- Comments from the head of a small generic drugmaker have become the latest flashpoint in a national debate over rising drug prices, provoking a public rebuke from Food and Drug Administration chief Scott Gottlieb.
- In an interview with the Financial Times, Nostrum Laboratories CEO Nirmal Mulye claimed a "moral requirement" to sell an antibiotic his company produces at the highest price possible. "This is a capitalist economy and if you can't make money you can't stay in business," the Financial Times quoted Mulye as saying.
- Nostrum raised the price of a bottle of nitrofurantoin, used to treat bladder infections, more than 400% from $474.75 to $2,392. The hike, and the CEO's defense of it, brought immediate flashbacks to Martin Shkreli's now infamous decision to raise the price of a drug called Daraprim by more than 5,000%.
Pharma companies sparking outrage over price hikes on their products are not a new occurrence. Since Martin Shkreli became the face of drugmaker greed, a succession of companies — both generic and branded — have come under fire for sharp increases. Most recently, President Donald Trump confronted Pfizer over increases it took on roughly 40 medicines, spurring the drug giant to reverse course.
But it's rare that a CEO publicly justifies such actions by claiming a moral obligation. The comments spurred Gottlieb to take to Twitter, criticizing increase as price gouging.
1/2 Regarding @FT story today @bydavidcrow; there’s no moral imperative to price gouge and take advantage of patients. FDA will continue to promote competition so speculators and those with no regard to public health consequences can’t take advantage of patients who need medicine— Scott Gottlieb, M.D. (@SGottliebFDA) September 11, 2018
In Mulye's interview, he said the increase of nitrofurantoin's price was in response to a jump in the cost of a branded version of the drug made by Casper Pharma. One bottle of Casper's product, branded Furadantin, lists at more than $2,800, according to Elsevier data cited by the Financial Times.
PhRMA, the trade lobby for the industry, made a point of distancing itself from Mulye's comments.
"Recent comments from the CEO of generic manufacturer Nostrum Laboratories are tone deaf, particularly as patients are increasingly facing affordability challenges in the marketplace," wrote Stephen Ubl, head of PhRMA, in a tweet.
Currently, Nostrum isn't actively marketing the product, having pulled it following a change in FDA rules on impurities.
But the price increase is suggestive of the market dysfunction that can emerge in generic categories, even when the patent defenses and regulatory exclusivities that guard branded drugs don't preclude a competitor from entering the market.
If too many suppliers of a generic drug drop out of the market, a manufacturer can enjoy limited competition and freer rein to increase price.
Currently, nitrofurantoin isn't on the FDA's list of drug shortages, Gottlieb noted in another tweet. A list of approved versions shows there are four manufacturers of suspended formulation nitrofurantoin, one of which is Nostrum.
"There are other suppliers of this product and, by its own admission in @FT, the company in question isn’t actively marketing their formulation," wrote Gottlieb on Twitter. "Their excessive price, detached from market principles, exists only on a list and should remain there in a competitive marketplace."
Ensuring proper competition exists in generic markets is an issue the FDA is particularly keen on resolving. Under Gottlieb, the agency has begun to list off-patent, off-exclusivity drugs without a generic available, aiming to quickly approve new copycat versions.
The FDA also recently approved the first generic drug under a new designation crafted to speed review for generics of products without competition.