Biotech and Pharma

Big Price Increase for Tuberculosis Drug Is Rescinded

Andrew Pollack
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A huge overnight price increase for an important tuberculosis drug has been rescinded after the company that acquired the drug gave it back to its previous owner under pressure, it was announced on Monday.

However, outrage over a gigantic price increase for another drug spread into the political sphere on Monday, causing biotechnology stocks to fall broadly as investors worried about possible government action to control pharmaceutical prices. The Nasdaq Biotechnology Index fell more than 4 percent.

"Price-gouging like this in the specialty drug market is outrageous," Hillary Rodham Clinton, a contender for the Democratic presidential nomination, said in a tweet on Monday. She said she would announce a plan on Tuesday to deal with rising drug prices.

Ms. Clinton was referring to the actions of Turing Pharmaceuticals, which last month acquired Daraprim, a 62-year-old drug used to treat a serious parasitic infection, and raised its price to $750 per tablet, from $13.50.

Cycloserine was acquired last month by Rodelis Therapeutics, which promptly raised the price to $10,800 for 30 capsules, from $500.But the company agreed to return the drug to its former owner, a nonprofit organization affiliated with Purdue University, the organization said on Monday.

"We discovered literally on Thursday the strategy that had been undertaken" by Rodelis, said Dan Hasler, the president of the Purdue Research Foundation, which has oversight of the manufacturing operation. "We said this was not what we had intended."

By Saturday, he said, Rodelis had agreed to give back the drug. Rodelis confirmed this in a brief statement on its website.

The foundation now will charge $1,050 for 30 capsules, twice what it charged before, but far less than Rodelis was charging. Mr. Hasler said the new price was needed to stem losses.

Drug price outrage
Drug price outrage

Cycloserine is used to treat multidrug-resistant tuberculosis, a serious form of the disease that does not respond to the usual drugs. There are only about 90 new cases a year in the United States, Mr. Hasler said, and about half those patients get treated with cycloserine.

Turing does not appear ready to surrender. Turing's founder and chief executive, Martin Shkreli, a former hedge fund manager, used television interviews and also Twitter and Reddit to defend his move.

He said that toxoplasmosis, the infection Daraprim is used to treat, had been ignored by the pharmaceutical industry because there was little money to be made. Now that Turing can presumably make money, he said, it will be able to educate doctors about the disease, improve delivery to patients and develop better drugs for the infection.

Infectious disease specialists, who have protested the price increase, question the need for new drugs for toxoplasmosis and say that if Turing wants to develop such drugs, it should use money from investors. They say the price increase will raise the cost of treating some adult patients with toxoplasmosis to hundreds of thousands of dollars a year.

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Senator Bernie Sanders of Vermont, who is also vying for the Democratic presidential nomination, sent Turing a letter on Monday demanding information on the price increase.

"Without fast access to this drug, used to treat a very serious parasitic infection, patients may experience organ failure, blindness or death," Mr. Sanders said in a letter written with Representative Elijah Cummings, Democrat of Maryland. The two lawmakers have been investigating sharp price increases in drugs, many of them old generics.

Rodelis, which increased the price of the tuberculosis drug, said last week it needed to invest to make sure the supply of the drug remained reliable. Rodelis reveals almost no information about itself, such as the names of its executives, directors or investors, on its web page.

Cycloserine, which went on sale in 1955 and is also known by the brand name Seromycin, was long produced by Eli Lilly and Company, which around 2000 decided to drop the drug, in part because the company was getting out of antibiotics.

Starting in 2003, as part of a philanthropic initiative on TB, Lilly transferred rights and manufacturing skill to generic drug companies in India, China, South Africa and elsewhere to supply the regions most affected. In 2007 it gave the rights for the United States and Canada to the Chao Center for Industrial Pharmacy and Contract Manufacturing, which is under the auspices of the Purdue Research Foundation.

Mr. Hasler, a former Lilly executive, said the Chao Center had lost about $10 million on the drug since 2007 because of the small number of patients and high regulatory costs. So the Chao Center was interested when it was approached by Rodelis. "They found us," Mr. Hasler said.

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A patient with multidrug-resistant tuberculosis might take two capsules a day of cycloserine, along with other drugs, for 18 to 24 months, according to the Centers for Disease Control and Prevention. Under the price Rodelis planned to charge, a full course of treatment would have cost more than $500,000 for cycloserine alone. With the new price from the Chao Center, it will be closer to $50,000.

The drug made by generic companies abroad costs only about $20 for 100 capsules.

Amir Attaran, an expert on pharmaceutical access issues at the University of Ottawa, said it would have made much more sense to just import the drug from abroad, rather than have it produced in America for so few patients at such high cost.

Mr. Hasler said this was probably not done because foreign manufacturers were not willing to bear the expense of applying for regulatory approval in the United States.

Dr. Attaran said Lilly should have kept more control over pricing. "There's an obligation on their part, having transferred this, to ensure that the objective of the philanthropic initiative continues to be met," he said.

Lilly said that to comply with antitrust rules it retained no control over pricing once it transferred the rights to the Chao Center and had no say when Chao transferred the rights to Rodelis.