Constitutional Health Network:
Big Pharma Caught Red-Handed

You've probably heard of Martin Shkreli even if you don't actually know his name. He is — or was, until this recently — the CEO of a Big Pharma company called Turing, the same scumbag company that jacked the price of a $13 specialty drug up to an insane $750 per pill earlier this year. The drug, Daraprim, is the only drug there is to treat the parasitic disease toxoplasmosis. And Turing is the only company making it.

Shkreli was arrested this week. Not for price-gouging. Not for endangering people's health. Not for sticking it to Big Insurance in the biggest way possible. No. He was arrested for securities fraud, which happened several years ago at a completely different company.

Here's the thing: that $750 pill still costs $750, and that's not likely to change. Meanwhile, the public is being given Shkreli's head on a plate so we feel like something is being done. But it's not. Nothing has changed.

When it comes to the real problem — big pharma's greed — nothing is being done.

This whole story is rotten. It stinks to high heaven. Is Shkreli a scumbag? Yes. Does he deserve to go to jail? Yes. But in focusing on Shkreli and the Turing company, media has shifted our attention to one single bad guy and away from the bigger picture.

The Big Story — the $750 pill

Daraprim is an old drug. It's been used for over 60 years, and the patent expired way back in the 70s. Normally there would be a generic version of a drug this old, but the market is so small — only around 12,000 prescriptions per year — that the investment just hasn't been worth it for manufacturers. And until last year, the price was so low — around $1 per pill — that no one, not even patients and hospitals, had any interest in a generic.

The drug was made by GlaxoSmithKline until 2010, when they sold the rights to it to CorePharma. Last year CorePharma was bought up by pharma company Impax…who immediately hiked up the price of Daraprim.

Big Pharma Caught Red-HandedOvernight, the drug went from around a dollar per pill to over thirteen dollars. Impax also put strict controls in place to make sure that no one else could get their hands on enough of it to reverse-engineer and make a generic. They limited who could sell it. They basically monopolized the market, jacked up the price to increase the bottom line on paper, then sold the rights to Shkreli and Turing.

A month after buying the rights to the drug, Turing raised the price again from the already high $13.50 per pill to an incredible $750, and patients and hospitals were left holding the bag.

Or were they?

In the midst of all the public outcry, here's what didn't make big news: Because of certain federal rules and discount programs, Medicaid got the drug very cheaply — sometimes for as little as $1 per bottle. Hospitals were set to get a 50% discount. Turing offered a "patient savings" program that let the needy get it at no cost and the low-income insured for about $10 per prescription. In light of this, who was really left holding the bag?

Insurance companies and Medicare. And of course those who don't have insurance but don't qualify for the discount program.

The Big Surprise — this is nothing new for Big Pharma

Here's something you probably don't know: this is business as usual for Big Pharma.

We don't usually hear about it, but insane overnight price hikes like this happen all the time. For example, back in 2007, multiple sclerosis drug Acthar jumped from $1,650 per bottle to $23,000.

500 tablets of the antibiotic doxycycline recently went from $20 to $1,839. A pill for drug-resistant tuberculosis jumped from $500 per bottle to $10,800. And in August of this year, Valeant Pharmaceuticals bought the rights to two old heart drugs — Isuprel and Nitroperss — and raised the price by 525%.

These are just a few examples of a widespread practice. It shouldn't happen, but it does. And I'm willing to bet that if it weren't for Martin Shkreli's abrasive personality — if he was less of a jerk — the whole story wouldn't even have been news. Insurers would have quietly paid the new price and we would never have been the wiser.

But Shkreli has a history of ticking people off, both as a hedge fund manager and as a Big Pharma bigwig. Today he's being sued by his former company, Retrophin, and just got fired from Turing. He's facing charges for securities fraud. And because the focus is firmly on Shkreli and his company, the public smugly feels that Big Pharma got its comeuppance — even while the dozen other companies doing the same thing get a free pass.

The Big Question — why do we pay $750 while Europe pays $6?

The jump from $13 to $750 is completely insane. But even more insane is that fact that while Americans — or their insurance companies — may be charged $750 per pill for Daraprim, U.K. residents still only pay about $6. This is an extreme example, but we Americans routinely pay anywhere from 3 to 10 times as much as Europeans do for the same drugs made by the same manufacturers. Why are we subsidizing low prices for other countries?

In a nutshell — because Europe simply refuses to pay our ridiculous prices. If Big Pharma wants to peddle pills over the pond, they have to do it at a reasonable cost. Meanwhile, we Americans pay anything but a reasonable price. And to add insult to injury, we're legally banned from filling our prescriptions through non-U.S. pharmacies.

Of course this is supposed to be "for our own good." There's no way to regulate online or mail-order pharmacies, Big Brother says. The truth is that to keep us paying for multi-thousand dollar prescriptions, they have to keep us buying from U.S. pharmacies — even when Big Pharma raises the price 5000% for us and not for anyone else.

This is not acceptable.

The Shkreli/Turing affair should have shined a light on Big Pharma greed in all its forms.

It should have exposed all the other predatory drug price hikes, and brought about regulation to keep them from happening again. Instead, our attention was distracted by Turing while the other players kept, and keep on, gouging us for all we've got.

As Shkreli is led away in handcuffs, we heave a sigh that the bad guy got what he deserved. Meanwhile, the other bad guys are laughing all the way to the bank. But this isn't the end of the story. Stay tuned for part two of this special look at Big Pharma's underhanded dealings.

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