Clinton's Tweet on High Drug Prices Sends Biotech Stocks DownBy and
Index falls after Democrat says she'll release drug cost plan
Turing Pharma CEO explains decision to raise price 50-fold
The drug company CEO under fire for boosting the cost of a decades-old medicine by 50-fold defended the decision, calling the treatment a bargain at $750 a pill.
Martin Shkreli, a former hedge fund manager who is now chief executive officer of Turing Pharmaceuticals AG, was called out by Democratic presidential candidate Hillary Clinton. Clinton tweeted that she would soon release a plan to combat the high cost of prescription drugs. Biotechnology stocks fell after her comment.
Clinton’s comment on Twitter sent the 144-member Nasdaq Biotechnology Index down 4.7 percent to 3,556.58 at 1:08 p.m. in New York, the biggest intraday drop since Aug. 24. Health-care stocks were the worst-performing subgroup on the broader Nasdaq index.
"Price gouging like this in the specialty drug market is outrageous," Clinton tweeted at 10:56 a.m. "Tomorrow I’ll lay out a plan to take it on."
Turing’s price increase risks making Shkreli’s company a poster child for aggressive pricing by the industry, especially after drugmakers have already been criticized for the cost of medicines to treat cancer, hepatitis C and other conditions.
Clinton was responding to reports about how Turing Pharmaceuticals in August acquired an older antibiotic drug, Daraprim, and subsequently raised the price by more than 50-fold.
Shkreli said the drug, which once sold for $13.50 per pill and for which Turing now charges $750, is still a bargain even at the new higher price. Patients typically take the drug for at least several weeks.
"This drug saves your life for $50,000," Shkreli said in an interview in New York. "It is still a bargain for health insurers. At this price, it is a no-brainer." The drug is very inexpensive for Turing to manufacture, Shkreli said during an interview Monday with Bloomberg TV, though there are other administrative and regulatory costs for the company.
About 2,000 Americans use Daraprim each year, which treats the disease toxoplasmosis. While the parasite that causes the disease is common, it doesn’t usually cause symptoms, and typically only needs to be treated in patients with compromised immune systems.
Many drugs for rare diseases have to be taken continuously for years, and cost $100,000 to $500,000 a year. By contrast, Daraprim treats patients in about six weeks, limiting the cost, Shkreli said.
Joel Gallant, a doctor and the former chairman of the HIV Medicine Association, disputed Shkreli’s comments about how the drug is used and for how long. HIV patients are particularly susceptible to toxoplasmosis, and many patients remain on lower doses for months or years.
"This is hundreds of thousands of dollars," Gallant said, referring to the cost for HIV patients with the disease.
"They are not in the game for biomedical research," he said in an interview. "They are getting exclusive rights to a cheap drug and raising the price because they can." Because of the cost, hospitals may not be able to stock the drug, causing delays in treatment Gallant said.
Shkreli didn’t immediately respond to an e-mail and telephone call requesting additional comment.
“We can understand why examples like these raise questions," said Robert Zirkelbach, a spokesman for Pharmaceutical Research and Manufacturers of America, which represents drug company interests. "However, Turing is not a member company and we are not in the position to comment on their product or pricing." He called Turing’s price for Daraprim "the exception and not the rule."
A drug price plan could be a part of a group of health proposals from Clinton, who said Sunday on the television program "Face the Nation" that she had several ideas on health care.
"I’m going to address them this week, starting with how we’re going to try to control the cost of skyrocketing prescription drugs," she said. "It’s something that I hear about wherever I go."
The biotechnology index was already vulnerable and Clinton’s tweet was likely a major factor in the decline, said John Fraunces, portfolio manager of Turner Medical Sciences Fund, said by phone. "Pricing is a theme that seems to be of growing concern in the health-care area, ourselves included."
Terry Haines, a political analyst with Evercore ISI, didn’t think Clinton could actually have an impact. "Regardless of what any Democratic candidate says about drug pricing, his or her ability to make that a reality as president is close to zero." Haines said in a note to clients that he doubted a drug pricing proposal could get through Congress.
Shkreli said that unlike many other drugmakers that also take huge price increases on old drugs, his company is investing in research to come up with better drug for toxoplasmosis. Researchers at Turing have identified several new candidate drugs, one of which could begin human trials next year, he said. He said he wants to come out with a better version of Daraprim with higher cure rates or fewer side effects.
Gallant, the HIV doctor, said Daraprim is already highly effective in combination with other drugs. "No one has been clamoring" for more toxoplasmosis drug research, he said.
Turing "is being criticized for trying to stay alive," Shkreli said. "It is very misplaced anger." At the old price, there was no way to turn a profit, he said.
Shkreli said the company had put assistance systems in place to make sure that all patients who need the drug can get it even if their insurance company won’t pay for it.
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— With assistance by Dani Burger
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