There’s a drug called Thiola (tiopronin) that most people have never heard of. It’s on my list of “smaller than aspirin” drugs, and I’d never heard of it until I put that one together. But thanks to a little company called Retrophin, we all get to hear about it now.

It’s used to treat cystinuria, a rare disease that causes painful kidney complications, namely unusual kidney stones of pure cystine. And until recently, tiopronin (as a small, nearly forgotten drug for an orphan indication) was rather cheap. It was sold by a small company in Texas, Mission Pharmacal, until Retrophin bought the marketing rights earlier this year (a move complicated by the company’s CEO, investor Martin Shkreli, who may have let the news of the deal leak on his Twitter account).

That link mentions part of Shkreli’s business plan as “acquiring the rights to obsolete remedies Shkreli says can be put to new and lucrative purposes”, and by gosh, that’s certainly accurate. Retrophin is increasing the price of Thiola from $1.50 per pill to over $30 per pill. Because they can – they stated when they bought the drug that their first move would be to raise the price. New dosages are formulations are also mentioned, but the first thing is to jack the price up as high as it can be jacked. Note that patients take several pills per day. Shkreli is probably chortling at those Mission Pharmacal hicks who didn’t realize what a gold mine they were sitting on.

Now, there have been somewhat similar cases in recent years. Colchicine’s price went straight up, and (infamously) so did the progesterone formulation marketed as Makena. But in both those cases, the small companies involved took the compound back through the FDA, under an agency-approved program to get marketing exclusivity. I’ve argued here (see those last two links) that this idea has backfired several times, and that the benefit from the clinical re-evaluation and re-approval of these drugs has not been worth their vastly increased cost. I think that drug companies should be able to set the price of their drugs, because they have a lot of failures to make up for, but this FDA loophole gives people a chance to do minimal development at minimal risk and be handed a license to print money in return.

But this isn’t even one of those cases. It’s worse. Retrophin hasn’t done any new trials, and they haven’t had to. They’ve just bought someone else’s old drug that they believed could be sold for twenty times its price, and have put that plan right into action. No development costs, no risks whatsoever – just slap a new sticker on it and put your hands over your ears. This is exactly the sort of thing that makes people go into fist-clenching rages about the drug industry, and with damn good reason. This one enrages me, and I do drug research for a living.

So thank you, Martin Shkreli. You’ve accelerated the progress of the giant hammer that’s coming down on on all of us over drug pricing, and helped drag the reputation of the pharmaceutical industry even further into the swamp. But what the hell do you care, right? You’re going to be raking in the cash. The only thing I can say about Shkreli and Retrophin is that they make the rest of the industry look good in comparison. Some comparison.

Update: There are some interesting IP aspects to this situation. As pointed out in the comments section, this compound has no exclusivity left and is off patent. So what’s to stop someone else from filing an ANDA, showing bioequivalence, and competing on price (since there seems to be an awful lot of room in there)?

Simon Lackner on Twitter sent me to this presentation from Retrophin on their purchase of the Thiola license. In it, you can see that their plan for this: “Similar to Chenodal, Retrophin will move Thiola into closed distribution”. Chenodal was the company’s previous brainstorm of this sort, when they bought Manchester Pharmaceuticals, details of which can be seen on this presentation. What they say on that one is “Closed distribution system does not allow for generics to access product for bioequivalence study. ANDA filings are impossible unless generic company illegally penetrates specialty distributor. Recent Celgene v. Lannett case establishes precedent.” So let’s go back and take a look at Celgene v. Lannett.

That was a long-running dispute between the two companies over Lannett’s desire to market a generic equivalent of Celgene’s thalidomide. Lannett brought suit, accusing Celgene of using the drug’s Risk Evaluation and Mitigation Strategy (REMS) improperly to deny potential competitors access to their product (which is needed to do a head-to-head comparison for an ANDA filing). As you can imagine, the REMS for thalidomide is pretty extensive and detailed! But there was no court decision in the case. The companies reached an out-of-court settlement before it went to trial in 2012, although I have to say that that Retrophin slide makes it sound like there’s some sort of legal precedent that was set. There wasn’t. The limits of REMS restrictions to deny access to a given drug are still an open question.

In late 2012, Acetelion and Apotex went at it over the same issue, this time over access to Tracleer (bosentan). The Federal Trade Commission filed an amicus brief, warning that companies could be abusing the REMS process to keep out competition. That case was also dismissed, though, after the two companies reached an out-of-court settlement of their own, removing another chance for a legal opinion on the subject.

But the issue is very much alive. Earlier this year, Mylan went after Celgene, also over thalidomide (and its follow-up, lenalidomide). Their complaint:

Celgene, a branded drug manufacturer, has used REMS as a pretext to prevent Mylan from acquiring the necessary samples to conduct bioequivalence studies, even after the FDA determined that Mylan’s safety protocols were acceptable to conduct those studies. In furtherance of its scheme to monopolize and restrain trade, Celgene implemented certain distribution restrictions that significantly limit drug product availability.

And this is the plan that Retrophin has in mind – they say so quite clearly in those two presentations linked above. What their presentations don’t go into is that this strategy has been under constant legal attack. It also doesn’t go into another issue: the use of REMS at all. Thalidomide, of course, is under all kinds of restrictions and has plenty of hideous risks to manage. Bosentan’s not exactly powdered drink mix, either – patients require monthly liver function tests (risk of hepatoxicity) and monitoring of their hematocrit (risk of anemia). But what about Thiola/tiopronin? It’s not under any risk management restrictions that I can see. Its side effects seem to be mainly diarrhea and nausea, which does not put it into the “This drug is so dangerous that we can’t let any generic company get ahold of our pills” category. So how is Retrophin going to make this maneuver work?

Update: more on this issue here.