September 22, 2015 4:47 pm
Updated: September 22, 2015 9:46 pm

Sticker shock: How the prices of life-saving drugs skyrocket overnight

WATCH: A former hedge fund manager who took over a prescription drug manufacturer has increased the price of a life-saving drug by more than 5,000 per cent, putting it out of reach for many people who need it. Jackson Proskow reports.

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What would you do if a drug you needed to stay alive went from $13.50 a pill to $750 overnight?

That happened to people with life-threatening illnesses recently when the price of a 62-year-old medication increased more than 5,000 per cent.

“It’s a great business decision that also benefits all of our stakeholders,” Martin Shkreli, the 32-year-old former hedge fund manager and founder of Turing Pharmaceuticals AG, wrote on Twitter Sunday.

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Turing Pharmaceuticals just bought Daraprim, which is used to treat toxoplasmosis, a parisitic infection that can cause serious health problems in pregnant women and people with a compromised immune system.

(Daraprim is not approved for sale in Canada.)

That “great business decision” caused an uproar in the wake of a New York Times article published Sunday, putting Shkreli on the defensive.

In an interview with Bloomberg Monday Shkreli said Daraprim’s previous owners were “giving it away, almost.”

READ MORE: Canada losing out on negotiating lower drug prices, study says

He explained the need to turn a profit from a financial standpoint, as well as to continue to develop new and better treatments and medications.

“We can make a better drug for this disease,” he said, calling his company an “ally” of toxoplasmosis sufferers.

“It’s only fair that we make profit, and we take that money and put it back into the patients’ hands.”

Shkreli also said his company will work with insurers to make sure everyone who needs the drug has access to it, even offering to send the drug for free to patients while the details are ironed out.

Facing enormous public pressure, Shkreli told ABC News Tuesday night he would lower the cost of Daraprim to make it “more affordable”.

His Twitter account, which he has been using to defend his business practices, has since been made private.

Turing Pharmaceuticals CEO Martin Shkreli.

Twitter @MartinShkreli / Global News

But it’s not a unique case: On Tuesday afternoon Rhoderis Therapeutics announced it’s reversing its plans to ramp up prices for drug Cycloserine, returning the tuberculosis drug to its previous owner.

Big drug companies raise the price of drugs because they can, says Ottawa-based lawyer and law professor Amir Attaran.

“Big pharma-companies that invented these products decades ago no longer control the market, they no longer control the patents.”

And governments have been slow to put in place any sort of controls.

“Governments have been not very attuned to this problem. They’re created an opportunity in which unscrupulous financiers … are taking advantage of drug prices to profit. And if it kills patients, hey, so what.”

Drug prices have been in the news as Canada’s federal political parties joust over how to make them affordable and accessible.

READ MORE: Mulcair announces universal pharmacare – how will he pay for it?

Ontario Premier Kathleen Wynne said Tuesday that pharmaceutical drug pricing needs to be a national conversation.

“There is a very robust conversation going on among health ministers. … But I think it does have to be a national conversation because we are all competing in this same field. Ottawa should be a partner in that,” she said.

“To be fair, I think that Health Canada is very much interested in making sure that there is process in place so that medication drugs can be affordable.”

READ MORE: Health ministers urging pharmacare program to pay for prescription drugs

Pharmaceutical companies often cite the costs of research and development as the reason for rising prices.

This can be particularly true for so-called “orphan drugs,” which are used to treat rare conditions: Because the cost of research and development can’t be spread over a large number of patients, the costs for some of these drugs can be mindbogglingly high.

As the Daraprim price hike caused outrage among public health advocates, it has also caught the attention of U.S. presidential hopefuls.

Democrat front-runner Hillary Clinton vowed Monday to take on price gouging in the pharmaceutical industry.

Clinton said it was time to deal with “runaway prescription drug prices”, adding she would outline a detailed plan for keeping drug prices in check, including reforming the way drug companies do business.

“No one in America should have to choose between the medicine they need, and paying their rent,” Clinton said.

And her rival, Vermont Senator Bernie Sanders, sent Turing a letter asking for information about the higher price.

WATCH: Price of drug Daraprim shoots up by 5,000%

 

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