New York Times
By ANDREW POLLACK OCT. 12, 2015
http://www.nytimes.com/2015/10/13/business/new-york-attorney-general-examining-if-turing-restricted-drug-access.html?_r=0
The New York attorney general has begun an inquiry into Turing Pharmaceuticals, whose fiftyfold overnight increase in the price of a 62-year-old infection drug stoked a backlash against high pharmaceutical prices.
The attorney general’s office is looking not so much at the price increase itself but at whether Turing may have violated antitrust rules by restricting distribution of the drug, Daraprim, as a way to thwart generic competition, according to a letter sent by the attorney general’s office to Turing on Monday.
“While competition might ordinarily be expected to deter such a massive price increase, it appears that Turing may have taken steps to prevent that competition from arising,” said the letter, a copy of which was obtained by The New York Times.
The letter was addressed to Martin Shkreli, the 32-year-old former hedge fund manager who runs Turing, and was signed by Eric J. Stock, the chief of the antitrust bureau. It asks that Turing contact the attorney general’s office immediately to discuss the situation and tells the company to “retain all documents that are potentially relevant to this inquiry.”
Demonstrators protested outside of the New York offices of Turing Pharmaceuticals earlier this month. Credit Craig Ruttle/Associated Press
Turing did not immediately respond to a request for comment sent to both Mr. Shkreli and the company’s media spokesman.
Turing, which is based in Manhattan, acquired the rights to Daraprim in August and raised the price to $750 a tablet from $13.50, drawing protests from infectious disease specialists. The drug is the preferred treatment for toxoplasmosis, a parasitic infection that can be especially dangerous for people with AIDS and for babies whose mothers are infected during pregnancy.
Mr. Shkreli said that Turing would spend the money from the higher price to develop better drugs for toxoplasmosis and that his company was already providing better access to Daraprim, with lower out-of-pocket costs for patients.
Still under fire late last month, he said that Turing would lower the price of Daraprim, though more than two weeks later, no new price has been announced.
Daraprim is no longer protected by patents. But until now the market has been so small, with annual sales in the United States below $10 million, that generic drug makers were not interested.
With the higher price now they might be interested. But the drug has been removed from distribution by the usual wholesalers and by retail drugstores. Patients can get the drug from Walgreens’ specialty pharmacy, and hospitals have been given a special phone number to order it.
Such restricted distribution can make it more difficult for generics manufacturers to get the samples of a brand-name product they need to do the required testing to show that their generic copy is equivalent to the original.
At his previous company, Retrophin, which also acquired older drugs and raised their prices, Mr. Shkreli talked openly about using restricted distribution to deny samples to generics manufacturers. While the move to restricted distribution for Daraprim occurred in June, before Turing acquired the drug, it might have been a prerequisite for the sale.
Still, there can be other reasons to move drugs to narrower distribution. Drugstores, for instance, typically do not want to carry a product that is rarely used, making it logical to distribute it centrally.
Eric T. Schneiderman, the New York attorney general, is not the only one looking at this issue. Last week, Senator Amy Klobuchar, Democrat of Minnesota, called on the Federal Trade Commission to investigate whether Turing and other drug companies were violating antitrust laws by using restricted distribution.
“Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system,” Ms. Klobuchar wrote in a letter to Edith Ramirez, the chairwoman of the trade commission. “If the restricted distribution prevents or delays generic competition, it could subject consumers to unnecessarily high prescription drug prices.”
When questioned by Ms. Klobuchar at a Senate hearing on Wednesday, Ms. Ramirez said that monitoring the pharmaceutical industry was a “top priority for us.”
The F.T.C. filed an amicus brief last year in a case in which Mylan, a generics manufacturer, claimed that Celgene was using restricted distribution to deny it access to its cancer drugs Thalomid and Revlimid. In those cases, the drug distribution is controlled because of safety issues. The F.T.C. said such behavior may nonetheless violate the law.
Turing missed the deadline of last Friday to provide information about its price increase that had been requested by Senator Bernie Sanders of Vermont, who is seeking the Democratic presidential nomination, and Representative Elijah Cummings, Democrat of Maryland. The two lawmakers are investigating sharp increases in drug prices.
Mr. Shkreli’s former company, Retrophin, has disclosed in regulatory filings that it is cooperating with a federal criminal investigation into certain financial transactions by Mr. Shkreli during his tenure there.
