# What in the drug industry allows the price gouging? **URL:** \ **Category:** Factual Questions\ **Created:** [September 22, 2015, 8:28am UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191 "2015-09-22T08:28:18Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [September 23, 2015, 6:14pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/41 "2015-09-23T18:14:36Z")
> [@Czarcasm](#): > > Can you show examples of this happening? Drug companies lowering the prices of drugs because the costs have been paid off, and not because of competition with another manufacturer? What would make you happy? A statement they are doing so? But no doubt, it could be claimed it was done for other reasons too- which is likely correct. ---
**Author:** ![WhyNot](https://avatars.discourse-cdn.com/v4/letter/w/c77e96/32.png) [@WhyNot](https://boards.straightdope.com/u/WhyNot)\ **Post date:** [October 11, 2015, 4:51pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/42 "2015-10-11T16:51:17Z")
> [@Martin\_Hyde](#): > > The controlled distribution isn’t why there aren’t generics, there aren’t generics because despite the drug being useful for what it does, it isn’t actually used that many times per year. > … > The generic companies could certainly get their hands on the drug for reverse engineering purposes if they wanted it, controlled distribution doesn’t meaningfully stop that. > [@Busy\_Scissors](#): > > This particular drug would be trivial to synthesise and manufacture, **Whynot** , from a chemical point of view. It’s a simple, short route that has been reported in the literature many times - there’s no need to contemplate ‘reverse engineering’ as it would not be relevant. > [@Martin\_Hyde](#): > > Why do you assume any of that would be necessary? It’s a well known compound for which many generics exist, they can just have someone buy it overseas, and analyze it there and transmit the data back to the United States for production. There may be regulations about shipping pills back to the United States (although I’d be surprised if there aren’t research exceptions to this as long as they aren’t intended for consumer consumption), but there’s no way to stop a company from transmitting the data. > > Based on the large amount of generic pyrimethamine production all over the world I suspect a generic manufacturer in the United States actually probably already has access to information on this chemical anyway, and probably could technically produce it with no problem. > … > Please cite that “controlled access” has ever stopped a generic manufacturer from getting access to a drug to reverse engineer it. Lots of medications are not widely distributed and of course require prescriptions. How do you think generic manufacturers tend to get these? Bumping the thread because someone wrote [an article about the controlled access issue](http://pharmalot.com/how-martin-shkreli-prevents-generic-versions-of-his-pricey-pill/), with quotes from the guy in charge of approving orders for Daraprim: > [@](#): > > Turing maintains a select list of qualified buyers that includes the specialty pharmacy unit at Walgreen, the big drug-store chain, which fills individual prescriptions. The only other names on the list include select hospitals and clinics. Meanwhile, all Daraprim shipments are made by a division of a major wholesaler that must clear any other purchase requests with Turing. > “If someone else calls and asks for 50 bottles of Daraprim, they would have to come to me for approval,” explained Jon Haas, director of patient access at Turing. “Once they’re set up as an approved purchasing agent, they can purchase as much as they want… It’s not unique to Turing, though. It’s a typical model in the industry." > > … Haas acknowledged that a generic drug maker trying to order the pill would not be welcomed. > > “Most likely I would block that purchase,” he told us. “We spent a lot of money for this drug. We would like to do our best to avoid generic competition. It’s inevitable. They seem to figure out a way [to make generics], no matter what. But I’m certainly not going to make it easier for them. We’re spending millions and millions in research to find a better Daraprim, if you will.” So could they get around it by ordering pills from overseas? Perhaps. Haas seems to think they’d be able to get their approval for a generic without his company’s product, but he’s also clear that it’s going to be a lot harder if he doesn’t cooperate, and no one is likely to bother. (They have not lowered their price yet, despite assurances a few weeks ago that they would, which quelled the social media outrage.) ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [October 11, 2015, 8:29pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/43 "2015-10-11T20:29:21Z")
