Derek Lowe's commentary on drug discovery and the pharma industry. An editorially independent blog from the publishers of Science Translational Medicine . All content is Derek’s own, and he does not in any way speak for his employer.

In the post just before this one, I’ve outlined the situation with Turing Pharmaceuticals and their strategy of gigantic price increases. As the links there show, however, they’re not alone. Several other companies have the same idea: find a small drug, for a small population, that’s not selling for much, and ram the price up as high as possible immediately. This is a terrible idea.

It’s terrible for several reasons. You have the ethical/humanitarian ones obviously, but I can make a case without even appealing to those arguments – which is good, I’d say, because those sorts of arguments (as correct as they can be at times) rarely seem to make a lot of headway. Here, then, is the more hardheaded case against Martin Shkreli and his ilk.

First off, they are horrendous for the reputation of the entire drug industry. As I’ve said before, critics of “Big Pharma” tend to go on about rapacious, greedy pricing schemes, squeezing patients and insurance companies beyond any human decency, and so on. Well, what do we do when someone comes along who’s actually doing just that? Who’s living the stereotype, exemplifying every cliché about Evil Drug Companies? My fear is that most members of the general public will draw no distinction at all between the likes of Turing Pharmaceuticals and all the other companies with names like “Something-Something Pharmaceuticals” – that is to say, the rest of the industry. Turing’s business model is basically that of a virus, hijacking a lot of existing machinery for its own ends, but no one’s going to see that unless they understand a fair amount about the business, and if there’s one thing I’m sure of, it’s that most people don’t understand much about the drug business at all. A biotech CEO has already sent a note to Adam Feuerstein, pleading with him to make the case the Shkreli and Turing are not representative of the industry. I agree, but how many people are going to listen?

Second, the awful publicity about these pricing strategies runs a serious risk of bringing the entire pricing structure of the industry under much heavier scrutiny and regulation. Martin Shkreli is going around saying that Turing is just a tiny little company, raising prices on a tiny little drug – and although that’s probably true, it doesn’t matter. This sort of thing could be a catalyst for far bigger changes, and many of those would be very unpleasant for the rest of the industry. Do you want to have pricing power for your new drugs? Then you need to police that, because pricing power is not some sort of natural right. It might be one in an ideal free market, but you may have noticed over the years that pharmaceuticals do not trade in any sort of ideal free market. The industry is regulated backwards, forwards, and sideways, and the various governments and government agencies involved (starting, but certainly not ending, with the FDA here in the United States) can do all sorts of things if provoked. And remember, coming down good and hard on the drug companies would, in fact, be politically very popular, and we’re heading into an election year around here.

So what should be done? We need to have more drug companies making loud, prominent public statements about this behavior. (I see others calling for this as well). Where’s PhRMA? Keeping their heads down, as far as I can see, which means (for most people) that “silence gives consent”. I understand being reluctant to talk about drug pricing, for fear of opening up discussions that you don’t want to have, but you know what? Those discussions are already going on, and as they say in politics, if you’re not at the table then you’re on the menu. The industry needs to get out in front of this stuff and make it clear that strategies like Turing’s are regarded as aberrations, misfunctions in the system rather than just sort of larger-than-normal examples of, y’know, business as usual. Is anyone going to do this?

Secondly, there should be calls – not least from industry – for the FDA to re-evaluate how it deals with the loopholes that are being exploited. The regulatory framework for bringing old drugs into modern compliance has had unintended consequences, and it’s time to rethink it. The regulatory framework for taking a drug into closed distribution has had unintended consequences, and it’s time to rethink it. Is anyone going to do this?

Retrophin, Turing, Catalyst, Makena, Valeant and others are warning signs. The way that they’re raising prices with such impunity on drugs that they took no risks on whatsoever is a failure of the system. The rest of us, companies and employees of companies that actually do the work of real drug development, need to step up, loudly and publicly, to distinguish ourselves from these rent-seeking parasites. Otherwise, we shouldn’t be surprised if people treat us as more of the same type. Is anyone going to do this?

Update: it’s not hard, folks. Shkreli practically denounces himself; joining in should be the work of a moment. . .

Update 2: here are some suggestions from John LaMattina.