Pharma, Policy

The Shkreli smirk effect: 5 congressional rants from today’s drug pricing hearing

Congressmen were up in arms over Martin Shkreli's disrespectful behavior - and that fueled their attacks against drug pricing in the pharmaceutical industry. Here are four of their most interesting rants.

Controversial Former Pharmaceutical CEO Martin Shkreli Testifies On Oversight In Drug Market

Martin Shkreli, as predicted, invoked the Fifth Amendment and kept uncharacteristically quiet during today’s House of Representatives hearing on drug prices. However, his demeanor alone ruffled congressional feathers – with Rep. John Mica (R-Florida) suggesting Shkreli be held in contempt of court.

Despite his subsequent absence, Shkreli’s presence held strong throughout the hearing – which was filled with congressional shame-on-you rants and constant interruptions of the speakers being questioned, with the politicians reviling the economics of the pharmaceutical industry. The non-Shkreli speakers, in turn, were repetitive – sticking by their scripts. On the stand were:

Nancy Retzlaff, chief commercial officer of Turing Pharmaceuticals
Howard Schiller, interim CEO of Valeant Pharmaceuticals
Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research
Keith Flanagan, director of the Food and Drug Administration’s Office of Generic Drug Policy.

The rants from our disgruntled politicians were pretty great. Here are some highlights:

LynchRep. Stephen Lynch, D-Massachusetts

Lynch, hailing from Boston, is supportive of the wider pharmaceutical industry – mentioning the 29 IPOs in his region from smaller biotechs in the last year. However, in the case of Turing Pharmaceuticals, he points out it “didn’t do a lick of research,” and cited how a patient in North Carolina was slapped with a $16,830 copay for taking Daraprim.

Lynch offered a fix to the problem, though it’s doubtful whether it’ll see any uptake in Congress:

“I think we got a solution here,” Lynch said. “Congress has the power. I would suggest – in the pharmaceutical regulatory procedure, we adopt a Poison Pill amendment.”

He went on to explain: If any company acts like Turing, and rises the price of a drug exorbitantly, Congress can suspend the exclusivity period for that drug.

“We can eliminate it the next day, and contract with DARPA – our government research labs – to produce your drugs at no cost to the consumer. That’s what we can do.”

The problem is, he continued, is that “it’ll impact the good companies that are doing research – not the hedge funds that come in and buy a company, and pump up the prices.”

Nancy Retzlaff, chief commercial officer of Turing Pharmaceuticals, tried to interrupt, but Lynch shut her down quickly.

“If Congress has the willpower, we can do that,” Lynch yelled. “Unfortunately, it’ll hurt a lot of good companies – and you’re trashing the pharmaceutical industry that’s doing a great job on a lot of different drugs from organ transplants to cystic fibrosis. Good researchers out there doing great work. You’re trashing that industry, and you’re going to cause us to have to put heavy, heavy regulations on good companies – and you’re probably going to choke off other drugs that are going to come into the pipeline. Look at the impact you’re having.”

Elijah CummingsElijah Cummings, D-Maryland

Early in the hearing, Cummings was calm and measured – beseeching an uninterested Shkreli to engage, and use his position to help improve the state of the pharmaceutical indiustry.

“You are in a unique position,” he told Shkreli. “You really are, sir. Rightly or wrongly.”

Shkreli could use that attention to “come clean,” and become one of the most effective patient advocates in the country – or “go down in history as the poster boy for greedy pharmaceutical executives,” Cummings said.

However, later in the hearing, Cummings’ lost his cool – speaking vehemently at Retzlaff and, by proxy, Shkreli. He cited an email that Turing received from an outside consultant last year, laying out a public relations strategy for the company to “respond to this unwanted attention” stemming from the Daraprim price hike. The consultant advised Turing to lower Daraprim’s prices, and tie the profits of the toxoplasmosis drug to R&D for a next-gen version of the drug.

“Turing followed most of the consultant’s advice, except for one glaring exception – you never lowered the price of Daraprim,” Cummings spat. “This email indicates that despite the promises of lowering the price internally, Turing has no desire to fix what it has broken.”

