Why do drug companies charge so much? Because they can.

October 05 01:00 2015 by ushadmin

In 1953, a new drug was released by Burroughs Wellcome, a pharmaceutical company based in London. Pyrimethamine, as the compound was named, was originally intended to fight malaria, after the microorganisms that cause the disease developed resistance to earlier therapies. The drug was used against malaria for several decades, often in combination with other compounds. It’s mostly used now to treat toxoplasmosis, a parasitic infection that can be life-threatening in people whose immune systems are suppressed, for example, by HIV/AIDS or cancer.

More than 40 years later, Burroughs Wellcome merged with the British pharmaceutical giant Glaxo. In 2010, the company, now GlaxoSmithKline, sold the U.S. rights to pyrimethamine — which is marketed under the brand name Daraprim — to another firm, CorePharma. By then, the patent on the drug had long since expired, but because nobody bothered to make a generic, Daraprim was essentially a monopoly.

In August, there was another significant development in the drug’s history: CorePharma’s parent company, Impax Laboratories, sold it to Turing Pharmaceuticals. Almost immediately, the company raised the price from $18 a pill to $750, a more than 40-fold increase, and this past week it sent its brash chief executive, Martin Shkreli, out to aggressively defend the new cost.

A course of treatment for toxoplasmosis is about 100 pills, which under the new pricing would run $75,000. Why the astonishing increase? The answer is: Why not?

Unlike every other advanced country, the United States permits drug companies to charge patients whatever they choose. (In this case, with Daraprim’s patent expired, Turing is probably in a hurry to make as much as possible before a generic version can enter the market. It announced after the fury over the increase that it would lower the price again, but you can bet it won’t fall all the way back to $18 a pill.) In Britain, in contrast, GlaxoSmithKline sells the drug for 66 cents a pill, and in India, it costs even less. The new U.S. price grabbed public attention because it was so sudden and extreme. But exorbitant charges for drugs that treat serious diseases are hardly unusual. Avastin, for example, a cancer medication of dubious benefit, can cost close to $100,000 for a year’s treatment. And prices for almost all prescription drugs are rising much faster than the background inflation rate.

Drug companies say high prices are necessary to cover their research and development costs, enabling them to discover innovative new medicines. Turing says it planned to use the profits from Daraprim’s higher price to fund research into better treatments for toxoplasmosis…