For shame: ‘Phar­ma Bro’ Shkre­li is in prison, but Dara­prim’s price is still high

The move drew crit­i­cism from all cor­ners. Con­gress hauled Shkre­li in for ques­tion­ing on tele­vi­sion. Me­dia out­lets shamed the prac­tice. The Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­i­ca (PhRMA), the pow­er­ful trade group for brand­ed drugs, dis­tanced it­self, say­ing Tur­ing “does not rep­re­sent the val­ues of@PhRMA” and kicked off a cam­paign it de­scribed as “more lab coat, less hood­ie.”

Shkre­li, 35, is now serv­ing a sev­en-year prison term for se­cu­ri­ties fraud (un­re­lat­ed to Dara­prim). Tur­ing has re­named it­self Vy­era Phar­ma­ceu­ti­cals.

But Dara­prim, which costs pen­nies to make and is used to treat the par­a­sitic in­fec­tion tox­o­plas­mo­sis — which is rare in the Unit­ed States — still re­tails for more than $750 per pill, ac­cord­ing to drug web­site Vy­era did not re­spond to mul­ti­ple re­quests for com­ment.

The con­tin­ued high price of the drug is a cau­tion­ary tale to those who hope that pub­lic sham­ing of a few “bad ac­tors” can curb es­ca­lat­ing drug prices, be­cause the prob­lem is root­ed in the mar­ket’s un­der­ly­ing fi­nan­cial in­cen­tives.

Drug prices are “easy to raise and hard­er to low­er, par­tic­u­lar­ly if there’s no com­pe­ti­tion,” said Nichol­son Price, an as­sis­tant pro­fes­sor at the Uni­ver­si­ty of Michi­gan Law School. “The mys­tery isn’t, ‘Why don’t drug prices go down?’ It’s more, ‘Why don’t they go up more?’”

That’s es­pe­cial­ly the case with a prod­uct like Dara­prim, which ben­e­fits a rel­a­tive­ly small group of peo­ple — about 2,000 Amer­i­cans per year. That means less prof­it in­cen­tive for oth­er com­pa­nies to de­vel­op a com­peti­tor that could dri­ve down prices.

Joey Mat­ting­ly, an as­sis­tant pro­fes­sor at the Uni­ver­si­ty of Mary­land School of Phar­ma­cy, us­es Dara­prim as a case study in a uni­ver­si­ty course he teach­es on phar­ma­ceu­ti­cal busi­ness strat­e­gy, high­light­ing how the in­dus­try func­tions un­der cur­rent in­cen­tives.

“The mar­ket sort of sets it up where, if you need it, you have to pay for it,” he said. “A for-prof­it en­ti­ty is go­ing to raise the price.”

Brand­ed drugs like Dara­prim are more like­ly to be priced high with­out a clear jus­ti­fi­ca­tion, not­ed David Howard, a health econ­o­mist and pro­fes­sor at Emory Uni­ver­si­ty.

Dara­prim was first ap­proved by the Food and Drug Ad­min­is­tra­tion more than 50 years ago, and the patent has long since ex­pired for both the drug and its ac­tive in­gre­di­ent. But there’s no gener­ic equiv­a­lent in the Unit­ed States.

Even with gener­ic-drug com­pe­ti­tion, costs don’t al­ways drop. In 2015 alone, 300 gener­ic drugs — off-patent med­ica­tions, which are typ­i­cal­ly cheap to make — saw price in­creas­es of more than 100 per­cent, ac­cord­ing to a 2016 Gov­ern­ment Ac­count­abil­i­ty Of­fice re­port.

“We don’t have a good mod­el for pric­ing phar­ma­ceu­ti­cals in this coun­try and, as a re­sult, we keep spend­ing a lot more mon­ey,” Price said. “We avoid think­ing about it, or avoid deal­ing with it, and as a re­sult things get more prob­lem­at­ic.”

