Specialty pharmaceutical companies that acquire certain drugs then spike the prices “egregiously” were compared to loan sharks and warned they were putting patients’ “lives in the balance” at a congressional hearing on Wednesday.

Drug companies such as Turing and Valeant, which have been under fire for months because of the soaring prices of lifesaving medications they made, were accused of being driven simply by greed, by congressional leaders in Washington on Wednesday afternoon.

Turing’s founder and chief executive, Martin Shkreli, was singled out by name for his cocky public defiance over recent price hikes – and briefly mocked after it emerged earlier in the day that he had paid a reported $2m to buy a one-off Wu-Tang Clan rap album.

Republican senator Susan Collins, of Maine, told the hearing that the new breed of drug entrepreneurs who focus on acquisitions and profits at the expense of research and healthy marketplace competition looked more like hedge funds than pharmaceutical businesses.

“These companies are to ethical pharmaceutical companies as a loan shark is to a bank,” Collins said.

The bipartisan Senate special committee on ageing, led by Collins and Democratic Senator Claire McCaskill, of Missouri, listed four companies as deserving of criticism and scrutiny – Turing, Valeant Pharmaceuticals International, Rodelis Therapeutics and Retrophin, the company Shkreli ran before he founded Turing.

Collins said the hearing was called to investigate the “sudden and dramatic” price increases that occur after companies buy the rights to certain older, niche drugs that are no longer protected by patents but have no significant generic competitors.

“Each of these companies has hiked the prices by 20, 30 or 40 times the prior price, at times putting these medicines out of reach for the patients and the doctors who treat them – and bearing in mind that they did not bear the research costs of developing these drugs,” said Collins.

“I certainly intend to call the CEOs of the four firms that we are focused on thus far,” Collins said, adding that the committee’s findings may also be incorporated into an Food and Drug Administration reform bill next year.

Shkreli became engulfed in a furore in September after it was revealed that he increased the price of Daraprim overnight from $13.50 per pill to $750 per pill, after buying the rights to it in August 2015, and also made it harder for doctors and pharmacies to get hold of it.

Collins cited a hospital in North Carolina that was treating children for the dangerous infectious disease toxoplasmosis and had to seek out an alternative drug that had not been appropriately tested because the standard drug to treat the illness was Daraprim.

After loud protests over the price hike, including from presidential hopeful Hillary Clinton, who also warned she would crack down on the practice if she wins the White House, Shkreli told the Guardian he would drop the price of the drug – then later reneged on that pledge.



But Turing was only one player in the strengthening storm over prescription drug prices that are relatively obscure but lifesaving for certain illnesses, which has now prompted the Senate to investigate.

“One goal is to understand why such companies can impose egregious price increases on off-patent drugs that they’ve acquired. Our system relies on competition to keep prices in check and there has been a market failure,” said Collins.

McCaskill told the committe hearing: “My main challenge today will be keeping my temper.”

Where companies had a de facto monopoly on drugs that patients rely on, tactics have quickly turned to price-gouging, she said.

‘My main challenge today will be keeping my temper,’ said Senator Claire McCaskill. Photograph: J Scott Applewhite/AP

“They can try to hide the truth but if this is just greed we have a duty to find out how to protect patients,” she said.

Health experts giving evidence at the hearing talked about how sudden price hikes had affected patients in their care.

Dr Erin Fox, director of drug information services at the University of Utah health care system, based in Salt Lake City, said that the hospitals in her jurisdiction had been forced to restrict the availability of two drugs supplied by the firm Valeant that are designed for use during the emergency treatment of cardiac arrest.

The drugs, Isuprel and Nitropress, had normally been carried on all the “crash carts” that doctors wheel around the hospital to rush to a “code” call – or alert of a cardiac arrest, she said.

In 2013, she told the committee, the hospital would pay $50 each for a dose of either drug. After the drugs were acquired by another firm in 2014, the price increased to $215 per dose of Nitropress and $440 per dose of Isuprel. Then, after being acquired by Valeant in 2015, Nitropress jumped to $660 a dose and Isuprel to $2,700, she said.

She said that nothing appeared to have changed about the drug itself and that Valeant did not manufacture it but simply “put its label on the bottle”.

When Fox worked out that the two drugs would cost the healthcare system almost $2m a year, the hospital stopped routinely carrying them on the crash carts and kept them locked up, which caused “some delay” in treatment and “frustration” to her staff, she said.

Valeant Pharmaceuticals International switched priorities away from research and development and into aggressive acquisitions and extracting value from its drug rights after former McKinsey & Co executive Michael Pearson became chief executive in 2008.

Canadian Business magazine recently named Pearson CEO of the Year 2015, noting that the acquisitive company he “cannily built” had swiftly made its “investors – and himself – very rich”.

At the Senate committee hearing on Wednesday, Dr David Kimberlin, a leading US pediatric infectious diseases specialist based at the University of Alabama, said that he had had a problem getting hold of Daraprim since Turing acquired the drug and changed the way it is distributed.

Kimberlin said he experienced problems accessing the drug in the liquid form that babies need.

“This has directly put the lives of patients with this severe infection at risk. Babies’ lives literally hang in the balance here,” Kimberlin said.



He said his healthcare system had seen the cost of a typical course of what he termed pyrimethamine, the medicine in the branded drug Daraprim, for adults rise from $1,200 to $69,000 under Turing’s ownership, with some serious cases costing “no less than” $500,000, having cost $8,500 before, he said.

“It’s appropriate that the Senate take up this issue,” he said.