> [@Heracles](#): > > In [this IMHO thread on the same subject](http://boards.straightdope.com/sdmb/showthread.php?t=769527), it was mentioned that the company doing the price gouging (Turing Pharmaceuticals) can let you spend your millions starting up your factory, raking in the profits all the while, then lower the price back down to 10 bucks when you’re about to go to market. That possibility creates a disincentive to compete against Turing. But aren’t most factories like the ones in india multi use? how much would it really cost to manufacture a new drug for a company like Cipla that already has the infrastructure? Daraprim does not look like a very hard molecule to synthesize, why would it cost millions to make it? It is a 3 step synthesis that a high school student could probably do if they have the raw materials. > **[Pyrimethamine](https://en.wikipedia.org/wiki/Pyrimethamine#Synthesis)** > > Pyrimethamine, sold under the brand name Daraprim among others, is a medication used with leucovorin (leucovorin is used to decrease side effects of pyrimethamine; it does not have intrinsic anti-parasitic activity) to treat the parasitic diseases toxoplasmosis and cystoisosporiasis. It is also used with dapsone as a second-line option to prevent Pneumocystis jiroveci pneumonia in people with HIV/AIDS. It was previously used for malaria but is no longer recommended due to resistance. Common si... ---
**Author:** ![gaffa](https://avatars.discourse-cdn.com/v4/letter/g/e68b1a/32.png) [@gaffa](https://boards.straightdope.com/u/gaffa)\ **Post date:** [October 11, 2015, 9:54pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/44 "2015-10-11T21:54:46Z")
> [@carnivorousplant](#): > > As an aside, there is a inexpensive generic of viagra, but it cannot be prescribed for erectile dysfunction, only to treat blood pressure. I have a prescription for sildenafil and it cost $40 for fifty 20mg pills, and 40mg is effective for my ED. My doctor prescribed it “off label” and that is legal. Totally happy to be able to take 2 small white pills instead of 1 larger blue pill. And get 25 doses for the price of 2. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [October 12, 2015, 2:02pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/45 "2015-10-12T14:02:43Z")
> [@Horatio\_Hellpop](#): > > One [article](http://www.skepticalraptor.com/skepticalraptorblog.php/skyrocketing-prices-of-an-anti-parasitic-drug-the-facts/) about this issue points out that virtually everyone in America who uses Daraprim is protected from the price increase, and that the condition it treats can also be treated by a variety of newer, cheaper drugs. A 30 tablet pack of Daraprim costs £13.00 in the UK and something comparable in the rest of the EU. Who exactly is paying $750/pill for this? Can this alarming news story be explained as a desperate attempt to manipulate Turing’s stock price? In order for a drug to be sold in the US it has to have FDA approval. None of the other versions of this drug sold overseas have FDA approval even though everyone knows they are the same drug and just as safe as this company’s. The way drugs are sold in the US is that they have a huge sticker price but what most people pay is just a co-pay which is a flat rate regardless of how high the price is. Because customers don’t pay for the drug cost, many pharmacies charge much different costs for the same drugs. For people who pay out of pocket and shop around the drugs are much cheaper or even free. ---
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [October 12, 2015, 2:20pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/46 "2015-10-12T14:20:18Z")
> [@Wesley\_Clark](#): > > But aren’t most factories like the ones in india multi use? how much would it really cost to manufacture a new drug for a company like Cipla that already has the infrastructure? > > Daraprim does not look like a very hard molecule to synthesize, why would it cost millions to make it? It is a 3 step synthesis that a high school student could probably do if they have the raw materials. > > [Pyrimethamine - Wikipedia](https://en.wikipedia.org/wiki/Pyrimethamine#Synthesis) What your saying is akin to suggesting that a small machine shop can set up a production line. Sure, they can turn out a fair number of complicated widget assemblies, but it won’t be easy to produce in large numbers with consistently high quality. (Do we have a process chemist around here? I imagine there’s a lot of work involved in setting up a production line, getting optimal yields, preventing contamination, and documenting every possible aspect of the process to prove it meets the FDA’s standards.) ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 12, 2015, 3:01pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/47 "2015-10-12T15:01:31Z")
