Senate committee targets Martin Shkreli, big pharma, over sky-high drug prices

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The leaders of the Senate Special Committee on Aging Wednesday targeted the Daraprim spike hike by Turing Pharmaceutical founder Martin Shkreli during the first of a series of hearings investigating abrupt and dramatic price increases in prescription drugs that are no longer protected by patents.

Committee Chairman Susan Collins, R-Maine, and ranking member Claire McCaskill, D-Missouri, singled out other examples of what Collins called "egregious" pharmaceutical increases, but Shkreli's bad boy persona continues to place him at the top of examples of pharma excesses.

Earlier this year, after buying the rights to Daraprim for a reported $55 million, Shkreli defended upping the price of a single tablet from $13.50 to $750, saying investment was needed to create a better alternative to treat toxoplasmosis, a parasitic disease that can be deadly for pregnant women and those with weakened immune systems, such as cancer, HIV and AIDs patients.

However, that decision came under such fire that Shkreli was forced to retreat and announce he would lower the price.

[Also: Turing Pharmaceuticals to cut Daraprim costs for hospitals only]

Shkreli's lavishness this week once again caught scorn on social media when it was revealed he paid $2 million to be the sole owner of the new Wu-Tang Clan album. The rapper group produced only one copy to be sold to the highest bidder.

"In North Carolina, doctors for a child diagnosed with toxoplasmosis were unable to get Daraprim -- the drug needed to treat that disease -- because Turing Pharmaceuticals had hiked the price by more than 40 times its original cost, forcing the local pharmacy to drop it from its inventory," Collins said during the hearing. "As a consequence, the child had to be treated with an alternative that had not been rigorously tested in children."

McCaskill said that at a Forbes healthcare summit last Thursday,  Shkreli lamented that he should have raised the price of Daraprim even higher.

"In 2005, a patient infected with toxoplasmosis could expect to spend $70 on a typical course of Daraprim," she said. "In 2010, a company named CorePharma, which was later acquired by Impax, purchased the rights to Daraprim and raised the cost of a course of treatment to roughly $900. In August of this year, the rights to Daraprim were once again sold, this time to Turing Pharmaceuticals. The new price tag for an average course of treatment? $50,000 -- an increase of more than 6000 percent since 2005."

[Also: Daraprim competitor to market $1 pill after Turing chief Martin Shkreli hikes price]

A doctor with the Department of Pediatrics at the University of Alabama said he wanted to get Daraprim to treat a baby about to be born to a mother with toxoplasmosis, but found it was unavailable in a form he could use.

Dr. David Kimberlin,  professor and vice chair for clinical and translational research at the Division of Pediatric Infectious Diseases, said he faced barriers of price and the fact that pyrimethamine -- the main ingredient in Daraprim -- could only be acquired in pill form in the outpatient setting through Walgreens Specialty Pharmacy privileged relationship with Turing.

The hospital needed the drug to be compounded to liquid form for it to be given to a baby.

"Our pharmacy cannot acquire the drug from the Walgreens Specialty Pharmacy due to restrictions in the sale of medications from one pharmacy to another, and this threatened to block our access to a liquid formulation that we would need," Kimberlin said. "When we contacted the Walgreens Specialty Pharmacy, we had concerns about Walgreens' experience in doing such compounding with pyrimethamine, so we were facing a situation where we might not be able to acquire the drug in a form that could be taken by a baby."

Another witness, Erin R. Fox from University of Utah Health Care, said her organization has been stung by other recent prescription drug increases.

[Also: Express Scripts to offer $1 Daraprim competitor to beneficiaries]

Nitroprusside and isoproterenol, which are critical medications for very sick patients, she said, went from $50 a vial each in 2013 to $215 for nitroprusside and $440 for isoproterenol in 2014 when Marathon purchased the products from Hospira. In 2015, when Valeant purchased these drugs, the prices again increased to $650 for nitroprusside and $2,700 for isoproterenol, Fox said.

"When we became aware of these new price increases, we calculated the potential impact to our inpatient pharmacy budget and discovered that if we continued to purchase the same amount of each drug, it would cost our organization just over 1.6 million dollars more for isoproterenol and approximately $290,000 more for nitroprusside compared to what we paid the previous year," she said.

Dr. Gerard Anderson, professor at Johns Hopkins University, said drug prices have increased as the pharmaceutical industry has consolidated over the last decade.

Proposed solutions to the price increases include expediting applications for generic drugs to increase competition and requiring companies to reveal how much drugs really cost.

Price controls do not address the underlying problem of rising drug costs and spending and would only shift costs and reduce availability, said Mark Merritt, president and CEO of the Pharmaceutical Care Management Association. The trade group represents pharmacy benefit managers.

Instead, Merritt urged for continued competition.

Two years ago, a breakthrough treatment for hepatitis C was priced at $84,000, but market competition forced a steep drop in cost for those enrolled in Medicare Part D and commercial insurance, he said, crediting pharmacy benefit managers for negotiating the price decreases.

Earlier this month, pharmacy benefit manager Express Scripts partnered with Imprimis Pharmaceuticals to offer a Daraprim alternative for $1 a pill.

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Collins acknowledged that for pharmaceutical companies to invest in research and take risk, they must see a fair return on their investment.

"At the same time, we cannot be blind to the cost of these drugs to individuals, health systems, and the federal government," she said.

"Americans are expected to spend more than $328 billion on prescription drugs this year alone," Collins said. "Of this amount, individuals will pay about $50 billion out-of-pocket. The federal government will pick up another $110 billion in payments through Medicare, Medicaid, Veterans Affairs, and other programs."

Twitter: @SusanJMorse