The pharmaceutical extortionist made excuses for a long time and tongue-tied, and lied all the time (With)

Democratic presidential candidate Hillary Clinton recently included in her campaign platform a proposal to restrict the freedom of pharmaceutical companies to sharply raise prices for the medicines they produce. Clinton accused drug manufacturers of shamelessly profiting from the sufferings of patients. 

Here is a fragment of one of Hillary Clinton's recent speeches:

– It has come to the point that we sometimes have to pay not even hundreds, but thousands of dollars for one pill. Something is clearly wrong here, the free market does not work in this way. It's just that the dodgers, it seems to me, mercilessly exploit the unfortunate.

The presidential candidate proposes to set a limit on the costs of prescription drugs – $ 250 per month. Insurance companies will have to cover expenses in excess of the limit in case of chronic diseases out of their own pocket or by increasing payments from other categories of policyholders. Clinton promises that her initiative will spur competition among manufacturers of cheap analogues of expensive branded medicines, the so-called "generics". And, finally, the leader of the Democrats is in favor of the state using its position as the largest buyer of medicines on the market in order to force manufacturers of medicines to significantly lower prices for that part of their products, which are purchased by about 40 million pensioners.

Even critics of the Clinton initiative, both Republicans and Democrats, agree that "the free market does not work in this way". Says Avik Roy, an analyst at the Manhattan Institute:

– There are two reasons why medicines are so expensive in America today. First, the federal health supervision has complicated the procedure for approving new drugs so much that manufacturers spend absolutely astronomical amounts on promoting their products through bureaucratic slingshots – an average of two billion eight hundred million dollars. At the same time, Clinton did not say a word about the reform of the mechanism for approving medicinal novelties. The second reason for the high cost: the quasi-monopoly position of the state in today's America in the medical services market. The state obliges all Americans to purchase health insurance and at the same time requires insurance companies to cover the bottomless costs of citizens for medicines. Therefore, it is not surprising that in this situation pharmaceutical companies raise prices. The time is right now to introduce genuine market incentives, not Hillary Clinton's ideas, to encourage manufacturers to develop cheaper drugs.

Americans are sensitive to their own health and are well versed in the intricacies of health insurance, otherwise Clinton would hardly have come up with such a seemingly exotic initiative already at the initial stage of the election race. Nevertheless, her proposal would never have received such loud publicity if it had not coincided with an event that has, offhand, all the signs of a scandal: former hedge fund manager Martin Shkreli, founder of the startup Turing Pharmaceuticals, acquired the rights to the drug daraprim for $ 55 million last month and immediately raised the price from 13.5 to $750 per pill. For those who take this remedy constantly, additional costs threaten to turn into hundreds of thousands of dollars. Daraprim is prescribed for toxoplasmosis, a parasitic disease that threatens the lives of infants born to mothers who became infected during pregnancy, or for damage to the immune system that occurs in patients with AIDS and certain types of cancer. Infectious disease specialists have sounded the alarm due to the fact that hospitals will have to replace daraprim with another, less effective drug. The danger signal was picked up and reinforced by AIDS patients and the clinics where they are treated, forming a powerful public lobby in the United States.

Americans are used to the high cost of new, branded medicines protected by patents, whether for hepatitis C, high cholesterol or cancer. Recently, however, prices for "generics" have also begun to rise significantly (these are, again, cheap analogues of old drugs that are allowed to be produced after the expiration of the patent for the original drug). These include daraprim, which was born 62 years ago. Cycloserine, the so-called "backup" anti-tuberculosis agent. Until recently, it cost 500 dollars for thirty tablets, today the price has soared to 10 thousand 800 dollars. The semi-synthetic antibiotic doxycycline has increased in price from $ 20 for a bottle with 30 capsules to $ 1,849. The Congress asked the manufacturers about the reasons and found out that the problem was the shortage of the drug that had become more expensive and the need to recoup investments in the creation of additional capacities for its uninterrupted production. In addition, poor patients allegedly receive these drugs for free. Or for a nominal price of one dollar.

According to the main person involved in the scandal, Martin Shkreli, daraprim is used so rarely that the impact of the increased price on the healthcare system as a whole will be microscopic. And that he, Shkreli, will use the profits to develop better treatments for toxoplasmosis, with fewer side effects. According to Shkreli, most of the patients have been using daraprim for less than a year, so the current price for it is comparable to the prices of drugs for other rare diseases.

The businessman accepted an invitation to speak on CNBC and was subjected to a very tough interrogation by two bullying presenters. "You claim that you inflated the prices of daraprim in order to finance the development of a new, more gentle version of the drug, but we just talked to an AIDS specialist and he assured us that there is no need for an improved version of daraprim." That's what Shkreli replied:

– This is not true. Doctors have just reported two more deaths from autoimmune encephalitis. The medicines available today are very far from perfect, they kill microbes by binding their folate receptors, there is nothing else more advanced in our arsenal. The treatment of toxoplasmosis requires new tools, which we are working on.

– These two deaths, which you are talking about, according to our sources, were the result of a late diagnosis, rather than the imperfection of the drug. Be that as it may, the standard business practice in such situations is to find investors who will finance the creation of a new drug, unwillingly raise the price of an existing drug by two and a half thousand times, which has no replacement, and ruin patients who are forced to take it.

– We did so, having collected investments worth about $ 90 million; this is a kind of record for a startup in the field of biotechnology. I want you to know that even after the price increase for daraprim, it costs about the same as other so-called "orphan" medicines, the demand for which is very low due to the rarity of the diseases in which they are prescribed. And we are by no means the first pharmaceutical company to raise the price of an "orphan" medicine.

– Did you really assume that nothing would happen to you after Hillary Clinton bumped into you? It shook up the entire biotech industry, the index of stocks turning around in this market segment dropped by five percent.

– The words that Clinton uttered had a great public response. Certainly. But she could have much more reason to attack very profitable, multibillion-dollar firms that have done the same thing as us. Although, strictly speaking, they did not need a higher price, unlike our Turing Pharmaceuticals, which is still unprofitable.

– Well, look: a lot of biotech companies have learned to survive in an unprofitable format for a very long time before entering the market with a new drug and starting to earn. Their example is not a decree to you?

– Turing Pharmaceuticals is a pharmacological company, not a biotechnological one. This is by no means the same thing. And it won't be easy for you to convince me that the pursuit of early profitability is a flawed business model.

"Access to daraprim has become dramatically easier,– Shkreli said. "And a good half of what we produce is donated to patients." Nevertheless, doctors have raised a cry that they are forced to strictly save the drug, because their patients do not have money for it. The doctors' cry and Clinton's shout forced Shkreli to back down: he announced that he would lower the price of daraprim, but did not specify how much. The manufacturer of cycloserine also capitulated, which returned the price to the original 500 dollars for thirty tablets from a height of 10 thousand 800 dollars.

If you look at the dynamics of income from the sale of daraprim in the United States over the past five years, it can be seen that receipts grew rapidly at the same time that the number of prescriptions prescribed for this drug decreased or remained unchanged. The answer lies partly in the increase in the consumption of the drug in hospitals, where it is issued without a prescription.

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05.10.2015