Cummings cited the negative impact the high drug cost would have on patients, inpatient hospitals and the wider payer system – but seemed most disgruntled about Shkreli’s rudeness:

“The thing that gets me,” Cummings spat, “is that Shkreli, your former CEO, walked out of this hearing – and before he got out of the door, he sends a tweet calling everyone on this committee imbeciles.”

farentholdBlake Farenthold, R-Texas

Farenthold made little sense in his questioning to Keith Flanagan, director of the Food and Drug Administration’s Office of Generic Drug Policy. He wondered why it takes 10 to 15 months to approve a generic drug.

“What takes so long to do this?” Farenthold asked. “I assume if you can manufacture XYZ drug at a place, have a clean facility, no roaches, why should it take 15 months to get approved? What else is involved there? And if they do screw up making it – 1-800-BAD-DRUG will bankrupt the company.”

Flanagan spoke of the process of evaluating generic drugs via bioequivalence studies – though, oddly, he forgot to throw in the fact that the FDA requires clinical trials to ensure a generic’s up to snuff.

“How difficult is it to get the output analyzed and see what it is?” Farenthold argued. “I can’t believe it takes 15 months. The TSA can, in a matter of seconds, tell whether or not I’ve got an explosive in my bag by just swiping something on it. Isn’t there technology there that’ll make it faster and better? Why aren’t we using it? Every day you delay getting a competitor on the market is a day companies can screw the consumer.”

DuncanRep. John Duncan, R-Tennessee 

Duncan kicked off questioning by citing that widely circulated – and frequently criticized – 2014 report from the Tufts Center for Drug Development that cites the cost to develop drugs as $2.6 billion.

“We all believe there should be some testing to make sure the drugs are safe, but you can go ridiculously overboard on anything,” Duncan said. “And it seems to me that when it takes 10 or 12 years to take a drug to market, and it costs $2.6 billion, as the Tufts study says, that’s going a little overboard.”

But after drilling in on costs, Duncan also takes Shkreli to task:

“In all my time in Congress – I’ve served on four committees, been here 28 years, I’ve seen hundreds of witnesses and some very heated confrontations, and I’ve never seen, as with Mr. Shkreli a while ago, such childish, smart-alecky smirks, even turning away from ranking member Cummings to pose for pictures while the ranking member was speaking, and I think it was just totally ridiculous,” Duncan said. “I can tell you this – his lawyer better advise him a little bit because a jury would love to convict somebody if he acts that same way if he’s on trial.”

chaffetzJason Chaffetz, D-Utah

Chaffetz pointed out a number of salary hikes seen last year among Turing’s top executives, as noted in documentation received by the House Oversight and Government Reform Committee in advance of the hearing.  Though the names have been blacked out, the October document indicates three major salary raises.

In the midst of a storm of negative PR for Turing, one executive saw a salary increase of $160,000, increasing the salary to $800,000. Another saw an increase of $275,000 to an annual salary of $600,000. And a third saw an increase of $275,000 to $600,000.

turing salary hikes

Chaffetz said this in part to contradict the words of Nancy Retzlaff, Turing’s chief commercial officer, who was at the hearing to represent Turing Pharmaceuticals. She said that Turing isn’t making a profit on Daraprim sales – but later admitted, when asked about first-year revenue, that Turing’s gross sales were $98 million, and net sales were $20 million.

“People can make a profit. They can pay exorbitant salaries,” Chaffetz said to Retzlaff. “But don’t come before the American people and shed a tear, and say ‘we’re not making any money.'”

Furthermore, he took offense that Shkeli – who holds the majority of shares in the company – told news reporters that Turing planned to invest all of its cash into R&D.

“It sounds like a contrived PR plan to do that,” Chaffetz said.

Chaffetz also cited costs that Turing spent on a salesforce party last year – in which it spent $23,000 to rent a yacht from Metro Yacht Charters. Among the expenses included fireworks and an $800 cigar roller.

“So don’t tell me you’re losing money. Don’t try and pretend and tell us this $750 is justified when you’ve got a woman who’s got AIDS,” Chaffetz said. “What is she supposed to do? Tweet Martin and try and get that for a penny?”

[Image courtesy of Getty]

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