The fall of former CEO Martin Shkreli hasn’t discouraged pharmaceutical companies from hiking up the prices of some of their medications.
Ex-pharmaceutical chief executive Martin Shkreli is currently on trial for security fraud.
But two years ago, as CEO of Turing Pharmaceuticals, he gained notoriety by suddenly hiking the cost of the company’s lifesaving HIV drug by 5,000 percent.
Despite the consumer outcry that followed, prescription drug prices have continued to rise.
In fact, experts say, the problem has become more widespread, affecting even frequently used medications — not just specialty drugs.
“Shkreli is a blimp in the bigger picture,” John Rother, executive director of the Campaign for Sustainable Rx Pricing, told Healthline. “Not that many people were affected. But some other drug companies are raising prices and affecting millions of people.”
Specialty drugs, which treat complex or rare chronic conditions, usually have the highest price tags.
Why? They’re usually quite profitable and don’t have competitors, Rother said.
Ravicti, used to treat urea cycle disorders, costs $794,000 per year.
And Lumizyme, used to treat another rare disorder called Pompe disease, costs $626,000 annually.
Shkreli, a former hedge fund manager, used this playbook to raise prices on Daraprim. It was formerly a generic drug, and Turing Pharmaceuticals became its sole producer, said Rother.
Because there are no caps on drug prices in the United States, price increases like that are legal.
“Shkreli saw a monopoly position,” Rother said.
It can take four years to get a drug approved by the FDA, Rother explained, so Daraprim had monopoly pricing power for that long.
EpiPen maker, Mylan, is the newest company to face consumer wrath.
It’s currently facing lawsuits for quickly raising prices for its epinephrine auto-injector.
“It was cleverly designed to be a monopoly,” Rother said.
However, not all pharmaceutical makers are aggressively raising prices, Rother added.
Johnson & Johnson and Merck have “made public pledges about modest price increases,” he said.
But Pfizer has been more aggressive, he noted. The nation’s largest drug maker raised prices on 133 of its products in 2015.
This year, Pfizer announced price increases for the second time, said Crystal Kuntz, vice president of policy and regulatory affairs at America’s Health Insurance Plans (AHIP). The total price increase is more than 20 percent on more than 100 drugs, she told Healthline.
Price increases have even hit longtime generics for diabetes, high blood pressure, and high cholesterol, according to a telephone poll conducted last year by Consumer Reports Best Buy Drugs.
“Even oncology treatments are costing over $100,000,” Kuntz added. “And effectiveness has nothing to do with it.”
PCSK9 inhibitors for lowering LDL cholesterol have also been singled out as being highly priced.
The prices for two recently approved drugs, Repatha and Praluent, would have to drop by more than a third to be cost-effective, according to researchers at the University of California San Francisco (UCSF).
The researchers concluded costs for these drugs would need to be reduced from an annual cost of $14,350 to $4,536.
What makes these drugs different, noted the researchers, is that they’re used by large populations.
However, evidence shows that the drugs are also highly effective at lowering LDL cholesterol, which could be important to many people.
“The industry wants you to believe that these increases are one-offs,” said Kuntz. “But this problem is widespread and systematic. Despite scrutiny, pharmaceutical companies continue to do what they do.”
Dr. Aaron Kesselheim, an assistant professor at Harvard Medical School, agreed.
Pharmaceutical prices are set by manufacturers at whatever the market will bear, he explained. Capping drug prices would take a major act of Congress or similar legislation.
Kesselheim pointed out that while Congress is hobbled, some states like Maryland are passing bills to prevent price gouging.
“We need pharmaceutical companies to have open, honest pricing,” said Kuntz. “However, it’s not easy to do. It’s a complicated issue with many challenges.”
Meanwhile, prices continue to go up, she added, despite the Shkreli scandal.