Price gouging is a sometimes criminal offense in which a seller drastically raises the value of necessary goods to an unfair cost in which people have no choice but to pay. This issue was brought to the forefront of debate when a pharmaceutical company hiked up the price of the life-saving drug Pyrimethamine.
Pyrimethamine, better known as Daraprim, has been in circulation for more than 60 years. It is primarily used to treat the parasitic infection toxoplasmosis and those with compromised immune systems such as AIDS patients.
The drug company Turning Pharmaceutical, headed by CEO Martin Shkreli, raised the price of Daraprim, once $13.50 a pill to $750, around a 5,000 percent increase.
This is not the first time Shkreli engaged in such business practices, and he has gained a reputation over the years for price gouging the drug market. He was fired by the board of his company, Retrophin, one year ago for routinely buying the rights of neglected and old drugs for the expressed purpose of drastically raising prices.
Unfortunately, Shkreli is not the only person who has a hand in the inhumane practice of price gouging life-saving pharmaceuticals.
Rodelis Therapeutics has committed similar deeds, such as increasing the cost of a tuberculosis treatment, Cycloserine, from $500 for 30 pills to $10,800.
These practices are perfectly legal, although highly unethical. After internet backlash, Shkreli has stated he will lower the price, however has not specified by how much. If the issue hadn’t gone viral, then he and other companies would have never had to answer for their actions.
This series of unfortunate events has opened up serious debate as to how to prevent such occurrences from transpiring again. Several presidential candidate hopefuls have utilized the controversy to speak on potential remedies for the situation and others like it.
Presidential hopeful Hilary Clinton has suggested her plan in relation to this problem would be to cap drug expenses to $250 a month for all out-of-pocket patient spending, requiring drug companies to spend less profits in marketing and more in research and development, and to reduce time manufactures spend in producing new drugs.
Sophomore computer science major Komal Soni stated, “I strongly believe that there should be laws made in order to prevent drastic increases in the price of medication.” Since only 34 states have any sort of laws against price gouging, usually only in reference to a period of emergency, there’s need for an intervention.
However, government involvement in regulating business dealings sometimes lead to bureaucratic technicalities that end with the establishments simply doing what they wanted in the first place. Although the regulation of murky business practices is necessary, there is a tactic which almost guarantees corporations have an incentive to promote fair prices for specialty drugs.
The true enemy to these monopolies is competition.
Since Daraprim is a specialty drug, Turning Pharmaceuticals is the only manufacturer in the U.S., however not the only seller in the world. India, the U.K. and Brazil all sell Daraprim for less than one dollar a pill. If the production environment in any one of these aforementioned countries meets the U.S.’s hygienic and safety standards, there should be no issues with allowing and encouraging competition between the countries and companies, U.S. based or not.
Mild pain medications, sleeping pills, some antibiotics; all are financially accessible and some even over the counter. The popularity and high demand of these pharmaceuticals allow different organizations to develop similar drugs and encourages competition between sellers which in turn creates a fair market for the buyers.
Through classic capitalist competition, advocated and overseen by the government, not only the price for Daraprim will hugely drop, but there will be considerable less risk of a similar phenomenon arising again.