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September 13, 2018

400% Rx price increase was 'moral requirement,' pharma CEO insists

Daily Briefing

    Nirmal Mulye, CEO of the Missouri-based pharmaceutical company Nostrum Laboratories, is facing backlash for describing the company's 400% price increase for an antibiotic as a "moral requirement."

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    Mulye in 'this business to make money'

    Mulye's comments were first reported Tuesday by the Financial Times.

    Nostrum in August raised the price of a bottle of the antibiotic nitrofurantoin, which is used to treat bladder infections, from $474.75 to $2,392, according to Elsevier's Gold Standard drug database. The drug has been marketed since 1953 and is on the World Health Organization's list of essential medicines, the Times reports.

    According to the Times, Mulye during an interview said the company raised nitrofurantoin's price in accordance with market dynamics. He noted that Casper Pharma, which sells a brand-name version of nitrofurantoin, had raised the price of its drug, known as Furadantin, to $2,800 by March 2018—up 182% from the drug's price at the end of 2015. Mulye said, "The point here is the only other choice is the brand at the higher price. It is still a saving regardless of whether it is a big one or not."

    Mulye also said FDA is "incompetent and corrupt," and blamed "nonsense" policies at the agency for contributing to the price increase, saying Nostrum has had to pay increasing fees to FDA that he likened to "highway robbery."

    Mulye continued to say, "I think it is a moral requirement to make money when you can … to sell the product for the highest price," later adding that he is in "this business to make money."

    Mulye also defended the actions of former Turing Pharmaceuticals CEO Martin Shkreli, who came under fire in 2015 for raising the price of the decades-old drug Daraprim—which is used to treat malaria and AIDS and is considered the standard of care for treating toxoplasmosis, a life-threatening parasitic infection—by 5,000%. Mulye said, "I agree with Martin Shkreli that when he raised the price of his drug he was within his rights because he had to reward his shareholders." Mulye added, "We have to make money when we can."

    Industry stakeholders, observers react

    Industry stakeholders and observers were quick to lambast Mulye's comments.

    FDA Commissioner Scott Gottlieb in a tweet posted Tuesday wrote, "[T]here'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."

    Some said the price increase and comments show the Trump administration's efforts to curb prescription drug increases—including President Trump's public criticisms of the increases—are not working. Michael Rea, CEO of RX Savings Solutions, said Nostrum's price increase shows it is "business as usual in the drug pricing world—contrary to what we hear out of Washington." He added, "The public shaming effect is waning and triple-digit price increases are not uncommon" (Hellmann, The Hill, 9/11; Crow, Financial Times, 9/11; Baker, "Vitals," Axios, 9/12; Paavola, Becker's Hospital Review, 9/11).

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