Neurogram+ 10-5-15

Greed Jumps the Shark1

Future pharmarchaeologists may try to unearth and analyze the sequence of events that triggered the eventual imposition of pharma price controls in the United States, for so long the bastion of pharmacoeconomic free enterprise. It is like exhuming the skeletons of Pompeii, except that they did nothing to trigger Mt. Vesuvius’ wrath, whereas this cataclysm was largely self-induced. From our viewpoint, the first major warning tremor came with Gilead’s pricing of Solvadi for Hepatitis C, where the cost, multiplied by the size of the potential treatment population, portended fiscal distress for American payor systems. But the advent of a competitor, and the restriction of access by payors, kept the crisis from burgeoning out of hand. But recent incidents of extreme price-gouging, amplified by the populist lens of an approaching election year, have put pharma drug pricing back in the crosshairs of editorial writers everywhere.
First, Turing Pharmaceuticals acquired a grizzled antibiotic (Daraprim) used for toxoplasmosis, and immediately raised the price 5400%, from $13.50 to $750 per tablet. When challenged, the justification claimed by CEO Martin Shkreli was that this would fund R&D and physician education, displaying a level of disingenuous smarminess close to self-parody. Shkreli finally promised to roll  back Turing’s price increase by some undisclosed amount. Rodelis Pharmaceuticals announced a 2000% increase in the price of cycloserine, used in the treatment of tuberculosis, after acquiring it from a nonprofit group. In the resultant outcry, the sale was canceled, the drug returned to its nonprofit owner. Similarly,  Valeant Pharma has been called out on its chronic appetite for a spate of abusive price-escalations.
Damage has been done: Democratic Party presidential candidates have mustered their outrage and called for regulatory controls, including proposals for requiring R&D expenditures to reach some minimum level (we would like to see Valeant’s research-phobes deal with that one); restrictions on the deductibility of DTC advertising costs (though DTC spending levels have indeed reached an absurd apogee); the acceptance of pharmaceutical imports from lower-cost countries; a reduction of marketing exclusivity for biologics; and the possibility of price controls. Like many campaign promises, these specific proposals may only have a shelf life of one or two polling cycles, but it would be naive to think that this issue will go away.
This serves as a salutary lesson on what happens when people-in-power possess neither a conscience nor the frontal-lobe capacity to appraise the future consequences of their actions. Valeant’s CEO Michael Pearson pathetically defended Valeant’s strategy as necessitated by his obligations to “shareholders”, apparently oblivious to the consideration of anything more than next-quarter’s earnings report.
Turing, Valeant, and Rodelis are nothing but entities bent on exploiting market anomalies, but the rank arrogance of their gouging exacerbates the overall public perception of the pharma industry as a club of robber-barons. Greed has jumped the shark, and the pharma industry as a whole is going to eventually suffer some pain as a result.2

1 “Jump the shark”: An American idiom that initially referred to a television show that signals its impending decline by resorting to some gimmick or story device that undermines its own premise or credibility. It has gradually been broadened to indicate a moment of excess in any industry or endeavor that constitutes a tipping point, after which decline/deterioration can be expected.
2 Some pain has already been felt: The NIR Stock Index dropped 25.6% from July 1 to October 1, as the topic of possible price controls resurfaced.

 

Two Science Notes

1) Roche announced positive data from a trial of ocrelizumab in PPMS, which along with a previous report of positive results from MedDay, albeit in an earlier-stage trial, signals the possibility that disease-modifying progress is finally being made vis-a-vis Progressive MS.
2) We were intrigued by the report that the HERV-K retrovirus may play a key role in the initiation of ALS pathophysiology. While this is a hypothesis that will require validation over time, it is reminiscent of the work being done by GeNeuro in the role of retroviruses in the onset of MS and schizophrenia.

This entry was posted in Big Pharma, BioFollies, Biotech and tagged , , . Bookmark the permalink.

One Response to Neurogram+ 10-5-15

  1. Leo Liu, MD says:

    Bravo on your piece about the price gouging practices of Turing, Rodelis, Valeant and their ilk. Their strategy of “cornering the market” on drugs like pyrimethamine and cycloserine is telling, because these are not simply “orphan drugs” in the broad sense, but in fact “drugs for neglected diseases.”

    Pyrimethamine is used in the treatment and prophylaxis of malaria and CNS toxoplasmosis: in America, malaria cases are virtually all imported, whereas CNS toxoplasmosis nowadays is diagnosed largely in poor and non-compliant AIDS patients (i.e.; minorities and i.v. drug addicts, not affluent gay white males). Cycloserine is a third-line drug used for multidrug-resistant tuberculosis: in America, these patients are virtually all immigrants (many undocumented) from developing countries.

    Thus, the patient constituencies for TB and parasitic diseases in America are overwhelmingly poor, disenfranchised, and politically powerless. Surely this was a strategic consideration by the M.B.A.’s at Turing and Rodelis when they went looking for drugs that could be priced solely on the basis of what insurers would pay, without fear of complaint from actual patients. Their corporate behaviour provides a sad and ironic contrast with the work on ivermectin and artemisinin – two anti-parasitic drugs that have saved and improved hundred of millions of lives around the world – that was recognized by the Nobel Prize in Physiology or Medicine that was announced today.

    All of these drugs, including cycloserine and pyrimethamine, are on the W.H.O. List of Essential Medicines, a selection of about 200 generic drugs chosen for their proven efficacy, availability, and low cost of production. The U.S. Centers for Disease Control currently stocks and makes available artemisinin and other anti-parasitic drugs, so one possible solution to negate perverse corporations like Turing and Rodelis would be to make any and all Essential Medicines “missing” from the American market available from the C.D.C.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s