Emails Reveal Turing, Valeant Price Increases Were Basis for Revenue Growth

Here’s Why 5 Billionaire-Led Funds Gobbled Up 3.3 Million Shares of Celldex Stock

February 3, 2016
By Alex Keown, Breaking News Staff

WASHINGTON – Martin Shkreli predicted the 5,000 percent price increase for toxoplasmosis drug Daraprim would bring Turing Pharmaceuticals more than $300 million annually for at least three years, according to company emails made public by the U.S. House of Representatives’ Committee on Oversight and Government Reform.

“I think it will be huge. 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 3 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,” Shkreli said in one email.

Turing’s emails, as well as those of Canada-based Valeant Pharmaceuticals , show the company’s growth was driven in large part by the increased price of prescription drugs. The congressional committee also said that the price increase for the medication also put it out of reach of many patients who relied on the medication. Additionally, the documents released by the congressional committee, showed that Turing knew the price increase would raise the objections of some patient segments, particularly those stricken with HIV/AIDS, who are susceptible to toxoplasmosis. The company believed though, that those patients and their advocacy organizations, “could be managed.”

Valeant is facing scrutiny from U.S. lawmakers and two U.S. attorney’s offices over pricing of drugs acquired through acquisitions. Valeant is under fire for a price increase of two recently-acquired cardiac drugs, Nitropress and Isuprel, after the company acquired Salix Pharmaceuticals, Ltd. Valeant then increased the prices for those drugs by 212 percent and 525 percent, respectively. Valeant acquired the two drugs in April.

“From 2014 to 2015, Valeant increased the prices of more than 20 additional “U.S. Prescription Products” by more than 200%. Valeant raised the prices of several of these products multiple times from 2014 to 2015, in some cases by as much as 800%,” the committee said in its memo.

Valeant’s emails and memos obtained by the committee showed Valeant anticipated that both drugs would eventually face competition from generic manufacturers, but wanted to ensure the company could benefit from its “temporary monopoly” by “increasing prices dramatically to extremely high levels very quickly.” The committee highlighted several emails justifying the price increase, including the following:

“A presentation dated January 16, 2015, from an outside consulting firm entitled “Nitropress and Isuprel Pricing Flexibility Review” stated, with respect to Nitropress: “With roughly 1 year of data showing essentially static volume performance after a substantial price increase (350%), MME [Medical Marketing Economics] believes pricing flexibility may still exist for the product up to the perceptual price point of $1,000 per vial.” The presentation concluded: “With current WAC [Wholesale Acquisition Cost] pricing at $214 per vial, Nitropress is likely to still have flexibility by multiple orders of magnitude.” Regarding Isuprel, the presentation stated: “Similar to Nitropress, one year of market data does not indicate negative consequence, following a substantial price increase (350%) ... MME believes the price for one vial of Isuprel may be adjusted to $700.”

Like Turing, Valeant believed any negative reaction could be managed. In efforts to assuage any scrutiny, the Canadian company used a public relations strategy to focus on patient assistance programs, rather than the cost of the treatments, the committee said.

In addition to the two cardiac drugs, Valeant has also been criticized for quadrupling the price of the 55-year-old drug Cuprimine, used in the treatment of Wilson disease. A New York Times article excoriated Valeant for its practice of increasing the price of drugs following an acquisition. According to a Deutsche Bank report, Valeant increased prices on its brand-name drugs an average of 66 percent, about five times more than its other competitors, the Times said.

Shkreli, who resigned from his position at Turing following a federal indictment on seven counts of securities fraud, and current Turing executives, along with Valeant officials are scheduled to appear before the congressional committee on Thursday. Last week Shkreli retweeted U.S. Sen. Susan Collins, a Maine Republican, who announced that Shkreli had invoked his Fifth Amendment privileges, which allows a witness to decline to answer any questions that may incriminate themselves in a court of law. In multiple interviews and on his Twitter feed, Shkreli has said the federal government does not understand how pharmaceutical pricing works.