WASHINGTON — The same strategy that Martin Shkreli used to get away with a 5,000-percent price increase on an old drug is used by many other drugmakers to maintain sky-high prices on billions of dollars' worth of medications.
Before the price hike that made him infamous, the former CEO of Turing Pharmaceuticals had to ensure that no competitor would be able to launch a cheaper version of Daraprim, the 60-year-old anti-infection pill that is no longer under patent.
Shkreli had the perfect weapon: a tightly-controlled distribution system which would make it virtually impossible for a competitor to obtain enough Daraprim to develop their own version.
Shkreli, who resigned in December, did not invent the closed distribution technique. And his former company, Turing, notes that Daraprim was already distributed under such a system when it acquired the drug.
Many larger drugmakers have also turned drug distribution into a powerful tool against competition. The strategy takes advantage of a simple fact: If generic drugmakers can't get their hands on the original product, they cannot perform the tests needed to develop a generic version. Typically generic drugmakers purchase drugs in bulk from third-party suppliers. But when the original drugmaker controls the drug's distribution, they can simply refuse to sell.
The effect on patients is higher prices for drugs that would otherwise be available as low-cost generics. Doctors say these tactics "continue to stand in the way of patients' access."
"The most effective way to improve access and lower prices is to ensure that generic drugs get to market as quickly as possible," says Dr. Ameet Sarpatwari, of Harvard Medical School, who has studied the issue.
At least 40 drugs worth an estimated $5.4 billion are sheltered from competition by distribution hurdles, according to a study commissioned by the Generic Pharmaceutical Association, an industry trade group.
Read Friday's Arkansas Democrat-Gazette for full coverage.