Turing Pharmaceuticals faced public outrage after the company’s CEO, Martin Shkreli, raised the price of the drug Daraprim by over 5,000 percent.  


Martin Shkreli stands in a window

CEO of Turing Pharmaceuticals, Martin Shkreli (NY Daily News)

Daraprim helps treat toxoplasmosis, which can be a dangerous disease to people with weak immune systems. Turing Pharmaceuticals purchased Daraprim from Impax Laboratories for $55 million in August and quickly increased the pill’s price from $13.50 to $750, making a once-affordable treatment out of the price range of most consumers. Why is it that the cost of this pill was increased by such a high amount?      


“It’s very easy to see a large drug price increase and say, ‘Gosh, those people must be gouging.’ But when you find out that the company is not really making any money, what does that mean?” Shkreli said to NBC News on Tuesday. “It’s very hard stuff to understand.”


Shkreli admitted that Daraprim is cheap to produce, but that the public needs to consider “the quality control” and “the regulatory costs.” The drug only has about 2,000 users each year in the United States; it is for this reason that Shkreli has said the drug may not even be profitable at its current price.


Medication created for the purpose of treating a rare condition is called an “orphan drug,” and some of these medications are among the most expensive drugs on the market. Do pharmaceutical companies really need to keep their orphan drug prices high to make selling them worth the costs?   


Soliris medication


The orphan drug Soliris can cost an individual about $669,000 for 12 months of treatment in the United States. This drug treats two rare blood diseases that only affect around one out of every one million people. Soliris may not have many users, but Alexion Pharmaceuticals has made over $6 billion in revenue over an eight year period just from selling this drug. With profits this size, many didn’t trust Shkreli when he said Daraprim may not be profitable, even after the price increase.           


After receiving a great deal of negative PR over Daraprim’s high cost, Shkreli announced that Turing Pharmaceuticals will reduce the price. The new price hasn’t been decided yet, but Shkreli believes that they will make their final decision in October.    


Is it likely that Turing Pharmaceuticals needed to greatly raise Daraprim’s cost in order to turn a profit? Should there be a change to the way orphan drugs are priced? Leave a comment or talk to me on Twitter @Karbowski_Devon.