Martin Shkreli Is Just One Reason for the High Cost of Drugs

Arthur L. Caplan, PhD


January 28, 2016

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Hi. I am Art Caplan, from the Medical Ethics Division at the New York University Langone Medical Center in New York City.

No matter where you turn these days, you cannot avoid Martin Shkreli. He is the man who achieved infamy by cornering the market on a drug used to fight protozoal infections in people with AIDS and people with malaria. That drug used to cost $13.50 a pill. By the time Shkreli was done with it, he had jacked up the price over 50-fold to $750 a pill.[1]

He cornered the market on a 62-year-old drug, and in doing so, probably retired for all time the award for Jerk of the Year in healthcare. Exploiting desperate people who need that drug by charging a ridiculous price is obviously morally abhorrent. But are Shkreli and his shenanigans really something we should spend a lot of time worrying about?

You may be surprised that I am going to say no. There is no doubt that this evil, amoral twerp deserves his comeuppance. He is a guy who not only has cornered the market for this drug, but he is also apparently involved in securities fraud—at least the government thinks he has been running some type of Ponzi scheme—so they are after him, too.

But Shkreli is an aberration. It does not help us to send him to jail, or vilify him, or have congressional hearings about him because none of this gets at the underlying problem, which is the high cost of drugs in the United States. We are paying three times as much as Britain, six times as much as Brazil, almost 18 times as much as India. (And the population of India is not all poor. We are subsidizing plenty of Indian middle-class and upper-class millionaires by paying high costs for drugs here in the United States.)

The problem is systematic. Too many pharmaceutical companies are evergreening their patents. They are saying, "By making a slight twist to our drug, making a PM version or a long-acting version, we can extend our patent and keep generic competition out." Sometimes they engage in pay-for-delay, telling generic companies, "Don't make the cheaper drug. We'll pay you to not make anything."

And a big government policy problem is that we do not bargain for the price of drugs. Some bargaining goes on with Veterans Affairs, a bit with the Department of Defense. But when we extended Medicare Part D in this country to provide more drug coverage for senior citizens, any negotiations about pricing were explicitly taken off the table.

That is not what they do with drug pricing in Canada; that is not what they do in Britain; that is not what they do in Australia. That is not what they do anywhere except in the United States. Other countries use the government purchasing power to negotiate better prices. Here, we practically ask the pharmaceutical company, "What do you want to charge?" Then we pay it.

Looking at Shkreli and his dastardly activities may be worth a few moments of our time. But getting at the systematic problems that face us in terms of escalating drug prices and paying more than anybody else in the world—that is worth a lot more of our time.

I am Art Caplan. Thanks for watching.


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