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How 2015 became the year of drug price outrage

By John Russell, Chicago Tribune
Published: January 3, 2016, 5:37am

Prescription drug prices, always a hot-button issue, reached the boiling point this year after several small pharmaceutical companies bought the rights to established lifesaving drugs and jacked up prices by huge margins.

The poster child for pharmaceutical greed, Martin Shkreli, captured the nation’s attention as a calculating, grinning villain who acquired the rights to Daraprim, a half-century-old drug that treats patients suffering from deadly parasites, and raised the price overnight by about 5,000 percent.

Then Shkreli’s story took another turn. He resigned as CEO of Turing and was ousted as CEO of another small drugmaker, KaloBios Pharmaceuticals, after being arrested last month on charges that he misled investors in a hedge fund and used stock at another company to cover the losses.

Those actions followed an uproar by doctors, patient advocates, drug industry critics and politicians, who said Turing was pushing the drug’s price beyond the means of desperate patients.

But it wasn’t just one rogue actor raising prices and causing a furor.

Another small drugmaker, Valeant Pharmaceuticals, based in Canada, raised the price of two lifesaving heart drugs by 500 percent and 200 percent, respectively. That move was met by such a large outcry that Valeant later said it would lower prices on some drugs next year through an agreement with Walgreens, the United States’ largest pharmacy retailer.

Around the industry, drugmakers slapped big prices on new drugs. The cost of branded drugs outpaced inflation for the 10th consecutive year, and spending on complex specialty drugs, such as those for cancer and hepatitis C, increased nearly 27 percent, according to a report by PricewaterhouseCoopers in Chicago.

Drugmakers have fought for years to justify their prices, saying they reflect the huge cost of researching and developing cutting-edge treatments.

“Because of the ecosystem that exists in the U.S., patients enjoy access to innovative medicines far earlier than patients in countries with centralized price controls, and (the U.S.) leads the world in drug discovery and development,” the Pharmaceutical Research and Manufacturers of America, the industry’s trade group, said in a statement last summer.

The public is paying, but it’s not buying it.

Public anger

Nearly three-quarters of those surveyed by Kaiser Health in June thought the cost of prescription drugs was unreasonable. A Gallup poll in September ranked the pharmaceutical industry 23rd out of 25 industries, above only oil and gas and the federal government.

“Public anger over the unacceptably high prices charged by pharmaceutical companies in the U.S. has reached unprecedented levels,” said Dr. Michael Carome, director of the health research group at Public Citizen, a nonprofit consumer rights advocacy group.

Presidential candidates from both parties are seizing on the anger. Republican Donald Trump called Turing’s steep price hikes of the anti-parasitic drug Daraprim “disgusting,” and Republican Marco Rubio called soaring drug prices “pure profiteering.”

Democrats Hillary Clinton and Bernie Sanders rolled out separate proposals to reform the industry.

“It is unacceptable that the United States now spends more than $370 billion on prescription drugs, and spending is rising faster than at any point in the last decade,” Sanders said.

The anger has captured the attention of Congress. Senate hearings over drug prices in November saw senators from both parties denounce big price increases on established drugs. The House is expected to follow with hearings in January. More headlines and outrage are likely just weeks away.

Altogether, the price of drugs has gripped the public attention like never before.

“I think it’s going to put increased pressure on the pharmaceutical industry to act voluntarily to lower prices, or it might be forced by the government and private payers to do so,” said Amy K. Dow, a health care lawyer at Epstein Becker Green in Chicago.

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