Big Pharma’s unprincipled price-gouging has earned itself an infamous place in the 2016 presidential election, with candidates on each side vowing to end the nefarious drug hikes. Though the practice has been ongoing for quite some time, it moved fully into the spotlight after former hedge fund manager Martin Shkreli, aka the “world’s most hated man,” raised the price of an infection-treating drug from $13.50 to $750 per pill.
In late December, Shkreli was arrested by federal authorities and charged with securities fraud. He made headlines once again after smugly pleading the Fifth Amendment before a congressional hearing, during which he smirked and giggled like a true narcissist, not giving one iota about the suffering he’s caused.
However, the upside to Shkreli’s despicable demeanor is that the controversial topic has now emerged as a focal point in this year’s election. Democratic presidential candidates Bernie Sanders and Hillary Clinton both called for the government to do something about pharma’s price-hiking. Though Shkreli has perfectly slipped into the role of the price-gouging bad guy, it’s the U.S. government that is the true culprit.
Why Congress is to blame for drug hikes
“In truth, people like Shkreli aren’t the real cause of the high drug prices that afflict American consumers,” reports the Los Angeles Times. “The reason that the U.S. leads the world in stratospheric drug prices is that government policy allows it. For example, the largest single pharmaceutical customer in the U.S., Medicare, isn’t permitted by law to negotiate drug prices with manufacturers.”
Additionally, “U.S. customers are forbidden to acquire their drugs in Canada or overseas, where they’re often cheaper. Reverse those policies, and the magic of price competition would begin to bring costs down.”
Presidential hopeful Donald Trump also entered the discussion about price hiking, recently voicing his support for allowing Medicare to negotiate cheaper drug prices. His and other candidate’s mention of the issue has sparked fears among pharma executives.
Jan Lundberg, an executive for Eli Lilly, “assured investors on his company’s most recent earnings call that to combat the rhetoric around drug prices, the industry maintains ‘an active dialogue with each of the candidates’ and will ‘work across party lines’ to influence policy,” the Intercept reports.
Pharma executives squirm
“James Hammergren, the chief executive of McKesson, which is the largest wholesale drug distributor in the nation, echoed the call for the industry to hold off on price hikes to avoid attracting unwanted scrutiny.”
“I would say that political discourse that’s taking place, and the congressional inquiries relative to pricing practices, I think are obviously going to have people at least pausing perhaps to consider whether now is the right time to take a price increase,” said Hammergren.
Attempting to avoid detection, other pharma companies are increasing drug prices on a smaller scale than they would have, had it not been for the recent controversy. For example, Biogen, a Cambridge-based biotech company, said they’ve recently increased the price on three drugs but at a “somewhat lower number” in an effort to avoid putting a “target” on their backs.
Recent drug hikes
Some of the most preposterous drug hikes include a move by Retrophin, a biotechnology firm started by Shkreli, that increased the price of a drug used to treat kidney stones from $1.50 a pill to $30.
Yet another company involving Shkreli, KaloBios Pharmaceuticals (where the young pharma tycoon purchased a “majority stake”), announced its intention to raise the cost of an anti-parasitic drug, used to treat Chagas disease (a tropical disease now spreading into America’s southwest), from a couple hundred dollars for a two-month supply to a price structure resembling that of hepatitis-C drugs, which can cost an upwards of $100,000 for a 12 week dose, reported Bloomberg.
But as the LA Times reminds us, “The Food and Drug Administration already has the authority to quell drug profiteering in generics… The agency could prioritize the approval process for competing generics to counter unwarranted price increases.”
It’s up to Congress to change its policies.