Off-patent drugs at brand-name prices: A puzzle for policymakers

Abstract

In August 2015, Turing Pharmaceuticals acquired the marketing rights to Daraprim (pyrimethamine), a drug used to treat parasitic infections like malaria and toxoplasmosis. Soon after, Turing caused an uproar when it announced that it would raise the price per tablet of Daraprim from $13.50 to $750, a 5500% price hike for a drug that has been on the market for over 60 years and off patent since the 1970s.Old, off-patent drugs are becoming increasingly expensive; Daraprim is the archetypal example. Turing had the power to set a high price for Daraprim because the drug's limited patient population, the absence of competing manufacturers, and a lack of therapeutic alternatives all created an effective monopoly. Similar forces have driven up the prices of other off-patent drugs that treat diseases as diverse as heart failure and multi-drug-resistant tuberculosis. Thus, policymakers will have to consider how the high cost of off-patent drugs impacts public health as well as public spending. In this Note I outline the extent of the high-cost off-patent drug problem, drawing special attention to the problem's negative effects on both health outcomes and government budgets. After discussing some of the problem's underlying causes, I present several solutions to the problem that policymakers could consider, with a focus on proposals like reference pricing and expanded compounding that have received relatively little media attention.