KHN Morning Briefing

Summaries of health policy coverage from major news organizations

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Controversial Drug Price Increase Highlights Growing Trend In Costs

The decision by a pharmaceutical company to raise the price of the 62-year-old drug 5,000 percent raised the ire of consumers and politicians alike. But health care advocates and industry experts have been wary of the growing prices for some time. Also, several outlets look at the man who decided to raise the price of Daraprim and set off the latest controversy.

The Associated Press: Fury Over Drug Price Spikes Rising, But Increases Aren't New
Hillary Clinton was among the patients and politicians who voiced outrage this week after it became public that the price of a 62-year-old drug used to treat a life-threatening infection had been raised by more than 5,000 percent. But exorbitant drug price hikes like that have happened increasingly over the last few years. And they could become even more common because of decreasing competition in the pharmaceutical industry, among other factors. (Johnson, 9/23)

CNN: 'Outrageous' Pill Prices Are Big Business As Usual
Drugs such as Daraprim, Doxycycline, Flucytosine and Cycloserine have been making news headlines lately because of their dramatic price hikes. A 2014 House of Representatives investigation found 10 generic drugs that ranged in price increases anywhere from 420% to over 8,000% of their prices just a year before. These generic drugs have jumped in price for a range of reasons, including shortages because of manufacturing issues and market consolidation. Generic drugs in particular are more susceptible to the market because they are off patent and can have competition. But what concerns doctors and patients most is the sheer ability of manufacturers to set their own price because there is no body or regulation that oversees drug prices. (Kounang and Ansari, 9/23)

The Washington Post: A Defining Moment In Modern Health Care
Martin Shkreli is health care’s Gordon Gekko, its wolf of Wall Street, the symbol of all that makes people uneasy about an industry that seeks to make money by selling treatments while vowing to care only about the well-being of vulnerable patients. ... Shkreli’s actions were shocking for a simple reason: It was an unusual moment of complete transparency in health care, where motives, prices and how the system works are rarely ever talked about so nakedly. Shkreli’s company, Turing Pharmaceuticals, raised the price of Daraprim from $18 to $750 per pill because he could. (Johnson, 9/23)

The Washington Post's The Fix: Martin Shkreli: A New Icon Of Modern Greed
Shkreli is the founder and chief executive of the pharmaceutical company Turing. He and his company have, of course, been the subjects of widespread news coverage this week after the New York Times highlighted Shkreli's decision to boost the cost of the more-than-60-year-old drug Daraprim from $13.50 to $750 after the company purchased the drug in August. The drug, developed long ago (i.e. the research costs were borne by a previous owner of the drug), is not exactly a frequently used medication but is considered the most effective drug and therefore the standard of care for people suffering with an infection called toxoplasmosis. (Ross, 9/23)

CBS News: Controversial Drug Company CEO Once Sued For Harassment
The moment Martin Shkreli announced a 5000 percent increase in the price of Daraprim, a drug used by some AIDS and cancer patients, the Internet exploded with rage. ... Shkreli's bio on the Turning Pharmaceuticals website says he has a Bachelors of Business Administration from Baruch College. What the 32-year-old knows about healthcare he learned as a hedge fund manager, who often clashed with drug companies. ... The board of directors of Retrophin, Shkreli's first drug company which he founded in 2011, kicked him out and filed suit in August for $65 million. He is alleged to have "used his control over Retrophin to enrich himself" and to pay back investors in his hedge fund, who lost millions in a bad investment. An earlier lawsuit brought by a former Retrophin employee, Timothy Perotti, accused Shkreli of harassing his family. (Dahler, 9/23)

NPR: Turing Pharmaceuticals Retreats From Plan To Raise Price Of Daraprim
Turing Pharmaceutical CEO Martin Shkreli has backed down on his plan for an astronomical price increase on a drug used to treat a deadly parasitic infection. The company did not say what the new price would be, but presumably less than the $750 a pill it had planned to charge. The move illustrates how Shkreli is more Wall Street speculator than pharmaceutical entrepreneur. (Zarroli, 9/23)

And sometimes marketing strategies can make an old drug seem new -

Bloomberg: How Marketing Turned EpiPen Into A Billion-Dollar Business
In a 2007 purchase of medicines from Merck KGaA, drugmaker Mylan picked up a decades-old product, the EpiPen auto injector for food allergy and bee-sting emergencies. Management first thought to divest the aging device, which logged only $200 million in revenue. Then Heather Bresch, now Mylan’s chief executive officer, hit on the idea of using old-fashioned marketing in part to boost sales among concerned parents of children with allergies. That started EpiPen, which delivers about $1 worth of the hormone epinephrine, on a run that’s resulted in its becoming a $1 billion-a-year product that clobbers its rivals and provides about 40 percent of Mylan’s operating profits, says researcher ABR|Healthco. EpiPen margins were 55 percent in 2014, up from 9 percent in 2008, ABR|Healthco estimates. (Koons and Langreth, 9/23)

In other news -

Modern Healthcare: How The National Drug Debate Is Changing The Pharmacy Benefit Business
The pharmacy benefit management industry is experiencing subtle changes, and a leadership shuffle at the country's largest PBM has experts speculating about whether PBMs will remain stand-alone companies. More healthcare organizations view prescription drug use as a critical element of keeping patients healthy and reducing costs, and controlling a PBM could help with a population health strategy. “You could see a pathway forward where the PBMs become more integrated with the payers,” said Jon Kaplan, managing director at Boston Consulting Group. (Herman, 9/23)

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