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Why do drug prices rises? Are pharmaceutical companies ripping people off? Drug price gouging has been all over the media this week. This is Healthcare Triage News.

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Aaron: Drug price gouging has been all over the media this week. This is Healthcare Triage News.

(Healthcare Triage intro plays)

You'd have to be living under a rock not to have seen the New York Times story on how daraprim just jumped from $13.50 a tablet to seven hundred and fifty dollars after being bought out by a new pharmaceutical company. The New York Times is on the case and you should go read the article.

I've written about pharmaceutical company costs and bringing drugs to market before. That has caused some people to think that I'm anti-pharma, even though I don't think that I am. If you doubt that, check out Monday's Upshot column on how much I love the drug I take or the many times I've said that in episodes of Healthcare Triage.

Yes, I have ulcerative colitis. Yes, I did say in the New York Times that I've pooped my pants many, many, many times. The drug I take prevents that, it's amazing, but that doesn't mean that all drug companies can do whatever they want.

One questionable practice, buying an old drug and then jacking up the price, is more common than many people think. Cycloserine, a drug that used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 after its acquisition by Rodelis. Isuprel and Nitropress, from Marathon Pharmaceuticals, promptly raised its prices by 525% and 212% respectively. Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1849 by April 2014 according to two lawmakers.

Evidently, companies find a drug that has a small market but can't be replaced, they buy up all the places that make it, giving themselves a virtual monopoly, and then they jack up the price. This isn't even the first time this has happened with daraprim, it cost about a dollar a pill some years ago, but became dramatically more expensive when its previous owner bought it from a different company. So this is just the latest round of massive price increases.

In 2010, the old old company sold just 12,700 prescriptions for $677,000. In 2011, the old company sold the same number of prescriptions for $6.3 million. In 2014, the old company sold only 8,800 prescriptions, which is fewer, for $9.9 million, which is more. It's estimated that the newest company could bring sales to tens or even hundreds of millions of dollars even if they sell fewer prescriptions.

This may be legal, you'd have to ask a lawyer, but it sure isn't gonna be popular. Many people also think it isn't right. Often, high drug prices are argued for to cover the cost of drug development, but in this case the company raising the prices did none of the development whatsoever. They bought a drug that was making money at $13.50 and then jacked-up the price.

Why? Quoting the article again, "Martin Shkreli, the founder and chief executive of Turing, said that the drug is so rarely used that the impact on the health system would be minuscule and that Turing would use the money it earns to develop better treatments for toxoplasmosis, with fewer side effects."

Quoting from him, "This isn't the greedy drug company trying to gouge patients, it is us trying to stay in business." Mr. Shkreli said. Trying to stay in business? If the company couldn't make money at the same price the old company was, then why did they buy the drug? And that was already a jacked-up price. Asking people to pay way more to fund other drug development seems like gouging sick people with no choice. I'm having trouble understanding the optics of this.

By the way, Medicaid and many hospitals will get the drug cheaper because of federal rebates and discounts. This will hit those with private insurance, Medicare, and hospitalized people. I'm curious to see how this plays out.

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