The U.S. Senate Special Committee on Aging recently released its report Sudden Price Spikes in Off-Patent Prescription Drugs: The Monopoly Business Model that Harms Patients, Taxpayers, and the U.S. Health Care System (hereinafter Report). Using four companies as case studies—Turing Pharmaceuticals, Retrophin, Valeant Pharmaceuticals International, and Rodelis Therapeutics—this Report specifically investigates one corner of recent drug pricing controversies: dramatically increased prices on old off-patent pharmaceuticals. Per the Report, these companies pursued a business model that sought to “identify and acquire off-patent sole-source drugs over which they could exercise de facto monopoly pricing power, and then impose and protect astronomical price increases.”
For a variety of reasons, these particular price increases are morally troubling. It’s not just that these increases may be exploitative. The plain human consequences of these businesses’ brazen, yet seemingly legal, decisions are gravely concerning. These corporate actions harm patients in need of the companies’ drugs, the families and physicians who care for those patients, and the healthcare system that helps pay the tab.
What’s driving this morally concerning behavior? A common refrain points to weak government regulation. No doubt improvements can be made, but a significant and seemingly oft overlooked part of the answer may point to investors. What role have investors played in pricing controversies and what role ought they to play?
The Report suggests that prominent shareholders were often in contact with the senior management of the investigated pharmaceutical companies. These investors, even if not outright encouraging price increases, at least appear complacent. Examples include:
- A partner from Broadfin Capital, a major investor in Retrophin Inc., commented in an email to Retrophin’s then CEO: “‘Funny that these small companies still haven’t realized you can raise price aggressively and nobody gets too upset?
The views, opinions and positions expressed by these authors and blogs are theirs and do not necessarily represent that of the Bioethics Research Library and Kennedy Institute of Ethics or Georgetown University.