Martin Shkreli is the man America loves to hate, and for good reason. He became a household name last year when he raised the price on the AIDS medication Daraprim from $13 to $750 per pill, in a move he claimed was necessary to maintain profits. During his appearance before Congress in February, Shkreli was aloof, condescending, and smirked and rolled his eyes while invoking the Fifth Amendment; he followed up his performance with a tweet calling the lawmakers “imbeciles”. Class act, that one.
Shkreli currently faces two criminal counts of securities fraud and six other conspiracy charges related to his time as a hedge fund manager; he recently received a court date for June 26, 2017. He and his co-defendant are also charged with illegally siphoning money from Retrophin, the company that owned Daraprim, which they allegedly used to pay off those hedge funds. (source)
This is but one example of how rare disease patients are getting screwed by what was intended to be a beneficial program, but fuckwits like Shkreli found loopholes to take advantage for their own benefit.
The Orphan Drug Act was passed in 1983 to offer tax credits and monopolies to drug companies to entice them to develop medications for rare diseases, which had been neglected prior to that. Unfortunately, it has backfired.
Per the Washington Post:
Pharmaceutical companies can reap huge profits because of the most important perk offered by the law: a period of market exclusivity that prevents competition for seven years. That has paved the way for drug prices so high that a single year of treatment can cost more than a car or even a house. Since the act passed, the median launch price of orphan drugs for chronic use has doubled every five years, according to an analysis presented in May by a team of Massachusetts researchers.
So, is this really a big deal for everyone? Absolutely. As the prices for these drugs increase, it drives up insurance costs for everyone. The costs of orphan drugs is growing at double the rate of the overall prescription drug market, and everyone knows how bad that is.
Since the definition of an orphan disease is one that affects 200,000 people or less, it made sense to have something in place to change the status of a drug if more patients were identified. However, although Congress quickly passed an amendment to revoke the exclusive nature if the drug’s target market went over 200,000 patients, President Bush Sr. refused to sign it.
I speak from personal experience here. Having a rare disease in and of itself is an utter bitch. The road to diagnosis is long and treacherous; finding doctors who can treat it can be a crapshoot. Dealing with insurance companies both before and after diagnosis can be a full-time job and then some, according to the Cohen Law Group insurance claims disputes specialists. Even the most liberal policies are still very difficult to navigate for treatments, leaving patients to spend an extraordinary amount of money out of pocket. This is where the costs really hit home.
In 2014, the average annual cost per patient for the 100 top-selling orphan drugs in the United States was nearly $112,000, compared with $23,000 for non-orphans, according to an Evaluate report. And orphan drugs are generally cheaper to develop. The largest, most expensive clinical trials for orphan drugs cost about a quarter as much as those for non-orphan drugs, after the tax credits are factored in, according to the report.
The case of Martin Shkreli and the drug Daraprim is the strangest loophole of all, and perhaps one of the most difficult to understand. This occurs when a medication that was invented years, even decades, ago is granted orphan status, and suddenly the cost goes through the roof.
The high prices of orphan drugs have been detached from the law’s original rationale — that incentives are necessary for companies to recoup the costs of research and development of treatments with tiny markets. Today, some pharmaceutical companies use the word “orphan” to justify a drug’s high price, whether or not that drug is protected by the law’s exclusivity. The market has come to expect high prices for any drug that treats very few patients, and the system lacks any real mechanism to counter the price increases.
According to Global Genes, one in ten persons suffers from a rare disease, and half of those are children. When this is looked at on a national scale, it has the potential to affect 30 million patients directly, and that is a really big deal when it comes to prescription drug costs.