AJC Watchdog: First Alert

Keeping watch on those who hold the public trust and money

How much per pill? Congress investigating drug prices

A U.S. Senate committee that is investigating shocking spikes in drug prices convened a hearing Wednesday to explore why the health care system is facing gigantic jumps in the cost of some pills.

Sen. Susan Collins, R-Maine, the chairman of the Senate Special Committee on Aging, said the investigation "is not about the legitimate incentives to create and market new drugs." Instead, she said, the focus is on breakdowns in the marketplace that are allowing some companies to jack up prices for pills that have been on the market for years.

"Some of the companies that have been the focus of our investigation look more like hedge funds than they do pharmaceutical companies," Collins said Wednesday at the hearing. "As one industry expert I recently spoke with put it, 'these companies are to ethical pharmaceutical companies as a loan shark is to a bank.' One goal of our bipartisan investigation is to understand why such companies can impose egregious price increases on off-patent drugs they have acquired, and what policies we should consider to counter this disturbing practices."

Sen. Claire McCaskill, R-Missouri, is the committee's ranking member. She got her point across by sharing the story of a drug called Daraprim. The drug is used to treat toxoplamosis, a disease that only requires treatment for babies and people with weak immune systems.

The drug was developed in the 1950s, she said, and in 2005 it cost $70 for a course of treatment. In 2010, a company that bought the rights to the drug raised the cost to about $900 for a course of treatment. In August, the rights were sold to Turing Pharmaceuticals. The new price for a course of treatment increased to about $50,000, McCaskill said.

"An almost 1,200 percent increase in 2010 was bad enough, but an additional 5,500 percent price increase on a 62-year old drug shocks the conscience," McCaskill said.

The committee is taking a close look at pricing practices of four companies: Valeant Pharmaceuticals, Turing Pharmaceuticals, Retrophin, Inc. and Rodelis Therapeutics. The special committee sent letters to each of the companies asking about specific cases.

Here are the details of a few of the inquiries, according to copies of committee letters reviewed by the AJC:

  • Valeant's 2,949 percent increase in the price of Cuprimine, a drug used for Wilson's disease, from $888 for one hundred 250 mg capsules to $26,189.
  • Retrophin's increase in the price of Thiola, a kidney disease drug, from $1.50 to $30 a tablet.
  • Rodelis's acquision of Seromycin, a drug for tuberculosis, and its increase in the price for 30 pills from $500 to $10,800. The company later returned the rights of the drug to its former owner and the committee inquired about that too.

This week's hearing was the first in what's expected to be a series of hearings that are part of the committee's investigation.

"The American pharmaceutical industry leads the world in innovation, and we rightly prize a system that allows the discovery of medicines that save and improve lives," McCaskill said in her opening statements. "But it’s imperative that we find out if that system is being taken advantage of by companies or individuals that seek deep profits while contributing little or nothing to advances in medical treatment. To me, there’s a line at which these huge price increases on prescription drugs go from rewarding innovation to price gouging."

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About the Author

Carrie Teegardin is on the investigative team. She is a graduate of Duke University and has won numerous national journalism awards.