Off-patent drugs at brand-name prices: a puzzle for policymakers

Abstract

In August 2015, Turing Pharmaceuticals acquired the marketing rights to Daraprim (pyrimethamine), a drug used to treat parasitic infections like malaria and toxoplasmosis. Soon after, Turing caused an uproar when it announced that it would raise the price per tablet of Daraprim from \documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{upgreek} \usepackage{mathrsfs} \setlength{\oddsidemargin}{-69pt} \begin{document} }{}$\rm{\$ 13.50\ to\ \$ 750}$\end{document}, a 5500% price hike for a drug that has been on the market for over 60 years and off patent since the 1970s. Old, off-patent drugs are becoming increasingly expensive; Daraprim is the archetypal example. Turing had the power to set a high price for Daraprim because the drug's limited patient population, the absence of competing manufacturers, and a lack of therapeutic alternatives all created an effective monopoly. Similar forces have driven up the prices of other off-patent drugs that treat diseases as diverse as heart failure and multi-drug-resistant tuberculosis. Thus, policymakers will have to consider how the high cost of off-patent drugs impacts public health as well as public spending. In this Note I outline the extent of the high-cost off-patent drug problem, drawing special attention to the problem's negative effects on both health outcomes and government budgets. After discussing some of the problem's underlying causes, I present several solutions to the problem that policymakers could consider, with a focus on proposals like reference pricing and expanded compounding that have received relatively little media attention.