Turing Pharmaceuticals recently increased the price of an infectious disease drug by 5,000 percent; there are reports that Turing and other pharmaceutical companies could be restricting drug distribution in violation of antitrust laws
In letter to the Federal Trade Commission, Klobuchar urges an investigation into Turing Pharmaceuticals and others for possible violations of Federal Trade Commission Act
Washington, DC – U.S. Senator Amy Klobuchar is calling for a Federal Trade Commission (FTC) investigation of pharmaceutical companies for possible antitrust violations in light of recent alarming drug price increases. For example, Turing Pharmaceuticals recently increased the price of an infectious disease drug, Daraprim, by 5,000 percent, until public pressure forced the company to commit to bringing the price back down. Daraprim is used to treat toxoplasmosis, a parasitic infection that is particularly dangerous for people who have weakened immune systems, like AIDS and cancer patients, as well as pregnant women. There are reports that Turing and other pharmaceutical companies could be restricting drug distribution in a manner that violates the antitrust laws established in the Federal Trade Commission Act.
“Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system,” Klobuchar wrote. “If the restricted distribution prevents or delays generic competition, it could subject consumers to unnecessarily high prescription drug prices. We urge you to investigate whether companies are using restricted distribution in a manner that violates the Federal Trade Commission Act. This issue is extremely important to consumers; access to affordable drugs and in particular generics is a necessary element of affordable health care.”
Klobuchar has been a leader in the Senate on addressing the high cost of prescription drugs, authoring multiple pieces of legislation that would protect American consumers. The Safe and Affordable Drugs from Canada Act would help Americans access safe, affordable prescription drugs from Canada by requiring that the Federal Drug Administration establish a personal importation program that would allow individuals to import a 90-day supply of prescription drugs from an approved Canadian pharmacy. The Preserve Access to Affordable Generics Act would expand consumers’ access to the cost-saving generic drugs they need, increasing competition and choices for consumers by helping put an end to the practice of brand-name drug manufacturers using anti-competitive pay-off agreements to keep more affordable generic equivalents off the market.
Klobuchar has taken on drug price hikes in the past, including addressing Ovation Pharmaceuticals price-gouging and anti-competitive practices after the company cornered the market on a type of drug used to treat heart conditions in premature infants and increased the price of one of the drugs, Indocin IV, by nearly 1,300 percent, from $108 to $1,500 per unit.
Full text of Klobuchar’s letter to FTC Chairwoman Edith Ramirez is below:
Dear Chairwoman Ramirez:
I am writing to you regarding a troubling practice that may be harming American consumers. For years, some companies have purchased older drugs and imposed substantial price increases. Some companies may be combining a substantial price increase for a prescription medication with a closed distribution system. If the restricted distribution prevents or delays generic competition, it could subject consumers to unnecessarily high prescription drug prices. I have no opinion on whether legal violations have occurred, but I urge you to investigate the issue to determine whether any companies have violated the Federal Trade Commission Act.
As a public policy matter, the practice of substantially increasing prices is disturbing, but as you know, the antitrust laws do not apply to unilateral price increases, no matter how unfair. Turing Pharmaceuticals’ 5,000 percent price increase on Daraprim, from which they have retreated, is the most recent example of this disturbing trend.
Such price increases could convince another company to seek approval for a generic version, enter the market, and lower the price for the product. This is how the free market is supposed to work. To conduct the necessary tests to receive approval from the Food and Drug Administration, a generic company would need a limited amount of the branded product. According to press reports, Turing, and perhaps others, are restricting distribution of their product. If a company were to employ this strategy to deny competitors supply for use in a generic application, it would be doing more than simply raising prices. It could be excluding competition from the market to the detriment of consumers and violating the Federal Trade Commission Act.
This issue is extremely important to consumers; access to affordable drugs and in particular generics is a necessary element of affordable health care. I believe there is sufficient concern for the Federal Trade Commission to thoroughly investigate whether Turing Pharmaceuticals or any other pharmaceutical company has used restricted distribution practices to insulate a price increase from competition.
Thank you for your attention to this matter.