The company that raised the price of a lifesaving drug by 5,000% has discovered capitalism’s solution to price gouging: competition.
If big business were a game of chess, Turing Pharmaceuticals, Inc. would find itself in check courtesy of an upstart player eager for a strategic win in the public perception department. Imprimis Pharmaceuticals, Inc. is playing out a strategy that’s likely to earn it big points with consumers irate over Turing’s recent decision to raise the price of the drug Daraprim from $13.50 to $750 per tablet.
San Diego-based Imprimis is a maker of compounded drugs. The company intends to begin selling doses of Daraprim’s generic version for $1 each, dramatically outmaneuvering Turing. Once orders start rolling in, the 3 ½-year-old compounding pharmacy could very well take a big bite out of Turing’s business. After all, Daraprim’s patents have long since run out; Imprimis is legally free to produce the product for individual patients in need of a cheaper alternative.
Daraprim is a drug used to treat toxoplasmosis, a parasitic infection that can cause serious and sometimes life-threatening complications in pregnant women, cancer patients and AIDS patients. Turing acquired the rights to Daraprim, a 62-year-old drug with no competition, in August for $55 million.
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Shortly after making the purchase from Impax Laboratories, Turing’s head, Martin Shkreli, issued the 5,000% price hike. The response from patients, the medical community and even government officials was immediate and harsh. Politicians have promised to fight such “price gouging”, while media scrutiny has been intense and government investigations have started. Biotech stock prices even took a hit.
As the controversy over Daraprim boiled, Imprimis quietly shored up its strategy for a win. The company has lined itself up nicely to be able to make the capsules for much less than Turing by using bulk ingredients from FDA-approved manufacturing plants. CEO Mark Baum said the company is sufficiently geared up to begin producing the cheaper doses as soon as orders start coming in. It’s also tooling up to go after other once-affordable generics that have had their prices raised by companies like Turing.
While Baum hasn’t fully revealed his play, he’s made it clear Imprimis intends to offer a viable alternative to higher-priced medications.
“We’re looking at all these cases where the sole-source of generic companies are jacking the price way up,” Yahoo Finance quoted Baum as saying.
Whether Baum’s move will take big pharmaceutical companies like Turing out of play remains to be seen. Even so, the strategy is likely to earn it a big win in the eyes of consumers. Imprimis has already launched an online order form for Daraprim’s generic, pyrimethamine. The compounded generic sells for $99 for a 100-capsule bottle.