By ANDREW POLLACK OCT. 12, 2015
http://www.nytimes.com/2015/10/13/business/new-york-attorney-general-examining-if-turing-restricted-drug-access.html?_r=0
The New York attorney general has begun an inquiry into Turing Pharmaceuticals, whose fiftyfold overnight increase in the price of a 62-year-old infection drug stoked a backlash against high pharmaceutical prices.
The attorney general’s office is looking not so much at the price increase itself but at whether Turing may have violated antitrust rules by restricting distribution of the drug, Daraprim, as a way to thwart generic competition, according to a letter sent by the attorney general’s office to Turing on Monday.
“While competition might ordinarily be expected to deter such a massive price increase, it appears that Turing may have taken steps to prevent that competition from arising,” said the letter, a copy of which was obtained by The New York Times.
The letter was addressed to Martin Shkreli, the 32-year-old former hedge fund manager who runs Turing, and was signed by Eric J. Stock, the chief of the antitrust bureau. It asks that Turing contact the attorney general’s office immediately to discuss the situation and tells the company to “retain all documents that are potentially relevant to this inquiry.”
Demonstrators protested outside of the New York offices of Turing Pharmaceuticals earlier this month. Credit Craig Ruttle/Associated Press
Turing did not immediately respond to a request for comment sent to both Mr. Shkreli and the company’s media spokesman.
Turing, which is based in Manhattan, acquired the rights to Daraprim in August and raised the price to $750 a tablet from $13.50, drawing protests from infectious disease specialists. The drug is the preferred treatment for toxoplasmosis, a parasitic infection that can be especially dangerous for people with AIDS and for babies whose mothers are infected during pregnancy.
Mr. Shkreli said that Turing would spend the money from the higher price to develop better drugs for toxoplasmosis and that his company was already providing better access to Daraprim, with lower out-of-pocket costs for patients.
Still under fire late last month, he said that Turing would lower the price of Daraprim, though more than two weeks later, no new price has been announced.
Daraprim is no longer protected by patents. But until now the market has been so small, with annual sales in the United States below $10 million, that generic drug makers were not interested.
With the higher price now they might be interested. But the drug has been removed from distribution by the usual wholesalers and by retail drugstores. Patients can get the drug from Walgreens’ specialty pharmacy, and hospitals have been given a special phone number to order it.
Such restricted distribution can make it more difficult for generics manufacturers to get the samples of a brand-name product they need to do the required testing to show that their generic copy is equivalent to the original.
At his previous company, Retrophin, which also acquired older drugs and raised their prices, Mr. Shkreli talked openly about using restricted distribution to deny samples to generics manufacturers. While the move to restricted distribution for Daraprim occurred in June, before Turing acquired the drug, it might have been a prerequisite for the sale.
Still, there can be other reasons to move drugs to narrower distribution. Drugstores, for instance, typically do not want to carry a product that is rarely used, making it logical to distribute it centrally.
Eric T. Schneiderman, the New York attorney general, is not the only one looking at this issue. Last week, Senator Amy Klobuchar, Democrat of Minnesota, called on the Federal Trade Commission to investigate whether Turing and other drug companies were violating antitrust laws by using restricted distribution.
“Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system,” Ms. Klobuchar wrote in a letter to Edith Ramirez, the chairwoman of the trade commission. “If the restricted distribution prevents or delays generic competition, it could subject consumers to unnecessarily high prescription drug prices.”
When questioned by Ms. Klobuchar at a Senate hearing on Wednesday, Ms. Ramirez said that monitoring the pharmaceutical industry was a “top priority for us.”
The F.T.C. filed an amicus brief last year in a case in which Mylan, a generics manufacturer, claimed that Celgene was using restricted distribution to deny it access to its cancer drugs Thalomid and Revlimid. In those cases, the drug distribution is controlled because of safety issues. The F.T.C. said such behavior may nonetheless violate the law.
Turing missed the deadline of last Friday to provide information about its price increase that had been requested by Senator Bernie Sanders of Vermont, who is seeking the Democratic presidential nomination, and Representative Elijah Cummings, Democrat of Maryland. The two lawmakers are investigating sharp increases in drug prices.
Mr. Shkreli’s former company, Retrophin, has disclosed in regulatory filings that it is cooperating with a federal criminal investigation into certain financial transactions by Mr. Shkreli during his tenure there.