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MSMB Capital Management CIO Martin Shkreli
The man who calls himself the most successful Albanian ever. Photograph by Getty Images

Here’s why Turing Pharmaceuticals says 5,000% price bump is necessary

Sep 21, 2015

Turing Pharmaceuticals and its CEO Martin Shkreli were the subject of significant criticism on Monday after the company boosted the price of the toxoplasmosis treatment Daraprim by over 5,000% after acquiring the drug in August.

The move, and its resultant media coverage, led to outrage on Twitter. Comments got heated as people took personal cracks at Shkreli, calling him names that are mostly unprintable by this publication. In response, Shkreli and Turing have mounted their own media blitz to explain why they increased the cost of Daraprim to $750 a pill from $13.50.

"Toxoplasmosis is a very serious, sometimes deadly disease, yet there have been no significant advances or research into this disease area in decades," the company wrote in an email response to Fortune. "Turing hopes to change that by targeting investments that both improve on the current formulation and seek to develop new therapeutics with better clinical profiles that we hope will help eradicate the disease."

Certainly, an argument can be made in Turing’s defense. Toxoplasmosis, a parasitic disease often contracted via contaminated food, can be cause problems for people with suppressed immune systems, which is why various AIDS and cancer groups have been especially outraged by the price increases. It’s also particularly dangerous for pregnant women since it can cause birth defects, and the Centers for Disease Control lists it as one of five neglected parasitic infections in the U.S.

However, toxoplasmosis generally isn’t an issue for healthy people. In fact, about 60 million people (19% of the U.S. population) may be infected with the parasite without knowing it. There’s only about 4,400 hospitalizations each year due to toxoplasmosis and an estimated 327 deaths, according to the CDC.

Also, doctors haven’t exactly been demanding new treatments for the disease.

"We are not in dire need of new drugs for toxoplasmosis right now," Dr. David Relman, chief of infectious diseases at VA Palo Alto Health Care System, told Fortune. "There is no significant drug resistance problem with toxoplasmosis."

Dr. Wendy Armstrong, a professor of infectious diseases at Emory University, echoed that sentiment in her comments to The New York Times, "I certainly don't think this is one of those diseases where we have been clamoring for better therapies."

Turing commented that its ongoing R&D aims to increase "treatment compliance," which suggests that it's less interested in drug innovation and more keen on marketing efforts. At the same time, the company said that its "success will be measured in new treatments that we develop and bring to market."

The question then becomes, how much of this 5,455% price increase will go toward research to find treatments that are more effective?

Fortune asked Turing to comment on its R&D budget, or at least the percentage of its revenues that it reinvests back into research. The company, which is privately held, did not respond to a request for comment.

"We do not need them to be undertaking some self-serving marketing campaign," said Relman. "There is no public health need for such. This is simply about greed."

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