Why would Martin Shkreli hike an old drug price by 5000%? Only a 'moron' would ask

Back when Martin Shkreli was CEO of Retrophin, he managed to grab a few headlines by buying an old rare-disease drug, Thiola, and raising the price 2000%. Now that he's on to his next company, Turing Pharmaceuticals, he's done himself one better, by buying another old drug and boosting the price 5000%.

The drug is Daraprim, which Shkreli's Turing Pharmaceuticals bought a few weeks ago from Impax Laboratories. As Healio and USA Today reported in recent days, Turing immediately hiked the price from $13.50 per pill to $750.  

"Under the current pricing structure, it is estimated that the annual cost of treatment for toxoplasmosis, for the pyrimethamine component alone, will be $336,000 for patients who weigh less than 60 kg and $634,500 for patients who weigh more than 60 kg," wrote the Infectious Diseases Society of America and the HIV Medicine Association, according to Healio's story. "This cost is unjustifiable for the medically vulnerable patient population in need of this medication and unsustainable for the health care system."

Daraprim was approved to treat toxoplasmosis in 1953, 30 years before Shkreli was born. And once again, he's flirting with becoming the poster child for price gouging in the pharma industry.

Explaining the move to USA Today, a spokesperson for the company said the company needed to raise prices in order to fund its research work on toxoplasmosis, along with new education programs for the disease. Toxoplasmosis is a common food-borne disease that can afflict people with weakened immune systems, which is why the AIDS community has become alarmed.

Martin Shkreli

In an exchange on Twitter, Shkreli first noted that engaging with me would make my head "spin." (We have a history. Reporting a recent lawsuit Retrophin's investors filed against Shkreli--including accusations of looting the company, which Shkreli has denied--the CEO called me an idiot. Twitter is not for the thin-skinned.)

"It's a great business decision that also benefits all of our stakeholders," Shkreli then retorted. "I don't expect the likes of you to process that."

His next remark: "You are such a moron."

There isn't anything unusual about the strategy, and certainly nothing illegal. Patient groups routinely complain about companies that charge ever higher prices for older drugs. Big Pharma regularly increases prices on drugs that are nearing a patent loss, and companies like Valeant ($VRX) have pursued a practice of buying old drugs and immediately raising the price in the U.S. Gilead ($GILD) was accused of taking advantage of patients with its startling sticker shock for hep C drugs, and the company had just cured the disease without all the ugly side effects associated with earlier drug regimens.

Shkreli's extreme sticker shock strategy on an ancient therapy, though, has become the kind of lightning rod for the controversial pricing issue that the industry will find it hard to defend against in the lead-up to a presidential election.

Turing has gone out of its way to protect individual patients with a co-pay assistance program. Payers, both federal and private, won't be as fortunate. They'll get hit with a massive price increase and pass it on in the form of higher taxes, greater debt and bigger insurance premiums.

Which is what we all get to pay.

And if you take issue with it, you'll be just as big a moron as I am.

(One quick addendum: After watching this piece blow up on Twitter Sunday, with The New York Times stepping in and comments on Reddit going viral, Turing and Shkreli are getting hit with a serious backlash. On Monday morning, Democratic presidential contender Hillary Clinton swiftly seized on the controversy, condemning the move as "outrageous" on Twitter and promising to follow up with a plan tomorrow that would stop it. The Nasdaq biotech index dropped 1.8% in morning trading as fears spread that the uproar could lead to legislative changes that would affect the entire industry. A spokesperson for the FDA declined comment on the pricing brouhaha, referring any questions to CMS, which has yet to respond to a query. Shkreli is no longer threatening to become the poster child for price gouging. He's earned the title.) -- John Carroll, editor-in-chief (email | Twitter)