Martin Shkreli, the pharma bro, was recently released from prison into a halfway house. In case anybody was able to forget Shkreli was originally in trouble for securities fraud and serving a seven-year prison sentence when regulators got involved with his pharmaceutical company Turing Pharmaceuticals. This is because it had a drug called Daraprim which was the only drug approved in the U.S. for treating toxoplasmosis. Toxoplasmosis is a parasite that can lead to life-threatening issues for people with immune systems that are compromised. While he was CEO, the price of that drug went from $17.50 a tablet to $750 a tablet. This spearheaded the criticism of pharmaceutical industry executives over the cost of prescription drugs, and in particular against Mr. Shkreli.
During that lawsuit, the federal government contended that the company blocked lower-cost alternatives from coming to the market through distribution agreements which would ensure generic companies couldn’t buy samples of the drug. The samples of Daraprim are needed for testing, required by the Food and Drug Administration, in order for any generics to be approved. Another method that they used was to have agreements that prevented distributors from selling Daraprim to a third party. Companies that make generics usually rely on data like this to decide if there is a market worth pursuing in generics for a current brand-name drug. These two methods successfully kept generic companies from being able to discover if there was a market, I don’t bring any similar drug before the FDA to be approved. Read more