The current debate over expensive prescription drugs caught fire after a notorious 2015 episode, when the price of a cheap, lifesaving drug was jacked up by more than 5,000 percent and the pharmaceutical executive behind it seemed to revel in the outrage over his decision. 

The drug was Daraprim, used to treat a parasitic infection, toxoplasmosis, that can be fatal, particularly in immunocompromised patients like those with HIV/AIDS or pregnant women. The manufacturer’s young leader — Martin Shkreli, who earned the moniker “Pharma Bro” because of his brash social media presence — had more experience in investing than in drug development.

Congress and, later, President Donald Trump used the public shock sparked by that incident to push to lower drug prices more broadly. Little was implemented, though, and the drug still appears to cost as much now as when the controversy occurred. 

Professor Michael Carrier of Rutgers Law School, who has testified before Congress on the issue of anti-competitive behavior in the pharmaceutical industry, notes that huge price hikes could still happen today.

“It’s possible for a company to acquire the rights to an off-patent drug and significantly increase price,” he said. “If it’s a small market, generics might not find it profitable to enter.”

After years of executive and legislative pushes for the Food and Drug Administration to prioritize generic drugs, a copycat version of Daraprim was finally approved earlier this year. 

Eye-popping prices

The controversy brought congressional scrutiny to other companies that employed similar practices and highlighted ways that drugmakers could act in an anti-competitive manner, which left rare-disease patients particularly vulnerable. 

In 2015, Daraprim only cost $13.50 per pill when the company, Turing Pharmaceuticals, acquired the rights to it. In September 2015, Turing hiked the price to $750 per pill. A standard course of treatment could be around $60,000. 

The company, now Vyera Pharmaceuticals, didn’t reply to an inquiry about Daraprim’s list price, but the price still appears to be $750 per pill. 

The generic Daraprim, pyrimethamine, was approved by the FDA in March. The list price is around the same as the brand-name version, according to the website GoodRx. With coupons, the generic can be acquired more cheaply —  around $183 per pill, or more than $16,000 for a course — but is still more than 13 times higher than the original brand-name price five years ago.

Vyera has vowed to provide it free to the uninsured and said many insured patients should be able to acquire it for a $10 copay. But the list price still matters, as some patients, including seniors on Medicare, often have to pay a percentage of a drug’s total price. And insurers’ costs are closer to the full price, which later can raise consumers’ premiums. 

Daraprim wasn’t the only old drug that underwent shocking price hikes around the same time. The company formerly known as Valeant Pharmaceuticals, now Bausch Health, faced similar scrutiny for increasing the prices of blood pressure and heart disease medications by 3,100 percent and 6,700 percent, respectively, from 2012 to 2015. More well-known products — like insulin for diabetes, Naloxone for opioid overdoses and the EpiPen for serious allergic reactions — also saw well-publicized price increases. 

When an original brand-name drug loses its patent protections, generic versions may enter the market and compete for sales based on lower prices. But when there are relatively few patients — such as for toxoplasmosis, which affected around 2,000 patients in 2015 — the market often doesn’t work that way. 

Development of generics

Immediately after the Daraprim controversy and through the start of the Trump administration, policymakers focused on how to encourage generic competition that could potentially deter price increases. 

In 2017, the Food and Drug Administration said it would prioritize reviews for new generics until there were three approved for a given branded product. It also began putting out a list of off-patent products with no competition.

Later that year, Congress codified those policies and created a new designation for those drugs known as “competitive generic therapies” as part of a broader FDA law. That type of product would get a speedier review and a 180-day period of exclusive sales if it was the first new competitor to emerge from review and go on the market. Since the law was enacted, 44 drugs have received that designation. 

As it happens, the company behind the Daraprim generic, Cerovene Inc., didn’t receive the competitive generic therapy designation.

In late 2019, a new law made it possible for generic firms to sue companies for preventing sample sales, a tactic Turing used to thwart potential competitors.

Earlier this year, the Federal Trade Commission and seven state attorneys general filed a lawsuit against Vyera and Shkreli. He no longer has an official role with the company, but the FTC alleges he still exerts influence from behind bars while serving a prison sentence for securities fraud stemming from another drug company he once ran. 

Even though the company has been able to keep Daraprim’s price high for five years, Carrier of Rutgers said the lawsuit could result in Vyera paying damages, and ultimately “could deter other companies contemplating this behavior.”