In 2015, the head of Turing Pharmaceuticals, Martin Skhreli, became the man that everyone loved to hate. After Turing acquired a patent for Daraprim, an older medication, they increased the price of the drug from $13.50/pill to $750/pill.
In August of 2016, Mylan Pharmaceuticals increased the price of the EpiPen from $56 to over $317. The EpiPen contains vital medication to counteract life-threatening allergic reactions. Soon, the media began to cover stories of parents struggling to afford EpiPens for their children.
After the price hikes, the CEO’s of Turing and Mylan faced heavy criticism. Public outcry demanded the reason for such an outrageous price increase, but the response seemed to be “because we can.” Unsatisfied by the logic, the nation questioned if the laws of the free-market should still apply when it concerns matters of life and death.
Yes, Martin Skhreli was Indicated, But It Was Not Because of the Price Hike
Martin Skhreli, Turing’s CEO, faced charges and was indicted of securities fraud in December 2015. As of September 2016, Skhreli is free on bail until his case heads to court. But his indictment of securities fraud comes from his time as a hedge fund manager and the CEO to a different company. During that time, Skhreli took the money from his company to make up for the money his investors lost in his hedge fund. His criminal charge have nothing to do with the price hike at Turing.
In fact, Skhreli, or any other CEO or company that increases the price of a necessary medication, cannot face criminal charges for the price increase. There is no law that criminalizes a drastic price increase.
It Is Not Illegal to Raise the Price of Drugs, In Fact It’s Good Business
Every discussion about the economy usually relies on the fact that the U.S. economy relies on capitalism. Capitalism can be a difficult concept, but the key point to understand is that a capitalistic economy relies on private ownership and is driven by profit.
Companies like Turing and Mylan that produce life-saving and vital medications can adjust the price to whatever would give them the most profit. If there are no alternatives to the medications supplied by those companies, then they have no competition and can set the drugs at the highest possible price.
This was the case for the price hikes by Turing and Mylan. Where there is a drastic price hike, capitalism says that other companies will create their version to undermine a competitors’ profits.
For Daraprim, the drug created by Turing, other corporations were able to create a generic version which costs only $1 per pill. But for the EpiPen, the price increase applies to the medication sold in the auto-injector and not the actual medication itself. The auto-injector is patented by Mylan.
After Mylan offered a “generic” version at $300 per box instead of $600, the nation was not convinced. To avoid paying such an outrageous price, some users of the EpiPen have resorted to buying the drug in the auto-injector (epinephrine), and injecting it themselves.
But is that the only solution? Do we need to wait until another corporation decides to create a profit?
If We Ask for the Government to Step In, It Will Be a Long Wait
Healthcare seems to be heavily regulated by the U.S. government. But out of all possible aspects of healthcare, the pharmaceutical industry faces the least amount of regulation. In fact, Daraprim and EpiPen are not the only drugs that have increased by over 100%.
In 2002, a drug called “Abilify” entered the market to treat acute psychiatric disorders like schizophrenia. It soon proved to be effective in treating other disorders, but the other treatments were not approved by the Food and Drug Administration (“FDA”). So insurance companies refused to cover the cost for “off-label” use.
Currently, the price of ability without insurance can range from $700 to $1,000 for 30 pills. It was only in 2015 that the FDA approved a generic version of Abilify. For 13 years, patients were spending hundreds and thousands of dollars on a medication that was necessary to their daily function.
In short, what has happened with Turing and Mylan is not something new, and it’s also not something that will go away. Drug companies have been doing this for a long time, and the U.S. government makes no attempt to stop them.
If you feel like drug companies need to be regulated, then 3 out of 4 Americans agree with you. The majority of the nation are beginning to feel like pharmaceutical industries need to be regulated and stopped. It is hard not to want regulation when a person needs to decide between financial ruin to survive a treatable illness, or death. It is time for each citizen to tell lawmakers and the pharmaceutical industry that enough is enough.