Here's Why Drug Prices in the U.S. Are So High

Summary

The video script discusses the controversial practice of drug price gouging, exemplified by Martin Shkreli's 5,000% price increase of the HIV drug Daraprim. It highlights that such price hikes are common in the industry, with examples like Merck's Januvia and Novartis's Gleevec showing significant price increases over time. The pharmaceutical industry justifies these increases due to the high costs and risks of research and development (R&D), and the limited time of market dominance before generic competition. Shkreli's Turing Pharmaceuticals faced backlash, eventually reducing the drug's price for some hospitals, but the video emphasizes that this behavior is widespread and unlikely to change without regulation.

Takeaways

• 💊 A drug company, Turing Pharmaceuticals, infamously raised the price of its drug Daraprim by 5,000%, causing public outrage.
• 📰 Martin Shkreli, the former CEO of Turing, justified the price hike by claiming the need to turn a profit on the drug.
• 🤬 The price increase of Daraprim from $13.50 to $750 per pill drew widespread criticism, including from political figures like Hillary Clinton.
• 💉 Daraprim is a drug used to treat life-threatening diseases in HIV patients, making its price increase particularly sensitive.
• 💔 The industry and even the lobby group in Washington distanced themselves from Turing's actions, indicating the controversial nature of such price hikes.
• 💊 Price increases are common in the pharmaceutical industry, with examples given for drugs like Januvia and Gleevec showing significant hikes over the years.
• 💰 The high costs of research and development (R&D) in the pharmaceutical industry, which can exceed $50 billion annually, are cited as a reason for high drug prices.
• 🔬 Most drugs fail during the development process, with only a few making it through the rigorous FDA approval process, which justifies the high prices to recoup R&D costs.
• 🏆 Once a drug is approved, it often has a 12-year period of market dominance before cheaper generics enter the market, during which time companies aim to maximize profits.
• 📈 Turing Pharmaceuticals was an extreme example, but the practice of increasing drug prices is widespread and unlikely to change without regulation.
• 🛑 After public backlash, Turing announced a reduction in the drug's price for some hospitals, but affordability issues persist for many patients.

Q & A

What was the controversy surrounding Turing Pharmaceuticals and Martin Shkreli?

Martin Shkreli, the former CEO of Turing Pharmaceuticals, faced criticism for raising the price of the drug Daraprim by 5,000% overnight, from $13.50 a pill to $750, which caused public outrage and was widely covered in the media.

What is Daraprim used for, and why was its price increase so controversial?

Daraprim is used to treat life-threatening diseases in HIV patients. The controversy arose because the overnight price increase made the drug unaffordable for many who needed it, leading to ethical concerns about price gouging.

How did Hillary Clinton respond to the price increase of Daraprim?

Hillary Clinton tweeted about the issue, highlighting the problem of price gouging in the pharmaceutical industry.

What was the reaction of the industry's lobby group in Washington to Turing's actions?

Pharma, the industry's lobby group in Washington, distanced itself from Turing Pharmaceuticals' actions, indicating that such extreme price increases are not representative of the industry as a whole.

Can you provide an example of another drug with a significant price increase?

An example is Januvia, a drug used by millions of Americans to treat diabetes. Its price increased from about $146 a month when it was first sold in 2006 to at least $370 a month in 2015, more than twice its initial cost.

What was the price increase timeline for Novartis' cancer drug Gleevec?

Novartis raised the price of Gleevec from $30,193 per year in 2001 to about $118,000 per year in 2015.

How many drugs did Pfizer raise prices on in a single year, and what was the year?

Pfizer raised prices on at least 133 of its drugs in a single year, which was 2015.

What is one of the reasons drug makers give for increasing drug prices?

Drug makers argue that research and development (R&D) is risky and expensive, with the industry spending over $50 billion on R&D in 2014 alone, and most drugs failing before reaching the market.

How long do drug companies typically have before generic versions of their drugs enter the market?

On average, drug companies have about 12 years of dominance before cheap generics come on the market and create competition.

What happened to Turing Pharmaceuticals after the controversy with the Daraprim price increase?

Martin Shkreli was kicked out of Turing Pharmaceuticals, and in November, the company announced it would cut the price of the drug by as much as 50% for some hospitals.

What was revealed about the accessibility of the drug at a congressional hearing in March?

At a congressional hearing in March, a doctor treating patients needing the drug stated that they were still having difficulty obtaining it at an affordable price.

What does the Turing Pharmaceuticals case illustrate about the pharmaceutical industry?

The Turing Pharmaceuticals case is an extreme example that highlights a broader issue within the pharmaceutical industry, where companies have been raising drug prices for years and are unlikely to change this practice.