Why Turing Pharmaceuticals needs to be investigated as an unfair Monopoly
Martin Shkreli, CEO of Turing Pharmaceuticals may be a lot of things, but he certainly isn’t stupid. Somewhere along the way he took an economics class and learned the concept of “price inelasticity”. The basic example used in most college classes is the sale of oil or heroin. The price you pay for something is a simple equation of supply and demand. A higher price tends to reduce demand and vice versa. But for certain products such as oil and heroin, the demand is so high because of addiction (physical and economic) that the buyer is willing to pay any price for the product. Also, in some case when the supplier is a monopoly there is only one producer so the buyer has nowhere else to go. In Pharmaceuticals, the same thing is happening. When the product is the only cure, the buyer will pay any price especially when death is the result of its non-use. The rare disease market is the green field opportunity for small biotechs which understand that they can achieve both the highest demand for their products (only drug) with virtually no competition and can price their drug as high as they want. In the case that these companies are creating a cure,… great! I’m a son of a banker, myself. No pun intended.
But it’s important to make a distinction here — Turing is not selling a cure to cancer or HIV. Instead, they are selling the only antibiotic that protects cancer and HIV patients from a parasite that normally would be handled by a patient’s own immune system that was invented in 1953. Therefore, Martin is using the fear of death and a monopoly to extort as much money as possible going from 135$ to $80,000 for a 100 pill regime. With 8000 scripts written for the drug next year, we are looking at over 600M in profit for the company in one year.
Martin Shkreli was interview on Bloomberg TV and said that he is “going to give the product away” for those who can’t afford it? Really?, if I have an infection, I need my antibiotic in a matter of hours not weeks. Does he have the resources to manage this? So does that mean that all patients will get free drugs? If not, who can afford $8000 assuming for a minute that Insurance companies will pay 90% of the cost? Which I doubt.
For Cancer patients, which I am heavily involved with as the founder of Cancerlife.com, the cost of cancer care is exploding. Financial toxicity is having an impact on disease progression and outcomes and cutting into the functioning of families. Yesterday, this was mainly caused by the Oncology drugs themselves… now because of Turing it is simply with a secondary medication trying to manage the life-threatening side effects of chemotherapy. We have now reached a new low in the healthcare of this nation, when one company can make 600M profit on a 1$ pill on a rare antibiotic.
How would you feel if your son was taken to the emergency room for a severe ear infection and you were told that Amoxicillin was now $80,000 and you had to pay $8,000 or your son would probably die?
In the debate around cancer drugs where $120,000 is the new norm, I have no problem if the drug itself is a cure with limited side effects and a reasonable extension of life. A good example is a drug called Sovaldi that cures Hepatitis C by Gilead Sciences. At $120,000 per treatment this would seem high but in fact it in my opinion it an example of good value based pricing. The treatment is a cure. The alternative is older drugs such as intereron that may cost less but leave the patient with side effects including extreme fatique and depression…..forever or until the patient needs a liver transplant. Here the treatment is well worth the cost. A cure is a cure.
It seems to me that a single supplier of a drug that recently change its distribution status to control supply then “unreasonably” raised the price of drug that is required to save a life is a violation of Sherman Antitrust Laws and I call on the Federal Trade Commission to:
1) Immediately begin an investigation of the unjust practice and “specific intent of the owner and its members” to maximize its control on its market.
2) During this investigation period, allow price of its product to return to its historical price of 13.50$
If The FTC does not take action,
How many of patients (including children who have less developed immune systems already) will die in the next year because they can’t afford a simple antibiotic and yet still are not cured of their disease?
In the case of the Martin Shkreli and Turing, I call on Cancer and HIV patients and their families to fight this form of drug extortion. We are fighting for our lives and the lives of our loved ones, facing fear and pain every day. This company and its leader have without warning declared war on us. Enough is enough.
Please go to www.fightturing.com and join our mailing list and sign our petition. Its time we come together and fight this abuse.