsule. Compounded medications may be appropriate for prescription when a commercially-available medicine does not meet the specific needs of a patient.
There's more detail in the disclaimer towards the end of the press release.
Imprimis' finished compounded drug formulations do not have an FDA-approval label for recommended use. Imprimis compounded formulations are not FDA approved and may only be prescribed pursuant to a physician prescription for an individually identified patient consistent with federal and state laws governing compounded drug formulations.
So, those looking for a cheaper variant of Daraprim will have to find a physician willing to prescribe a drug that doesn't have the FDA's blessing for this particular use. The compound will likely work as well as Daraprim, but it does open doctors up to additional liability. That being said, some doctors may be willing to do this as the only other option for some patients will be no medicine at all.
The other problem is that the FDA could come down aggressively on pharmaceutical companies who market drugs for non-FDA-approved purposes. Imprimis is exploiting a loophole in the system, albeit one much more easily closed than the FDA's loophole-esque sheltering of "sole supplier," off-patent drugs -- the sort that most often see astronomical price hikes post-acquisition.
But for now, it's the market system at work -- the same market system Shkreli used as a justification for raising Daraprim's price. Zero competition led to Turing's $750/pill price. A little competition might push Shkreli to drop Daraprim's retail price lower than he actually wanted to. (And, again, no price drop has been instituted at this point.) But given Shkreli's past use of the FDA as his unofficial partner in stock-shorting moves, it's far more likely he'll be asking the agency to eject his new competitor from the playing field.
With the conclusion of the negotiations for the Trans Pacific Partnership (TPP) agreement now in place, there has been some ridiculous whining from the pharmaceutical industry which got almost everything it wanted in the agreement, but wasn't quite able to get a few things, including a 12 year patent-like exclusivity on biologics. And, because of that hissy fit, apparently, the USTR and its counterparts in Australia and Canada have agreed to help out Big Pharma in another arena. Jamie Love is reporting that this week there's a meeting at the WTO this week to explore granting a special exemption on patent rules for developing nations (i.e., those who often need drugs the most, while also being the least likely to be able to afford them). It's silly to enforce patents in these countries, because doing so would not only lead to almost no business at all, but (more importantly) because lots of people will die or, at the very least, suffer needlessly.
But, because Big Pharma is upset about the TPP, the USTR and others have decided that they "can't" agree to anything that might upset Pharma. Talk about a bunch of captured government officials...
On Friday, 9 October 2015, Ambassador Punke met with representatives from 15 countries (including 5 Ambassadors) from the LDC Group. Ambassador Punke clearly indicated that the US could not agree on an indefinite exemption because certain stakeholders in the United States were quite upset with concessions made by USTR during the final stages of the Trans-Pacific Partnership (TPP). Informed sources noted that the US indicated that "the TPP did not deliver as expected on IP and so we are under a lot of pressure not to give in more on IP."
How far the pharma industry has come from the days when George Merck declared: "We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been."
And, really, how do the folks who work at the USTR sleep at night knowing that they're doing this for no reason other than to help out the profits of a few giant companies at the expense of the public?
We've mentioned before how yeast can produce a bunch of useful stuff, beyond bread and beer. Synthetic biology promises to give us engineered microorganisms that can make almost any specialty chemical or even some biofuels. Brewing medicine might not be too far away, and it might be incredibly difficult to control "controlled substances" in the very near future.
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.
“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.
Martin Shkreli -- founder of Turing Pharmaceuticals and overnight poster boy for everything that is wrong with the pharmaceutical industry -- spent a lot of yesterday defending his 5000% price hike on Daraprim, a drug that treats victims of toxoplasmosis. That the drug has a nexus with cancer and AIDS sufferers (basically anyone with a diminished immune system) made the price increase seem even more unconscionable.
He claimed raising the price from $13.50/pill to $750/pill was done in the interest of the same people who would likely find it suddenly prohibitively expensive to take the drug.
“With these new profits, we can spend all of that upside on these patients who sorely need a new drug in my opinion.”
Dr. Wendy Armstrong, professor of infectious diseases at Emory University, questions Turing’s claim that, after more than 60 years of physicians using Daraprim, there is a need for a better version of the drug.
“I certainly don’t think this is one of those diseases where we have been clamoring for better therapies,” says Armstrong.
Next, there's the inherent ridiculousness of this assertion, which portrays Turing's plans for Daraprim as a reverse pyramid scheme, in which future "investors" will benefit from the gouging of those who got in on the ground floor.
On top of that, Shkreli claims the drug is still underpriced, despite having been sold for $1/pill before its acquisition by the company Turing acquired it from.
While it's true that drug research and development can be expensive, it is nowhere near as costly as this price hike would indicate. Shkreli tossed out the easily-debunked claim that it costs $1 billion to bring a new drug to market. The actual cost is considerably lower (~$55 million), according to research using the same data drug companies provided to backup their claims of $1.3 billion in R&D costs per new drug.
Data also shows pharmaceutical companies spend far more on marketing than research and development. They have to. Most "new" products on the market aren't actually new. They're just variants on what's already available. It's tough to sell a "new" drug that doesn't outperform a competing product, hence the increased marketing expenditures.
Shkreli also used a variant of "everyone else is doing it" to defend the price jump. He pointed to the existence of other cancer drugs costing "over $100,000" per treatment as justifying Turing's price increase. But being slightly less exortionate than competitors isn't the same thing as being "good."
