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Turing Lawyer Says He Warned Over Pill Hike

21.03.2016 -

The former general counsel of Turing Pharmaceuticals said on Thursday that he and other executives had repeatedly objected to a plan by Martin Shkreli, then chief executive, to impose a huge price increase on a decades-old drug.

In testimony to a Senate committee, the lawyer, Howard Dorfman, said he had told Mr. Shkreli that the move “would have a severely negative impact on Turing’s business and reputation” and was “not justified” because the company had not spent anything yet on research and development.

Mr. Dorfman said he was fired in August, two to three weeks after voicing his objections.

“Mr. Shkreli told me that he was the most knowledgeable person with regard to this business model, that I was seriously misinformed,” Mr. Dorfman said, noting that he himself had been in the pharmaceutical industry for 30 years. He added that Mr. Shkreli, 32, “basically said that no one cares about prices.”

It turns out people did care. The overnight price increase in August in a drug used to treat a potentially dangerous parasitic infection — to $750 a pill from $13.50 — set off a national furor that has lowered pharmaceutical stock prices and made drug prices into an issue in the presidential campaign.

Mr. Shkreli resigned from Turing in December after being arrested and charged with securities fraud related to his time running a hedge fund and an earlier pharmaceutical company, Retrophin. Mr. Shkreli’s lawyer, Benjamin Brafman, said that because Mr. Shkreli was under indictment and would not comment, “others apparently feel free to engage in what in our opinion amounts to ‘revisionist’ history.”

The hearing was the second held by the Special Committee on Aging to examine companies like Turing that acquire old drugs and increase prices to the level of modern drugs for rare diseases.

Valeant Pharmaceuticals International, which also engaged in the practice, has now forsworn it under pressure. The company’s stock price has collapsed and questions are being raised about its viability as a company.

Turing has argued that most patients pay far less than the list price and that the company makes sure that no patient who needs the drug, Daraprim, goes without it.

But Dr. Adaora Adimora, an HIV specialist at the University of North Carolina, told the committee that some patients with toxoplasmosis, the infection treated by Daraprim, had had to wait to get treatment they need urgently. She said doctors had to spend “hours upon hours, or even days” trying to persuade insurers or Turing’s patient assistance program to pay for the drug.

Shannon and Joshua Weston of Whispering Pines, NC, testified that their insurer would not pay for Daraprim for their baby daughter, Isla, even though toxoplasmosis can lead to brain damage and blindness in infants. The couple tried to figure out how they could raise $360,000 for the year of treatment that Isla needed. They were saved when the University of North Carolina said it had enough of the drug on hand to sell to them for $48 a month.

Senators took turns sharply rebuking Turing, using terms like “scam,” “sick game” and “the incarnation of evil.” There was little discussion of possible policy measures to prevent such price increases.

Senator Sheldon Whitehouse, Democrat of Rhode Island, said there was bipartisan concern about interfering with the “fair and free operation of the market” for drugs in general. But he said that in cases of “extortionate” pricing, the market had failed, adding, “I think there actually is a role for Congress to step in and put some price limits on.”

Two Turing executives were subpoenaed to testify: Ron Tilles, the chairman and interim chief executive, and Michael Smith, senior director of business development. Both said they had not been involved in the pricing decision so could not answer most questions about it, which frustrated some of the committee members.

“You can’t come to this committee and say, you know, ‘I’m Sergeant Schultz; I see nothing, I know nothing,’ ” Senator Richard Blumenthal, Democrat of Connecticut.

Mr. Tilles said that although Turing had not spent money to develop Daraprim, it was using the profits from the price increase to develop new drugs. “So in a way, it’s similar,” he said.

He refused a dare to lower the price, saying Turing was not yet profitable. When asked if the company would increase the price if it had a chance to do it over, he replied: “It’s hard to look back. What’s done is done.”