> [@puddleglum](#): > > In order for a drug to be sold in the US it has to have FDA approval. None of the other versions of this drug sold overseas have FDA approval even though everyone knows they are the same drug and just as safe as this company’s. This is the main barrier with old generic drugs. It’s not a matter of setting up new production. It’s getting that production, new or old, approved. ANDA takes 3-4 years. I don’t know how much it costs. As **Eliahna** , mentions, the old $13.50 price for pyrimethamine was already not a free market price. That’s around $1/dose. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 12, 2015, 3:06pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/48 "2015-10-12T15:06:01Z")
> [@WhyNot](#): > > It is a big deal. As has already been said, just because a drug is off patent doesn’t mean that directions are available for how to make it. They don’t release the recipe. They only release the rights to make it, if you can figure out _how_. The recipe is part of the patent. While not true for every drug, a competent undergrad chemistry student could make pyrimethamine based on the patent. See US2576939 A. It’s 1950s-style organic chemistry, not a biologic. ---
**Author:** ![WhyNot](https://avatars.discourse-cdn.com/v4/letter/w/c77e96/32.png) [@WhyNot](https://boards.straightdope.com/u/WhyNot)\ **Post date:** [October 15, 2015, 12:29pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/49 "2015-10-15T12:29:02Z")
Right, we’ve established that. But they still need the samples for _testing_ to get generic approval. And that’s no longer simply my opinion/vague understanding of how things work…it’s for real. And apparently, restricting distribution in order to thwart generic competition may even be illegal: [New York Attorney General Examining Whether Turing Restricted Drug Access](http://www.nytimes.com/2015/10/13/business/new-york-attorney-general-examining-if-turing-restricted-drug-access.html) > [@](#): > > 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. > [@](#): > > 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. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 15, 2015, 1:50pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/50 "2015-10-15T13:50:05Z")
> [@WhyNot](#): > > Right, we’ve established that. But they still need the samples for _testing_ to get generic approval. And that’s no longer simply my opinion/vague understanding of how things work…it’s for real. And apparently, restricting distribution in order to thwart generic competition may even be illegal: > > [New York Attorney General Examining Whether Turing Restricted Drug Access](http://www.nytimes.com/2015/10/13/business/new-york-attorney-general-examining-if-turing-restricted-drug-access.html) It may be an issue on paper and to the lawyers, but it’s not a barrier to acquisition and testing for any of the dozen or more existing manufacturers of the drug. Especially compared to ANDA. ---
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [October 15, 2015, 2:42pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/51 "2015-10-15T14:42:24Z")
Doesn’t bioequivalence testing for ANDA approval require direct comparison to the FDA-approved version of the medicine? A maker of pyrimethamine approved for sale in another company would need to acquire Daraprim, from Shkreli’s company, to administer it to test subjects and prove that both formulations have comparable pharmacokinetics. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [October 15, 2015, 2:43pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/52 "2015-10-15T14:43:37Z")
> [@ftg](#): > > Price manipulation to prevent others from coming to market is against US anti-trust laws. > [@Bone](#): > > Predatory pricing involves lowering the price - this instance the price was raised. More specifically, predatory pricing is selling a product _below_ cost in order to starve out competitors. In this case, we’re just talking about how much above cost Turing is charging. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [October 15, 2015, 7:33pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/53 "2015-10-15T19:33:24Z")
> [@Francis\_Vaughan](#): > > The issues in bringing drugs to market are worrying. I was recently reading a paper on the history of research of bile acids - the author described two drugs that he invented/discovered with worthwhile clinical application that never made it to market - because they are already known compounds and not patentable. Thus no profit, and no point. The current system is broken, but not in the manner many think. I’ve read something similar about a drug very promising for a new application. But you needed to go through all the steps to have it validated for this new use. Which would cost money while the drug wasn’t patented anymore, so some laboratory would have to pay for this after which everybody else could just freeride and sell it. So, it wasn’t happening (and some doctors were precribing it for this different condition, despite doing so being perfectly unlawful). ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [October 15, 2015, 7:43pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/54 "2015-10-15T19:43:27Z")