Shkreli has little interest in being good, no matter what altruistic assertions he makes. His former company -- from which he was ousted over accusations of stock price manipulation -- also jacked up the price on an essential drug just because it could.
When Retrophin acquired rights to Thiola, the drug cost about $1.50 per pill. [Patients take multiple pills per day.] Now, Retrophin has decided to charge more than $30 for the same Thiola pill. Retrophin says it has plans to change the Thiola dose and develop an extended release version of the drug, but I have seen none of those changes yet. To my knowledge, Retrophin hasn't yet done any of this work -- except to drastically increase Thiola's price.
And indeed, Retrophin never did. From a 2015 presentation, it's generating sales for Retrophin, but nowhere in it is any indication the company is actually working towards an extended-release version of the drug.
I asked Shkreli about this and he claimed the company ditched the R&D plans after it ousted him. Maybe this is true, but it doesn't exactly instill any confidence in Shkreli's latest claims that price hikes are being done with an eye on increased R&D spending. Instead, they look like nothing more than the normal deflection performed by drug companies after controversial price increases.
Other circumstantial evidence does little for consumer confidence. Not only is Shkreli being sued by his former company for fraudulent behavior, he's previously been taken to court (by Lehman Brothers) for a $2.3 million loss he incurred (but never repaid) when his bet on a market decline went south. The complaint accuses him not only of failing to pay Lehman what was owed, but of pushing through the transaction without actually possessing the funds to cover the original purchase.
Shkreli also has a history of thriving on market failure. He has made money shorting pharmaceutical stocks while simultaneously engaging in questionable behavior. Here's a "treatise" he wrote detailing the negative aspects of one company's research efforts, which clearly states at the top of each page (for legal reasons) that he stands to personally gain if the company's stock price drops.
DISCLAIMER: The authors of this article have a conflict of interest and will benefit financially if the stock price of VTL falls. The authors reserve the right to change their investment if the price of VTL changes dramatically. Please read the Disclosure at the end of this paper for more information.
(This was tracked down from a deleted tweet by Martin Shkreli. Other Twitter users had commented on it, so it was recoverable from Google cache. Here's a screenshot, because the cache won't stay live for long.)
But he's also been accused of actions that are more than simply treading the edge of legality. A heated Twitter exchange implies Shkreli talked the FDA out of a drug approval -- something that hurt the company producing the drug, but paid off for Shkreli's stock short.
Shkreli's history does little to back up his assertions of altruistic goals and a future full of well-funded research and development. Instead, it shows someone who's willing to exploit every last dollar out of something and leave its dessicated corpse behind.
What he has done is anger the "community" he's a part of. Drug prices were already being subjected to the scrutiny of crusading legislators. Now, drug prices are no longer under the Congressional microscope. They're also being projected onto the Jumbotron that is social media. No less than presidential candidate Hillary Clinton offered up her view on the price hike, promising a plan to address the problem.
On top of that, share prices for several drug companies fell the day the Daraprim price hike went viral. That this may have worked out well for Shkreli can't be ignored, considering his prior experience with shorting pharmaceutical companies. Maybe this was part of the plan: Short pharma stocks. Jack price up on newly-acquired drugs. Play the villain while cashing in on the market decline.
That's all speculation, of course. What is certain is that Martin Shkreli is not THE problem. (He's not even "Big Pharma," even though several editorials have placed him in this group.) He's part of the problem, but his specific actions are more about exploiting obscure drugs that competitors aren't interested in. His actions shed little light on the genesis of high drug prices.
The original issue is patents. That has been mostly ignored by legislators and opinion pieces during the most recent push for some sort of drug pricing controls. And it will continue to be ignored because Daraprim's price hike is completely unrelated to patent monopolies. Turing's exclusive license for Daraprim includes only the use of the trademarked name. The patents have expired. Anyone can make it, but no one's been particularly interested in offering an alternative. (Maybe this will change now that a company has a chance to take on the villain du jour…)
But it's patents that make drugs unaffordable in the first place. New drugs are given, at minimum, 20 years of competition-free sales. That's two decades (at least) where drug companies can charge whatever they want because no one else can offer a competing product. Companies -- like Shkreli -- will claim they need this exclusivity to recoup "massive" research and development costs. But this simply isn't true. Pharmaceutical companies enjoy massive profit margins, much more than would be expected if they were faced with meaningful competition. The lie is exposed when patents expire. Prices fall dramatically once the market is opened, including that of the original manufacturer's.
So, if the government really wants to tackle the problem of overpriced drugs, it needs to start with the protections it grants that allow this to happen. But this seems unlikely to happen because drug companies have significant "buying power" when it comes to legislation, no matter how many people come forward to testify about being priced out of essential treatments.
Shkreli, however, is specializing in finding "orphan drugs" -- drugs for rare conditions that are no longer under patent protection (which would raise the acquisition price significantly) but which have seen little to no competitive movement over the years. His decision to implement a 5000% price increase, despite minimal costs (and benefiting from R&D performed 60 years ago), is one he can make because there's no market force in place to stop him. So, he may be the poster boy for everything that's wrong with the pharmaceutical industry, but he's not really indicative of the ongoing problem.
What he is, however, is an opportunist with a hedge fund background and a history of market exploitation. Any claims of altruism or searches for better treatments should be met with intense skepticism.
