How Much the Cost of Daraprim Could Drop After Outcry Over Controversial 4,000 Percent Price Hike

Turing Pharmaceuticals agreed to drop the price after a widespread outcry.

ByABC News
September 23, 2015, 2:28 PM

— -- The pharmaceutical company that faced an intense backlash for increasing the price of a parasite drug by more than 4,000% said it will lower the price, but have not indicated how far the price could drop.

Turing Pharmaceuticals CEO Martin Shkreli told ABC News on Tuesday that the company would no longer charge $750 a dose for the drug Daraprim, used to treat parasitic infections. Before Turing acquired the drug, it cost $18 a dose.

"We've agreed to lower the price on Daraprim to a point that is more affordable and is able to allow the company to make a profit, but a very small profit," he told ABC News. "We think these changes will be welcomed."

A spokesman for the company said it is not currently releasing any information about the possible price change.

"We have no further information yet on the company's move to adjust price for the drug. We'll follow up when we have something definitive," the spokesman said in an email today.

While Shkreli appears to have responded to the outcry over the price hike, he defended the company's actions and said half of the medication produced was given away at zero cost or at $1 a dose and that it was not "substantially profitable" even at the higher price.

"I think they have a fundamental misunderstanding of the way pharmaceutical companies operate," he told ABC News of critics on Tuesday.

Karen Andersen, a senior biotech analyst at the investment research firm Morningstar, said unlike other drugs where companies have to match the price of competition, Shkreli was able to hike up the price because Turing had no competition.

The backlash to the price hike may have resulted from "a sense that this is an abuse of that power and abuse of that competitive advantage that they did have," Andersen told ABC News. "Maybe it was worth it, if he could justify increasing the price. But the amount and speed was slightly too much."

Andersen said it would be difficult to guess how much the price will drop but that multiple factors will contribute to the new price.

"Shrkeli will likely consider the cost of manufacturing, the number of patients who will take the drug, and any marketing costs," Andersen said. "I would not expect the future price of Daraprim to subsidize the firm's R&D investments, particularly considering that the drug was not a product of their R&D investment. ... In this particular case, pricing is likely to become more a matter of public opinion than anything else."