Column

Shkreli in the Coal Mine

An entrepreneur’s greed serves as a warning about the escalating price of essential drugs.

Martin Shkreli, the “Most Hated Man in America,” is the pariah who keeps on giving. In case you’ve been on Tatooine for the last several months, Shkreli is the 30-something former CEO of Turing Pharmaceuticals. In August 2015, Turing acquired the rights to the drug Daraprim (pyrimethamine), which is used to treat parasitic infections in HIV patients and prevent malaria. Turing immediately raised the price from $13.50 a pill to $750, a more than 5,000 percent markup.

In the wake of this shameless price gouging, the young CEO responded with utter tone-deafness, calling the move “a great business decision” and regretting that he had not raised the price even more. Shkreli became the pharmaceutical industry’s mash-up of Keeping Up With the Kardashians and the VW diesel recall: a cartoonish object of contempt and a potent symbol of vanity and corporate greed.

Despite Turing’s announcement that it would cut the $750 Daraprim price tag by as much as half (i.e., to only 28 times what it used to cost), Shkreli remained a defiant presence in print, online, and on television: buying rare Wu Tang Clan and Kanye West albums and livestreaming his own life from his desk … at least until he was arrested for securities fraud (unrelated to his drug pricing antics) in December and called to testify before a House committee in February (anticlimatically, he pleaded the Fifth).

But getting hauled away in handcuffs and testifying before Congress notwithstanding, give the Most Hated Man credit for his perverse PR savvy. Drug prices have been rising for many years — sometimes spectacularly — with very little public pushback. Now, thanks in large part to the monster ratings generated by the Shkreli Show, we are having the proverbial “national conversation.” The cost of drugs is on the shortlist of presidential campaign issues. Congress is holding hearings. Media outlets are suddenly attacking the issue with a ferocity once reserved for ISIS and Deflategate. And even before Shkreli’s arrest, the pharma lobby had loudly and publicly disowned Turing and its ilk. Hell has turned impossibly frigid.

Among Shkreli’s cardinal sins was not only raising Daraprim’s price 55-fold, but doing so despite Turing’s having had absolutely nothing to do with Daraprim’s development. Shkreli, the unlikeliest source of sunlight, brought attention to the practice of companies that scoop up old drugs, rebrand them, and add zeros to their price tags, all the while making empty noises about the necessity of high prices to fund their own R&D.

Shkreli, the unlikeliest source of sunlight, brought attention to the practice of companies that scoop up old drugs, rebrand them, and add zeros to their price tags, all the while making empty noises about the necessity of high prices to fund their own R&D.

So what does this naked profiteering have to do with genomics and precision medicine? If we’re self-aware and actually interested in reducing health expenditures and disparities, then maybe nothing. But color me skeptical.

Consider: In early 2012 the FDA approved ivacaftor (brand name: Kalydeco), a small molecule for the treatment of cystic fibrosis (CF) after reviewing it for just three months. The drug, developed by Vertex Pharmaceuticals with millions of dollars in help from the Cystic Fibrosis Foundation, was the first approved medicine to treat the root genetic cause of CF, a disease whose sufferers are most likely to die in their late 30s. The clinical data on Kalydeco were impressive: CF patients with a particular genetic mutation that makes them responsive to the drug (there are about 1,200 such patients in the U.S.) watched their lung function improve by 10 percent. They gained weight and coughed less. Kalydeco has changed their lives (the drug’s remarkable power was profiled in this magazine last September). In his 2015 State of the Union address, President Obama cited Kalydeco’s ability to reverse “a disease once thought unstoppable.” Others have hailed the drug as a “breakthrough” and “the dawn of a new era.”

Alas, new eras ain’t cheap. Kalydeco goes for $311,000 per patient per year (up from $294,000 at launch). Its price is not high because it is massively expensive to manufacture, but because there aren’t many patients to sell it to, the company spent millions on R&D, and, well, it’s just a really, really good drug. “[W]e view Kalydeco as a breakthrough medicine and we priced it as such for the value it brings to patients,” Vertex’s chief medical officer told investors in 2013. The CFO agreed: “We believe that if we provide high value to the patient, then the company should recover that value to the patient.”

But even though Vertex has pledged to give every eligible patient affordable access to the drug, some have blanched at the price and the prospect of Vertex’s senior executives receiving $53 million in one-time bonuses should the company show sustained profits. Even the CF Foundation, which sold its rights to Kalydeco to an investment firm for $3.3 billion in 2014, thinks the price of the drug is too high.

“It’s ridiculous,” Scripps translational scientist Eric Topol told me shortly after Kalydeco’s launch. “The price should be related to the cost of manufacture as opposed to the rapid gratification of shareholders. I think it’s high time that doctors stand up and say that this is not acceptable.”

Some of them are doing just that. UC San Diego pulmonology researcher and CF patient Paul Quinton has called Vertex’s pricing “egregious.” In July, Quinton, who takes Kalydeco himself, lamented to the Boston Globe, “What we’ve done is essentially make the executives a bunch of millionaires.”

I would like to think that the unintended seismic ripples precipitated by a self-absorbed hedge-fund bro might somehow lead to a more honest reckoning with the costs of cutting-edge drugs.

Let’s be clear: Kalydeco is not Daraprim, and Vertex is not Turing. But Kalydeco is not a cure, and Vertex’s follow-up drug, Orkambi (lumacaftor/ivacaftor), which is aimed at a larger group of patients but is not nearly as effective, still costs $259,000. Meanwhile pharmaceutical R&D is already subsidized, at least in small part, by you and me via NIH grant funding and the National Center for Advancing Translational Sciences, which was publicly funded to the tune of more than $600 million in 2015. All this while our most important payer, Medicare, is prohibited by law from negotiating drug prices. So please spare me the utopian rhetoric about free markets at work and the tired, complacent refrain that “this is what innovation looks like.”

Does innovation have to look like this? I would like to think not. I would like to think that the unintended seismic ripples precipitated by a self-absorbed hedge-fund bro might somehow lead to a more honest reckoning with the costs of cutting-edge drugs. And then the dream of precision medicine might be one we can actually afford.