Martin Shkreli, the pharmaceutical CEO arrested on securities fraud charges this week, may have made drug price increases notorious in the U.S. But his strategy of finding an old drug, raising its price, and taking the profit is one that’s increasingly common among a new breed of drugmakers.
Disdaining a business model dependent on expensive research and development, companies like Shkreli’s Turing Pharmaceuticals AG, Valeant Pharmaceuticals International Inc., Rodelis Therapeutics and others have taken advantage of inefficiencies in the U.S. health-care system. Old drugs can be sold at much higher prices if the owner is willing to push the boundaries of what the market will bear. Turing, for example, took a decades-old drug, Daraprim, and raised the price to $750 a pill from $13.50.