While Valeant (VRX) was the most prominent casualty of a dramatic drop across the entire biotech/spec pharma space, the plunge started over a month ago when the NYT brought attention to what it dubbed “price gouging” at Martin Shkreli’s Turing Pharma which raised the price of its only drug, Daraprim, by over 5000% from $13.50 to $750 overnight. This price increase, and the media storm that followed, prompted none other than Hillary Clinton to get involved in the debate of what should be a “fair price” for drugs, going so far as to propose price caps.
One of the consequences of this episode was to make Shkreli into a media and industry outcast, infuriating not only such natural advertising media outlets at CNBC, but also his industry peers who have seen their value tumble in the aftermath of the (long overdue) close attention paid by regulators into pricing practices.
But at least he had one thing going: a business model that afforded him solid margins, because despite promising to cut the price of the scandalous Daraprim, Turing did not do that.
Now, however, even that may be in jeopardy following news that San Diego-based specialty drug maker Imprimis Pharmaceuticals, says it can make a close, customized version of Daraprim for a paltry $1 a pill, NBC reports. That’s a big contrast to the $750-a-dose that Shkreli said Turing was going to start charging for the same drug.
What makes Shkreli’s price hike particularly disturbing is that there is nothing in Daraprim, known generically as pyrimethamine, that makes it expensive to produce: it’s been around since 1953 and has been generic for decades. It’s prescribed for a range of parasitic infections but is especially used by patients infected with HIV who are vulnerable to toxoplasmosis.
Turing bought Daraprim from Impax Laboratories in August for $55 million and raised the price from $13.50 a tablet to $750. It had originally been made and sold by GlaxoSmithKline for about $1 a tablet.
