Coverage: Turing Pharmaceuticals announces price cut on $750 drug

After a firestorm of public outcry, Turing Pharmaceuticals CEO Martin Shkreli announced his company would lower the $750 price tag for Daraprim, a drug used to help patients with AIDS/HIV and cancer.

The fallout from the price gouging continues to get worse for Shkreli with John Castellani, president of the Pharmaceutical Research and Manufacturers of America, and presidential hopeful Hillary Clinton both offering strong criticisms against him.

Ariana Eunjung Cha of The Washington Post had the story:

Turing Pharmaceuticals CEO Martin Shkreli announced Tuesday night that the company will roll back the price of the drug Daraprim, but did not commit to a specific price.

The company had faced intense criticism in recent days from patient advocacy groups, doctors, politicians — as well as from within its own industry — after it raised the price of the 62-year-old drug from $18 to $750 or more than 4,000 percent after it purchased rights to the drug last month. The medication is a critical treatment for a parasitic infection that can be fatal to those with compromised immune systems due to conditions like AIDS/HIV and cancer.

“We’ve agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit,” Shkreli told ABC News. “We think these changes will be welcomed.”

Shkreli had defended the price hike to journalists as recently as Tuesday morning, saying that it is not only good for its business but good for patients as some of the profits could be reinvested into research to develop new treatments.

Turing Pharmaceuticals explained in a statement that “there have been no significant advances or research into this disease area in decades.”

“For toxoplasmosis and other critical, under-treated diseases, the status quo is not an option,” the company said. “Turing hopes to change that by targeting investments that both improve on the current formulation and seek to develop new therapeutics with better clinical profiles that we hope will help eradicate the disease.”

In what was perhaps one of the most stinging criticisms, John J. Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, disavowed the company and Shkreli.

“PhRMA typically does not comment on matters related to individual company products or product pricing decisions,” he said in a statement. But, “Turing Pharmaceutical is not a member of PhRMA and we do not embrace either their recent actions or the conduct of their CEO.”

New York Times reporters Andrew Pollack and Julie Creswell delved into Shkreli’s background on Wall Street and off:

After fiercely defending the price increase in various interviews and on Twitter for two days, Mr. Shkreli backed down a bit late Tuesday. He told television news networks that the price of the drug, Daraprim, would be lowered, though he did not specify what the new price would be.

“I think that it makes sense to lower the price in response to the anger that was felt by people,” he told NBC News. He declined to comment for The New York Times on the pricing announcement, and did not reply to an email request for comment on other matters mentioned in this article. “I think our relationship is over,” he wrote in response to an email seeking comment on Tuesday.

This is not the first time that Mr. Shkreli, a former hedge fund manager with a reputation for outspokenness, has been at the center of a controversy.

While in his 20s, he drew negative attention for urging the Food and Drug Administration not to approve drugs made by companies whose stock he was selling short.

He was among a group of investors ordered by a New York judge to pay $2.3 million to Lehman Brothers to cover a losing bet on the markets in 2007.

Two former employees sued him for not paying their wages, while another former employee accused Mr. Shkreli of taking over his personal email and Facebook accounts and harassing his family through social media.

The board of his first pharmaceutical company accused him of using the company as his personal piggy bank to pay back angry investors in his hedge fund.

While controversial, Mr. Shkreli is also charismatic and whip smart, according to those who know him, able to talk science without having any formal training.

“You give him a science textbook on chemistry, he’d give it back to you in nine months and he’d have it memorized,” said one early investor in Mr. Shkreli’s first drug company, Retrophin. “He’s a sponge for information.”

Mr. Shkreli has also continued to bet against, or short, biotechnology stocks, even as he has run Retrophin and Turing. He is said to have made millions shorting the stocks of Celladon and Vital Therapies after correctly predicting their products would fail in clinical trials

But this investor, who spoke on the condition of anonymity because he wanted to retain relations in the industry, added, “There’s nobody there in Martin’s life to tell him what the right thing is.”

Fortune writer Laura Lorenzetti wrote about Hillary Clinton’s drug plan that she released after Turing Pharmaceuticals price gauging was announced:

Democratic presidential hopeful Hillary Clinton heads to a campaign event in Iowa Tuesday where she will release her health care plan that aims to lower drug prices, reduce tax breaks for the pharmaceutical industry and mandate certain levels of research spending.

Clinton’s proposal comes just one day after Tweeting on the issue of astronomically high drug prices, which sent biotech stocks downward. These events were put into motion when Turing Pharmaceuticals hiked the price of a drug called Daraprim by over 5,000%, to $750 a pill from $13.50. The move became a symbol on social media of the much larger trend of rising drug prices, which in many cases has been unconnected to new innovation.

“It’s time to deal with skyrocketing out-of-pocket costs and runaway prescription drug prices,” Clinton said at a campaign rally in Arkansas on Monday. Patients shouldn’t have “to choose between buying the medicine they need and paying their rent.”

Clinton’s proposal, which she said would be implemented if she were elected, builds on President Barack Obama’s Affordable Care Act and includes such provisions like limiting a patient’s out-of-pocket spending on drugs to $250 a month, or $3,000 a year. The ACA currently caps yearly out-of-pocket total medical spending at $6,600 for an individual and $13,200 for a family. The proposal would also limit sales exclusivity for biotech drugs to seven years from the current 12 years.

Clinton’s platform would also mandate that drug makers devote a minimum amount of revenue to research and development, and it would bar those companies from deducting drug advertising spending as a business expense, a move that Clinton says would save the government “billions of dollars over the next decade.”