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Using Antitrust Law to Challenge Turing's Daraprim Price Increase

30 Pages Posted: 29 Jan 2016 Last revised: 14 Jul 2017

Michael A. Carrier

Rutgers Law School

Nicole Levidow

Program on Regulation, Therapeutics, and Law, Division of Pharmacoepidemiology and Pharmacoeconomics

Aaron S. Kesselheim

Brigham and Women's Hospital/Harvard Medical School; Harvard University - Edmond J. Safra Center for Ethics

Date Written: January 29, 2016

Abstract

As CEO of Turing Pharmaceuticals, Martin Shkreli made worldwide headlines by obtaining marketing rights to pyrimethamine (Daraprim) and quickly increasing the price 5000 percent, from $13.50 to $750 per pill.

In addition to increasing price, Turing initiated another less widely appreciated move — it changed the distribution scheme for the drug. Before its acquisition by Turing, pyrimethamine was widely available. But in the months before the price hike, apparently as a condition of the sale to Turing, pyrimethamine was switched to a controlled distribution system called Daraprim Direct, in which prescriptions or supplies could be obtained only from a single source, Walgreen’s Specialty Pharmacy.

The Daraprim Direct system made it impossible for anyone other than registered clients to obtain the drug. This could include other manufacturers wishing to obtain samples for use in bioequivalence studies supporting a generic application. The restricted distribution scheme thus could allow Turing to prevent generic versions of the drug from reaching the market.

This Essay addresses the question of whether Turing's behavior violates the antitrust laws. Part I describes the typical distribution systems in the pharmaceutical industry. Part II examines monopoly power and considers whether Daraprim possessed such power. Part III considers the second element of monopolization claims, exclusionary conduct, and explores whether Turing engaged in such behavior. Part IV then reaches beyond pyrimethamine to offer additional examples of similar conduct. Given that the Federal Trade Commission and N.Y. Attorney General are currently conducting antitrust investigations of this behavior, this Essay offers a framework for analysis.

Keywords: Turing, Shkreli, antitrust, monopolization, drugs, pharmaceuticals, Daraprim, pyrimethamine

JEL Classification: I18, K21, L40, L41, L43, L65, O34, O38

Suggested Citation

Carrier, Michael A. and Levidow, Nicole and Kesselheim, Aaron S., Using Antitrust Law to Challenge Turing's Daraprim Price Increase (January 29, 2016). 31 Berkeley Technology Law Journal 1379 (2017). Available at SSRN: https://ssrn.com/abstract=2724604

Michael A. Carrier (Contact Author)

Rutgers Law School ( email )

217 North Fifth Street
Camden, NJ 08102-1203
United States
856-225-6380 (Phone)
856-225-6516 (Fax)

Nicole Levidow

Program on Regulation, Therapeutics, and Law, Division of Pharmacoepidemiology and Pharmacoeconomics ( email )

75 Francis St.
Boston, MA 02115
United States

Aaron S. Kesselheim

Brigham and Women's Hospital/Harvard Medical School ( email )

1620 Tremont St
Suite 3030
Boston, MA 02120
United States
617-278-0930 (Phone)
617-232-8602 (Fax)

HOME PAGE: http://www.drugepi.org/portal

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

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