While investigating the recent skyrocketing prices of U.S. prescription drugs, congressional investigators uncovered several emails from former Turing Pharmaceuticals CEO Martin Shkreli admitting that he raised drug prices solely for profit. Although Shkreli claims the majority of profits went toward research, his emails tell a very different tale.
On Tuesday, Rep. Elijah Cummings, ranking member of the House Committee on Oversight and Government Reform, released two memos summarizing some of the key findings into the investigation. After receiving more than 250,000 pages of documents from Turing Pharmaceuticals and over 75,000 pages from Valeant Pharmaceuticals, the committee discovered company emails boasting about profits while price-gouging patients.
“These new documents provide a rare, inside look at the motivations and tactics of drug company executives,” Rep. Cummings said in a statement. “They confirm what Americans across the country have experienced firsthand for years — that many drug companies are lining their pockets at the expense of some of the most vulnerable families in our nation. The documents show that these tactics are not limited to a few ‘bad apples,’ but are prominent throughout the industry.”
After purchasing the rights to a drug that prevents infections in people with weakened immune systems, including AIDS patients and cancer survivors undergoing chemotherapy, former Turing Pharmaceuticals CEO Martin Shkreli raised the price of Daraprim by 5,500% last summer. Instead of paying $13.50 per pill, patients with life-threatening illnesses are now forced to pay $750 per pill. Led by the former hedge fund manager, Turing Pharmaceuticals was founded by Shkreli after his first startup biotech company, Retrophin, ousted him amid accusations of stock impropriety.
“I think it will be huge,” Shkreli wrote in an email on August 27, 2015. “We raised the price from $1,700 per bottle to $75,000… So 5,000 paying bottles at the new price is $375,000,000 — almost all of it is profit and I think we will get three years of that or more. Should be a very handsome investment for all of us. Let’s all cross our fingers that the estimates are accurate.”
While taking steps to purchase the exclusive rights to sell Daraprim, Shkreli wrote an email to the chairman of the board on May 27, 2015, boasting, “$1 bn here we come.”
On September 17, 2015, Tina Ghorban, senior director of business analytics and customer insights at Turing, forwarded a single purchase order for 96 bottles of Daraprim at the full price. Ghorban wrote, “Another $7.2 million. Pow!”
Receiving negative reactions from HIV/AIDS advocate groups, doctors, patients, hospitals, and providers, Turing was responsible for hitting patients with co-payments over $16,000. In an email from August 20, 2015, the director of specialty pharmacy development at Walgreens asked Ghorban whether Turing would grant exceptions to patients with exceptionally high co-pays. The Walgreens director wrote, “Would you be willing to grant an exception for those patients with a copay over the approved amount of $10,000? … Example: BCBS of North Carolina… Claim pays with a high copay of $16,830.00.”
According to the documents from Valeant Pharmaceuticals, the company intended to aggressively raise the price of two prescription drugs for the sole purpose of increasing profits at the expense of medical patients. Although Isuprel’s previous owner acquired $54.5 million in 2014, Valeant’s goal for the drug in 2015 was $279.3 million. The goal for Nitropress in 2015 was $245.5 million, up from $98.7 million in 2014.
In October 2014, Sen. Bernie Sanders and Rep. Cummings launched an investigation into the recent epidemic of drastically increasing drug prices. On February 24, 2015, Sanders and Cummings sent a letter to the Office of Inspector General requesting a thorough examination of the price hikes and the effects these price increases have had on Medicare and Medicaid. In December, the Department of Health and Human Services released their report revealing that price gouging has cost taxpayers $1.4 billion since 2005.
In 2014, Retrophin’s board fired Shkreli and later sued him for breaching his duty of loyalty to the company. After purchasing the exclusive rights to sell Daraprim, Shkreli gained notoriety by suddenly raising the price of the drug by 5,500%. Last year, he bought an unreleased Wu-Tang Clan album for $2 million and sent a campaign contribution to Sen. Sanders, but the presidential candidate refused to accept the dirty money.
Shortly after KaloBios Pharmaceuticals named Shkreli its new chairman and CEO, he was arrested and charged with securities fraud, securities fraud conspiracy, and wire fraud conspiracy while allegedly defrauding investors and misappropriating assets. Following his arrest, Shkreli was removed as CEO of both Turing and KaloBios. The latter company filed for bankruptcy.
Recently Shkreli has appeared on TMZ while making vague threats to Ghostface Killah from the Wu-Tang Clan. The video of Shkreli posing with masked goons was a response to the rapper openly mocking the disgraced CEO for drastically raising the price of Daraprim and for refusing to release the Wu-Tang Clan’s new album to the public.
On Thursday, a committee hearing will review the aggressive hike in drug pricing along with the tens of thousands of documents, including company emails bragging about the increase in profits without concern for patients’ health or financial issues. Although Valeant’s interim chief executive, Howard Schiller, is expected to testify at Thursday’s hearing, Shkreli announced that he will invoke his Fifth Amendment right and not answer any questions.