The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Rogue "Drug" Companies Face Congress

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


On Thursday, February 4, the House Committee on Oversight and Government Reform held a hearing entitled, “Developments in the Prescription Drug Market.”  The entire reason for the hearing was to address the enormous price increases Turing Pharmaceuticals and Valeant Pharmaceuticals International placed on their drugs. Witnesses included Dr. Janet Woodcock, director at the Center for Drug Evaluation and Research at the Food and Drug Administration (FDA), Mr. Howard Schiller, interim CEO at Valeant Pharmaceuticals International, Mr. Martin Shkreli, former CEO at Turing Pharmaceuticals, Ms. Nancy Retzlaff, chief commercial officer at Turing Pharmaceuticals, and Mark Merritt, president and CEO of the Pharmaceutical Care Management Association. Martin Shkreli became a pariah in 2015 when he purchased and then increased the price of Daraprim, a 62-year old anti-parasitic drug that treats toxoplasmosis, from $13.50 a pill to $750 a pill.  Throughout the hearing, Shkreli repeatedly pled his Fifth Amendment right not to incriminate himself.  (He is currently facing an unrelated charge on securities fraud.)  Rep. Trey Gowdy (R-S.C.) did get him to answer one question – how to pronounce his name.  He was dismissed from the hearing within the first hour because of his uncooperativeness. In 2015, Canadian company Valeant also purchased two heart drugs, Nitropress and Isuprel  from Marathon Pharmaceuticals.  An April 26, 2015 Wall Street Journal article reported that soon after the drugs were purchased, their list prices were increased 212 percent and 525 percent, respectively.  The drugs are used by doctors during procedures to treat heart-rhythm problems. Unlike brand-name companies, the companies did no research to justify the drugs’ costs.  All three of the drugs are off patent and eligible for generic competition, but no generics exist at this point.  With no competition they essentially monopolize the market. During the hearing, the companies’ witnesses kept remarking that it’s the hospitals or insurers that pay for the bulk of the cost of the drugs, not individuals.  But committee members kept reminding the witness that it is taxpayers, employers, and patients that ultimately pay the price in higher insurance costs. If there had been generic versions available for these drugs, it would have been impossible for these companies to raise prices as they did.  That’s why members of Congress also grilled FDA Commissioner Woodcock about what was being done to reduce the huge backlog for generic drug approvals.  Currently, there are 4,300 generic drug applications waiting approval. To get faster approvals for their drugs, the Generic Drug User Fee Agreement Act (GDUFA) was passed in October 2012, and is due for renewal in 2017.  If the FDA does not get its approval times remarkably reduced from its pre-GDUFA approval time of 42 months, the agency can expect tough negotiations from generic manufacturers in renewing the user fee law. Turing and Valeant have been called no more than “hedge-funds masquerading as pharmaceutical companies.” Unfortunately, these bad actors have tainted the entire pharmaceutical industry that spends billions on research to get their drugs approved by the FDA.  Their outrageous and aberrant behavior has invited new calls for government price controls and interference in a robust market vital to the U.S. economy.  If such policies were implemented, it would be bad for research and development, harming patients well into the future.  Let’s hope politicians resist the temptation to do so.

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