As prices climb, Vy­era has fol­lowed what has be­come a fa­mil­iar phar­ma­ceu­ti­cal play­book to shift at­ten­tion and costs, launch­ing what it calls the Dara­prim Di­rect pro­gram.

Com­mer­cial­ly in­sured pa­tients can get a com­pa­ny-spon­sored coupon that guar­an­tees they’ll pay no more than $10 out-of-pock­et. Unin­sured pa­tients at 500 per­cent or less of the fed­er­al pover­ty lev­el — about $82,300 for a fam­i­ly of two — won’t pay any­thing.

Peo­ple with Medicare Part D cov­er­age can ap­ply for co­pay as­sis­tance from an “in­de­pen­dent char­i­ta­ble foun­da­tion” to which Vy­era has do­nat­ed mon­ey. This op­tion is list­ed on the Dara­prim Di­rect web­site. Tech­ni­cal­ly, Medicare ben­e­fi­cia­ries can­not use com­pa­ny coupons, but many drug com­pa­nies skirt that reg­u­la­tion by send­ing as­sis­tance through a sep­a­rate in­ter­me­di­ary — such as an in­de­pen­dent char­i­ty. It’s com­mon enough that the prac­tice has re­cent­ly come un­der fed­er­al scruti­ny.

Crit­ics are quick to point out that such pro­grams — of­ten de­ployed for high-priced drugs — may en­able pa­tient ac­cess but do noth­ing to ad­dress over­all ex­pense. Pri­vate in­sur­ers, Medicare or Med­ic­aid must pay the tab, whether through in­creased pre­mi­ums or strained pub­lic health bud­gets.

On av­er­age, Med­ic­aid pro­grams in 2017 paid $35,556.48 per Dara­prim pre­scrip­tion, ac­cord­ing to a Kaiser Health News analy­sis of fed­er­al da­ta cov­er­ing that year’s first three quar­ters.

That fig­ure doesn’t ac­count for any re­bates state Med­ic­aid pro­grams like­ly re­ceive from Vy­era, which is undis­closed pro­pri­etary in­for­ma­tion. In Mass­a­chu­setts, those deals mean the state’s net costs for Dara­prim have re­mained large­ly un­changed since 2014, though the price tag is 75 times what it was, said a spokes­woman for the agency’s Ex­ec­u­tive Of­fice of Health and Hu­man Ser­vices.

But states have vari­able ne­go­ti­at­ing lever­age and skills in press­ing for dis­counts. And pay­ing for high-cost drugs — es­pe­cial­ly those with­out a com­peti­tor — re­mains a se­ri­ous chal­lenge, she said.

Gen­er­al­ly, Med­ic­aid like­ly pays hun­dreds of dol­lars per Dara­prim pill, said Matt Sa­lo, ex­ec­u­tive di­rec­tor of the Na­tion­al As­so­ci­a­tion of Med­ic­aid Di­rec­tors. A stan­dard start­ing dose of two to three pills per day lasts one to three weeks. And that’s like­ly to gen­er­ate costs much high­er than they were be­fore Shkre­li start­ed sell­ing Dara­prim.

By She­fali Luthra with con­tri­bu­tion from Syd­ney Lup­kin. Orig­i­nal­ly post­ed at Kaiser Health News, a na­tion­al health pol­i­cy news ser­vice that is part of the non­par­ti­san Hen­ry J Kaiser Fam­i­ly Foun­da­tion.

Note: To de­ter­mine what Med­ic­aid paid for Dara­prim, Kaiser Health News used da­ta made pub­lic by the Cen­ters for Medicare & Med­ic­aid Ser­vices. This fig­ure rep­re­sents a weight­ed av­er­age of Med­ic­aid pay­ments per pre­scrip­tion, across var­i­ous strengths, pack­age sizes, routes and la­bels. It does not in­clude drug ver­sions (rep­re­sent­ed by Na­tion­al Drug Codes) with few­er than 11 pre­scrip­tion fills per quar­ter.

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