Price of Daraprim jumped ~5,000%

By Kim Smiley

The cost of prescription drugs have been in the news the last several years as the United States struggles to deal with rising health care costs, but few stories have come close to generating as much outrage as the recent massive price increase of Daraprim.  As new specialty drugs hit the market, they are often expensive as drug companies recoup the costs of development and maximize profits while the drug is covered by patents, which may be frustrating but is understandable.  That is not what happened in the case of Daraprim, a lifesaving drug used as an antimalarial drug and to treat toxoplasmosis.  The medication has been around since the 1950s and isn’t covered by any patents.

So why has the price of Daraprim suddenly increased about 5,000 percent?  A Cause Map, or visual root cause analysis, can be used to intuitively show the causes that contributed to the issue.  (To view an outline and a High Level Cause Map, click on “Download PDF” above.) This is one of those issues where it may be tempting to identify the “root cause” or focus on a single cause that contributed to the issue, but there are many factors that need to be considered.  The piece of the puzzle that is probably the easiest to focus on is the fact that a new company bought the only company with regulatory approval to sell the drug in the United States and significantly raised the price.  Basically, there is demand for the drug and the company which has a monopoly on the supply in the US took advantage of it by increasing the price per pill from $13.50 to about $750.

The CEO of the company has been widely villainized for what many consider a predatory price increase, but it is important to remember that the Daraprim price increase was legal.  Many find the price increase distasteful, but there are currently no laws or regulations that prevent huge medication price increases, which is another cause that contributed to the issue.

While a generic version of the drug is available in many other countries for less than a dollar a pill, it cannot be sold in the US without going through a lengthy and expensive approval process. Possible solutions to prevent similar price increases in the future could be to create laws that limit price increases on drugs without patents on them or to increase the supply of medications sold in the US by allowing some sort of reciprocal approvals with countries that have strong regulatory systems in place.  A senate committee is requesting documents and information relating to the pricing of Daraprim and several other medications and there are lawmakers pushing to create legislation that would limit price hikes.

Another enterprising company seems to have found their own solution to the problem of the high cost of Daraprim – creating a cheaper alternative. Imprimis Pharmaceuticals has stated that they will produce a substitute drug that will be priced as low as $99 for a 100 pills.  The alternative drug isn’t a generic version of Daraprim, but rather a compounded drug that combines two FDA approved drugs (pyrimethamine, the only ingredient in Daraprim, and leucovorin) that are often used together.  The compounded drug would not be FDA approved, but doctors can prescribe it specifically for a patient based on the rules governing compounded medications.

It isn’t as elegant as having another FDA-approved supplier of Daraprim, but it seems like a viable work-around for many patients.  It also seems like satisfactory justice for the price of 60-year-old pyrimethamine drugs to end up cheaper in the US after they were hiked up to such high levels.