Martin Shkreli Isn’t the Only One: Pharmaceutical Exploitation in America

Martin Shkreli is probably a name that most of you are familiar with by now. He is the second Martin suggested by Google, only bested by Dr. Martin Luther King, which is ironic considering Shkreli’s reason for fame. If you aren’t familiar, I’ll sum him up for you: Shkreli was a hedge fund manager turned pharmaceutical CEO who gained notoriety when he hiked the price of life-saving drug Daraprim from $13.50 to $750 a tablet. His choice to virtually eliminate the availability of this drug to important consumers, like pregnant women, cancer patients and those with HIV/AIDS, along with his insufferable attitude on Twitter quickly made Shkreli one of the most despised individuals in the world. Nearly everyone spoke out against his actions, including Donald Trump, and the photos of his smug smile did him no favors with winning friends. Shkreli was arrested last December, and it seemed like the world released a universal sigh of relief. Though his arrest was due to federal fraud charges linked with a biotechnology company he owned prior to his employment at Turing Pharmaceuticals, many people still felt overjoyed that Shkreli would be brought to some kind of justice. Finally, a photo surfaced without that pompous smile of his. After all, this man was single-handedly making crucial drugs unaffordable, thus ruining the lives of those in need, right? Well, not exactly. Yes, the allegations against Shkreli about the price hike are absolutely true, though he maintains that it was perfectly legal and thus sees nothing wrong with his choice, but Shkreli is not alone in this type of action. The pharmaceutical industry in America has been practicing price gouging for years, and the FDA has done nothing to regulate the problem. So don’t just blame Shkreli; he may be the loudest of them, but he certainly isn’t the only one.

Drugs are price-controlled in a number of countries, including India, which keeps their prices reasonable regardless of the presence of competition. America does not engage in this process, and also has a complex series of laws that make FDA approval of competing companies very difficult. Couple that with the pharmaceutical industries economic spending on lobbying efforts—which is in the billions—and the prospects for those who want to begin drug development in retaliation of price-gouging seem bleak. Turing Pharmaceutical acquired the rights to Daraprim for $55 million and immediately hiked the price up 5,000%. For an extended period of time, Turing faced no competition and thus was able to keep the insane price. Shkreli himself has claimed that his company is dedicated to providing the medication to every person who needs it, and that insurance will cover the cost for most. If not, a deal with hospitals will provide Daraprim at $1 a pill for everyone without it. But some experts in the medical field are saying that this simple system is not actually realistic and that some insurers are refusing to pay. In October of last year, a small company called Imprimis announced that it was working on developing a version of Daraprim that would sell for $1 a pill. Imprimis planned to partner with Express Scripts, a middleman company between drugmakers and patients, to provide the drug to those in need quickly. According to doctors at the company, the pill was a perfect alternative.

So the case of Martin Shkreli and his influence seems to be moving in a positive direction. It’s likely that Shkreli will maintain a level of success in his future: from everything I’ve read, he is a business-minded person with a high IQ. But what about all the other companies that are doing exactly what Shkreli is doing, but much, much quieter? It’s no secret that health care affordability is a hot topic in the United States right now. A major platform point for every presidential candidate is their view on healthcare. Senator Bernie Sanders is resolute in his promise to provide free healthcare. Mr. Trump claims only that he wants to repeal Obamacare and replace it with something “great” though he never seems to specify what he means or exactly how he plans to make good on such a murky promise. The mention of healthcare is no accident; it is tapping into a present fear among the American people, which is healthcare’s decreasing affordability. While we love to talk about Obamacare, free health care and the systems in Scandinavian countries, we rarely approach pharmaceutical exploitation if it’s not connected to Shkreli’s infamous power play. Why is that? He certainly wasn’t the first or the only perpetrator. Before Turing, Shkreli actually planned to purchase two other drugs from Valeant, another pharmaceutical company, that are used to treat Wilson disease and jack up those prices, but the deal fell through. Valeant then went ahead and increased the prices of the two drugs in question by 1,886% and 3,650%, which raised their sales per month from $200,000 to $10 million. Was this buzzed about? Hardly, and yet it happened before Shkreli even had access to Daraprim. So why don’t we seem to care about the other guys?

It is possible that our disinterest is due to the commonality of the practice. Pharmaceutical companies have been doing this for years and are protected by the complexities of the legal side of pharmaceutical development. This is mainly because of the FDA. The Food and Drug Administration in America has the authority to control inflated pricing of drugs and profiteering from this exploitation, but they choose not to. In some cases, the actions of the FDA itself will induce price hikes. When the FDA granted KV Pharmaceutical exclusive development rights to the drug Makena, a medication meant to prevent premature deaths, it allowed the company to keep competitors out for seven years. KV Pharmaceutical then increased the price of the drug from $250 for full treatment to $25,000. Part of the problem tied into the FDA’s practices is not only what they choose not to do, but the slow pace of their intended purpose. Currently, the FDA is responsible for approving generic drugs as equivalent to their branded, more expensive alternatives. The backlog on this process is in the thousands by now. In 2014’s fiscal year, not one of the 1,600 generic drugs submitted to the FDA were approved. The FDA can expedite applications for certain generics that would help with drug shortages, but even with the assistance, approval could take up to 12 months. If the FDA will not regulate the price of pharmaceutical drugs, there are two options in the meantime. They could compound certain drugs, like the situation I described above in response to Turing’s price hike. The FDA allowed Imprimis to create a specially formulated drug at a much lower price. The FDA could also allow temporary importation of drugs that are available at a less costly price overseas. So far, little has indicated the FDA’s interest in either option, but hope remains. If the FDA would act on price regulation, they could have a huge impact on the availability of essential medicines.

Perhaps that will be necessary as the future of pharmaceutical exploitation becomes more apparent. Let’s return to the case of Martin Shkreli. For all the bad things he’s done, there is one positive takeaway that he left with us, and that is awareness. He shined a light on pharmaceutical exploitation in America with his antics, and perhaps that light will not be quick to fade. Now that we’ve witnessed such an exemplary situation of price gouging gone wrong, perhaps the government and its agencies will enact some legislation to control this practice. It may not be immediate, but it has the potential to happen.

The problems tied into the fabric of this unfortunate practice is also the foundation of our country. Pharmaceuticals have become a for-profit agency with protection from competition. It is the profit that draws up the prices for these big pharma companies, many of which are controlled by investors that are already rich by some other enterprise. Introducing drug regulation would undercut the profits to be gained by pharmaceutical development, though it would help the majority of Americans to acquire the drugs that they need. Is this going to happen easily? Like all matters that are inherently political in nature—and this decision certainly is—no, it will not. But hopefully, something can be done here that will positively affect this industry and the people that are affected by it. Hopefully, and this is a truly hopeful statement, some level of harmony can be reached, and the prices of life-saving medication can be affordable for years to come.