> [@clairobscur](#): > > I’ve read something similar about a drug very promising for a new application. But you needed to go through all the steps to have it validated for this new use. Which would cost money while the drug wasn’t patented anymore, so some laboratory would have to pay for this after which everybody else could just freeride and sell it. So, it wasn’t happening (and some doctors were precribing it for this different condition, despite doing so being perfectly unlawful). Prescribing off label is not prohibited. If a drug that has been approved for one use is found to have another use, it is legal for doctors to prescribe it for the other use but it is not legal for the company to market the drug for the other use or make any claims for the other use. However, recent court cases have suggested that drug companies may have first amendment protection for claims they make about off label uses as long as those claims are truthful. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [October 15, 2015, 10:17pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/55 "2015-10-15T22:17:33Z")
What about drugs that were originally developed for other purposes? For example, malathion-a widely used insecticide. It has found human use in treating certain conditions. malathion is dirt cheap-what would make it a $20/pill cost? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 15, 2015, 10:37pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/56 "2015-10-15T22:37:37Z")
> [@lazybratsche](#): > > Doesn’t bioequivalence testing for ANDA approval require direct comparison to the FDA-approved version of the medicine? A maker of pyrimethamine approved for sale in another company would need to acquire Daraprim, from Shkreli’s company, to administer it to test subjects and prove that both formulations have comparable pharmacokinetics. GSK’s version is FDA approved, and Shkreli’s company buys it from GSK. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 15, 2015, 11:07pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/57 "2015-10-15T23:07:00Z")
> [@Ruken](#): > > GSK’s version is FDA approved, and Shkreli’s company buys it from GSK. Actually I may be misinformed. I’m checking. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [October 15, 2015, 11:19pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/58 "2015-10-15T23:19:53Z")
This is a mess, but I suspect the distribution barrier _is_ real. At some point after CorePharma made the deal with GSK to market Daraprim through its subsidiary Amedra, they were getting it from DSM, who was making it in NC. I can’t tell how GSK was selling it in the US prior to that deal, or whether DSM is making it for Turing. If so, their contract with Turing likely forbids sale to anyone else. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [October 16, 2015, 12:50am UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/59 "2015-10-16T00:50:50Z")
> [@Ruken](#): > > This is the main barrier with old generic drugs. It’s not a matter of setting up new production. It’s getting that production, new or old, approved. ANDA takes 3-4 years. I don’t know how much it costs. > > As **Eliahna** , mentions, the old $13.50 price for pyrimethamine was already not a free market price. That’s around $1/dose. It is $0.02 a pill in Brazil, India is probably about the same price. ---
**Author:** ![lazybratsche](https://avatars.discourse-cdn.com/v4/letter/l/ba8739/32.png) [@lazybratsche](https://boards.straightdope.com/u/lazybratsche)\ **Post date:** [October 16, 2015, 12:13pm UTC](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191/60 "2015-10-16T12:13:39Z")
> [@Ruken](#): > > This is a mess, but I suspect the distribution barrier _is_ real. At some point after CorePharma made the deal with GSK to market Daraprim through its subsidiary Amedra, they were getting it from DSM, who was making it in NC. I can’t tell how GSK was selling it in the US prior to that deal, or whether DSM is making it for Turing. If so, their contract with Turing likely forbids sale to anyone else. Thanks for digging into that. I was having a hard time figuring anything out myself… Naiively I also assumed that Turing now owned some sort of drug production facility, rather than merely the marketing rights. Was there never a generic version in the US? Did GSK simply lower the price of the original drug since it was old, cheap to make, and they weren’t as willing to say “fuck you” to the FDA? [Previous page](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191.md?page=2) [Next page](https://boards.straightdope.com/t/what-in-the-drug-industry-allows-the-price-gouging/732191.md?page=4)