This past August, American consumers were shocked to learn about a CEO named Martin Shkreli; in his short period of relative anonymity this year, Shkreli managed to raise the price of a life-saving drug from $13.50 per pill to $750 overnight.
Shkreli, former hedge fund manager and current CEO of Turing Pharmaceuticals AG, recently purchased the rights to a drug called Daraprim. This medication has been around for 62 years and is used by an estimated 2,000 American patients each year, according to Bloomberg; it treats a parasitic infection called toxoplasmosis which affects HIV/AIDS patients.
As the Wall Street Journal noted, all of this publicity has caused widespread public outrage about drug prices, which has led to increased pressure on lawmakers to make some changes — any changes — in order to lower prescription drug costs.
However, this will require an in-depth look at the country’s legislation on prescription drug pricing because, as the Huffington Post reminded readers, it’s completely legal for a pharmaceutical company to jack up the prices of a drug it manufactures. For the first 20 years that a drug is on the market, the manufacturer is given “manufacturing exclusivity” before a generic drug can come along under the Abbreviated New Drug Application at a much lower cost, thereby driving down the price of the name brand drug.
For diseases and medical conditions that affect few patients, however, pharmaceutical companies often don’t bother to invest in a separate generics manufacturing approval process. For a drug like Daraprim, this exclusivity rule doesn’t apply to Turing’s ridiculous price increase — but Shkreli’s decision to raise the price of Daraprim by over $700 has brought attention to the fact that pharmaceutical companies are protected quite thoroughly under U.S. legislation.
Changing this legislation isn’t likely to happen in a matter of weeks, or even months; it could take years for the pharmaceutical company lobbyists to negotiate an amended law with politicians in Washington.
In the meantime, the local businesses involved in the healthcare industry will likely face the brunt of the costs. As fewer people are able to afford their medications — even when they have health insurance plans — fewer customers will be visiting their pharmacies and making purchases.
Although pharmacies are able to track drug prices on specialized pharmacy software, patients and prescribing doctors rarely pay much attention to the pre-insurance prices — until the prices increase substantially and insurance companies decide not to foot the bill.
It seems inevitable that prescription drug spending will decrease eventually — but the path to get there may be more difficult than anticipated.