Hunter College High School in Manhattan has long been reckoned among the best public high schools in the United States; in 2004, the Wall Street Journal ranked it at the very top. Supreme Court Justice Elena Kagan, author and television news host Chris Hayes, cybersecurity guru Bruce Schneier, and novelist Cynthia Ozick are among its alumni*; a glance over the list is striking in its inclusion of so many eminent and principled people. Also to be found among these luminaries is Martin Shkreli, CEO of Turing Pharmaceuticals, who owes his recent fame to acquiring the rights to an anti-protozoal medication, Daraprim, and raising its price from $18 to $750 per pill.
The Shkreli affair is one of two scandals that have thrust the complicated world of specialty pharmaceutical companies into the news in recent weeks. The second and larger mess, which is still breaking, involves Valeant Pharmaceuticals, a public company likewise known for acquiring “underpriced” drugs and then drastically jacking up the tab. Senator Claire McCaskill called on Valeant in September to explain its sixfold-plus increase in the price of Isuprel, a cardiac medication, from $215 to $1346. (To give an idea of the difference in monetary terms between the two scandals: some ten thousand Daraprim prescriptions are written every year, and Turing, a private company, paid fifty-five million dollars for the rights to the drug, which appears to account for the bulk of its business; Valeant, even after losing more than half its market capitalization in the wake of the current contretemps, is still valued at nearly thirty-five billion dollars.)
Though specialty drugs make up only one or two percent of the total prescriptions written in the U.S., they account for more than thirty percent of drug costs, and the figure is rising. These high-priced drugs are often prescribed for serious and/or chronic conditions such as cancer, hepatitis C and multiple sclerosis. Some of them require special handling, like refrigeration, or they’re injectables that patients need to be taught to use, but it’s also the case that these are often drugs for which there are few, or no, alternative treatment options. It seems obvious that drugs like these are being identified and targeted for acquisition in advance by companies such as Valeant and Turing. There are no available generic equivalents for Daraprim or Isuprel approved by FDA; there are few if any clinical alternatives available to prescribe; and the market for these drugs is so small that sinking time and money into obtaining FDA approvals for new generics wouldn’t be worth it, as James Surowiecki noted recently in the New Yorker. This is the loophole that Valeant, Turing and other drug makers are exploiting. Or to put it another way, a “business case” can be made for such a strategy; in response to questions about price gouging, Valeant spokesperson Laurie Little flatly informed the Wall Street Journal: “Our duty is to our shareholders and to maximize the value” of Valeant’s products. (The first sentence of the about page on its website states, “Valeant Pharmaceuticals International, Inc. is a diverse and decentralized pharmaceutical company that is committed to focusing on our key stakeholders while delivering consistently high performance.”)
Earlier this month, in Managed Care Magazine, Dr. Richard L. Schilsky, chief medical officer of the American Society of Clinical Oncology, spoke of the “financial toxicity” visited on patients by the current system. “The high cost of drugs is increasingly being shifted to patients,” he said, adding that some are having to take out second mortgages just to pay for their medicines: “[T]hey can’t afford to pay their rent, they can’t afford to send their kids to school.” To some extent, Schilsky said, this is because “there are no constraints on the cost of care at any level.” Dr. Marcia Angell of Harvard Medical School put the matter still more bluntly in an editorial at the Washington Post: “Why Do Drug Companies Charge So Much? Because They Can.”
Since the U.S. imposes no legal or regulatory limitations on drug prices, the inquiry into Valeant’s misdeeds looked inconsequential at first — a familiar piece of political theater unlikely to result in real action. But on October 19th, Roddy Boyd of the Southern Investigative Reporting Foundation revealed Valeant’s apparent concealment of an ownership interest in Philidor, a specialty pharmacy. Why the need for secrecy? A number of possibilities emerged. The Wall Street Journal scared up some former employees and prescribing doctors who said the relationship between the two firms had been concealed “so it didn’t appear Valeant was using the pharmacy to steer patients to the drug company’s products.” (If you go to an ordinary pharmacy with a high-ticket specialty drug prescription, they’re likely to offer you less expensive alternatives. By steering patients to its own pet pharmacy, Valeant would be able to make sure you never heard any such suggestions.) While it is not illegal for Valeant to own a pharmacy — provided all the accounting and disclosure requirements are met — if the implications of SIRF’s analysis are correct, and the company kept its ownership of Philidor a secret in order to defraud patients and benefits providers, as pharmacist Russell Reitz, who sold his business to a Valeant subsidiary, alleges in the LA Times, the jig may be up for the company.
As it is currently constituted, each of the several branches of the pharmaceutical industry has an interest in removing incentives to control drug costs for Americans — ours is a business-friendly, back-scratching commercial culture, where favors are done through political contributions and lobbying, strategic acquisitions, pressure on regulators, and tricky price negotiations. Where there’s a way to squeeze money out of the system, there’s a forest of hands grabbing at the teats dispensing in excess of $374 billion in annual prescription drug revenues. Specialty pharmacies, politicians, pharmacy benefits management companies, drug manufacturers, doctors — various members of all these groups are compensated handsomely for their longstanding failure to lower drug prices to levels comparable to those in other developed countries. And there is no shortage of other parties to blame, when necessary.
This is at least partly because a halfway credible appearance of principle is more than enough to assuage the concerns of a people way too exhausted, bummed out, and resigned to the system to demand actual change. For example, the media hullaballoo set in motion by Turing and Valeant last month caused Hillary Clinton to announce her sudden antipathy to Big Pharma’s “price-gouging”; I would love to know what Clinton campaign donors Pfizer Inc., Johnson & Johnson, and Bristol-Myers Squibb Co. thought of that.
In any case, the practice of medicine is still largely perceived positively by the media and the public, even if the hospital-industrial complex and its attending bureaucracy aren’t quite so popular as Atul Gawande is. Medicine very often helps people, and that leaves any and all players in the industry free to wrap themselves in a mantle of altruism, as Martin Shkreli did in his recent AMA on Reddit: He claimed to live modestly, to be interested in philanthropy, and to be “focused on making new medicines for dying children.” Given that there have been multiple reports of clinicians having difficulty obtaining Daraprim owing to its newly exorbitant cost, these latter claims look dodgy to say the least, despite Shkreli’s repeated assurances that nobody will be denied access to the drug who needs it. Reminds me of Emerson’s remark, “The louder he talked of his honor, the faster we counted our spoons.”
But there can be no doubt that Martin Shkreli has been generous to his high school: his gift of one million dollars last March was widely reported. Surely it is pertinent to ask: Are we to consider Martin Shkreli the model American citizen produced by the country’s best high school? When asked whether Shkreli is the type of person the Hunter College High School is proud of turning out, Tony Fisher, the school’s principal, answered this way (through a public relations representative): “We appreciate all former students who choose to share their success and give back.” We can take the non-answer to mean, at least, that the school doesn’t intend to return Shkreli’s money.
The patron deity of Hunter College High School is Athena, Greek goddess of wisdom; its motto, mihi cura futuri: “The care of the future is mine.”
Gif via Reddit
*Martin Shkreli attended Hunter College is in its alumni directory, but did not graduate as part of the class of 2001