Daraprim, a 62-year-old generic drug used by cancer and AIDS patients, recently made headlines when its price ballooned from $13.50 per pill to $750 overnight.
The 5,000 percent price hike was handed down by the drug’s new owner, Turing Pharmaceuticals, a privately held startup biotech company founded by former hedge fund manager Martin Shkreli.
Although many people now view Shkreli as a prescription price-gouging villain (and rightly so), he is not alone in this practice. Daraprim is one of several drugs that has skyrocketed in price since 2013.
According to a new report by the nonprofit activist group Hedge Clippers, an increase in medical or production costs is rarely behind the massive hikes in drug prices.
So what — or who — is responsible?
“Out of the 25 drugs with the fastest-rising prices over the past two years, 20 are owned or have been acquired by firms with significant activity from hedge fund, private equity, or venture capital firms during the relevant time period,” the report said.
That’s right. According to the anti-hedge fund organization Hedge Clippers, hedge funds and private equity firms are driving up drug prices.
For example, “drugs like Sprix nasal spray or Vimovo have rocketed in price after an ownership change made possible by private investment,” the report said.
“It’s not just one unethical guy. It’s this broader winner-take-all mentality in hedge funds and private-equity firms that is infecting public health,” Michael Kink, one of the leaders of the Hedge Clippers and executive director for the union-backed Stronger Economy For All Coalition, told CNN Money.
Based on data from the Medicaid National Average Drug Acquisition Cost survey, Hedge Clippers lists 19 drugs that have experienced price hikes of 435 percent to 1,270 percent over the last two years.
Of those listed, Hedge Clippers noted 15 are produced by companies that have been backed by hedge funds, private equity firms or venture capital firms, including:
- Vimovo (500-20 mg tablets): Arthritis pain reliever made by Horizon Pharma. The price per tablet increased from $1.88 in 2013 to $23.86 in 2015, which represents a hike of 1,270 percent.
- Dutoprol (25-12.5 mg tablets): Used to treat high blood pressure, this Covis Pharma-manufactured drug has experienced a 1,013 percent increase from 52 cents a pill in 2013 to $5.26 per pill today, according to the report.
- Tasmar (100 mg tablet): This Valeant-produced drug is used to treat Parkinson’s disease. The price per Tasmar tablet increased by 675 percent in the past two years, from $15.70 in 2013 to $105.98 today, Hedge Clippers said.
Horizon, maker of Vimovo, which experienced the biggest increase in price in the last two years, told CNN Money that pricing doesn’t drive its business.
The company said 97 percent of all Vimovo patients pay $10 or less out of pocket (which still represents a 430 percent hike from the previous price).
The patients who pay the sticker price are those that don’t have health insurance. In general, insurance companies negotiate a discounted rate.
Hopefully, the recent increased scrutiny of prescription drug prices — from the media, lawmakers and the public — is a sign that times are changing and the days of ridiculously large increases in drug prices are coming to an end.
What do you think about the report’s claims that hedge funds and private equity firms are driving drug price increases? Sound off below or on our Facebook page.