About 1 Penny’s Worth of API Pyrimethamine in 7-12 Daraprim Pills (Which Cost $5,250-$9,000)
If you’re breathing air, you’re very likely to know that, in August, Turing Pharmaceuticals increased the list price of its newly purchased brand-name antimicrobial Daraprim (pyrimethamine) to exospheric levels, from $13.50/pill to at least $750–a more than 5000% price increase. (For important background on this story, start with the USA Today and NY Times reports and “Google News” forward until you’re exhausted.) Daraprim is an important part of the preferred treatment for active toxoplasmosis, a parasitic disease that affects the immunocompromised (eg, those with HIV/AIDS), pregnant women, and their infants.
According to the NY Times on September 20th,
Turing’s price increase could bring sales to tens or even hundreds of millions of dollars a year if use remains constant. Medicaid and certain hospitals will be able to get the drug inexpensively under federal rules for discounts and rebates. But private insurers, Medicare and hospitalized patients would have to pay an amount closer to the list price.
And this is what irritant* Turing CEO Martin Shkreli is counting on. That insurance providers, Medicare, and hospitals will acquiesce to the full new asking price for Daraprim–primarly because the market for active toxoplasmosis** is so small in the United States. According to the NY Times, there were 8,821 outpatient prescriptions for Daraprim in 2014.
By using this prescription number as a benchmark, we can independently approximate the revenue that Daraprim might generate for Turing in a year on the basis of the new list price. As an example, the recommended treatment for toxo encephalitis includes a 200-mg loading dose of pyrimethamine (8 Daraprim pills) followed by 50 mg of Daraprim (2 pills) per day, if a patient weighs 60 kg or less, or 75 mg (3 pills) per day, if a patient weighs more than 60 kg. This treatment is continued for a least 6 weeks. Therefore, the 6-week treatment for CNS toxo requires either 92 or 134 Daraprim pills, depending on a patient’s weight. At $750/pill, that amounts to $69,000 or $100,500 for a 6-week treatment of Daraprim alone (average, $84,750). In a September protest letter to Turing, the Infectious Disease Society of America (IDSA) and the HIV Medicine Association (HIVMA) estimated a much higher annual cost for the Daraprim portion of toxoplasmosis treatment: $336,000 or $634,500.
Nevertheless, even if we use the more conservative treatment cost and suppose that Turing collects full price on just 50% of Daraprim prescriptions, the company still might collect $300 million in a year and easily recoup the $55 million it spent on acquiring the US marketing rights to the drug. And further still, even if we use very rough ballpark estimates for the number of active US toxo cases and the variable costs of their pyrimethamine treatment, it’s still reasonable to project that Turing will collect Daraprim revenue in the high 8-figure or low 9-figure range on an annual basis (which is consistent with the NY Times report).
This potential revenue is in shocking contradistinction to what the active pharmaceutical ingredient (API) pyrimethamine appears to cost on the open, global market. According to information at dailymed.com, the source for the API pyrimethamine in Turing’s Daraprim is Fukuzyu Pharmaceutical Co, Ltd, an API manufacturer in Toyama City, Japan. Per the FDA, Fukuzyu is one of two, active API suppliers for pyrimethamine in the agency’s Drug Master File (DMF) database (the other is IPCA Pharmaceuticals, Ltd, in India). This DMF information is reflected by data at PharmaCompass.com, an aggregator of publicly available information on “price trend information, regulatory filings, product patents, [and] inspection histories” in the global pharmaceutical industry. This webpage entry for pyrimethamine at PharmaCompass.com, which lists Fukuzyu and IPCA as API suppliers of pyrimethamine, indicates an API reference price of $54/kg, or 0.54 cents (not dollars) per
mg gram mg (D’oh, I was right the first time). That comes out to 0.14 cents for a 25-mg pill of Daraprim. And the price for API pyrimethamine may be even lower. An import record from September 23rd into Miami indicates a per-kg price of approximately $31. In other words, there is about 1-cent’s worth of API pyrimethamine in 7-12 Daraprim pills–which cost $5,250-$9,000 in the United States.
So Turing is likely to generate 100s of millions of dollars a year off of an API that costs a tiny fraction of a penny per milligram.
* Or Internet troll, depending on how old you are.
** Meaning ocular, systemic (eg, encephalitic, associated with HIV/AIDS), pregnancy-related, or congenital disease.
11-3-2015 Addendum: In a recent interview with HIV activist Josh Robbins, Turing CEO Martin Shkreli said that about 60% of Daraprim is “given away” (or nearly so, at 1 penny per pill). So if Turing collects full price on the remaining 40% of Daraprim prescriptions, then Turing’s estimated annual revenue from Daraprim alone is still close to $300 million (using the average per-treatment cost of $84,750). While Shrekli states that his company hasn’t recouped their $55 million investment in Daraprim yet, Turing should be pretty close to doing so, given that the drug’s been on the market for more than 2 months at the $750/pill price.
Also Robbins got Shkreli to commit to a “modest” (perhaps 10%) price drop in the cost of Daraprim before Christmas. However, Shkreli appears to be backtracking on that promise via Twitter since the interview.
06-03-2016 Addendum: In his inimitable, weaselly way on Twitter (where else?), ex-Retrophin, ex-Turing, ex-Kalobios CEO Martin Shkreli is trying to argue that a 1-time treatment of Daraprim (pyrimethamine) costs only about $25,000. He’s apparently basing this convenient calculation on a 66% reduction in Turing’s retail price on 80-100 pills (his calculation of a 6-week treatment, I guess), given that Turing provides about two-thirds of the drug at a nominal 1-penny-per-pill cost (eg, to 340B facilities). Of course, there’s no way to independently verify this repeated claim from Turing/Shkreli. Nevertheless, if true, then the average per-pill cost of Daraprim is about $200-$300, making the price increase a real bargain at 1500%-2000% (from $13.50). Also keep in mind that the IDSA and HIVMA, who have infinitely more clout than Martin Shkreli with respect to the recommended treatment of toxoplasmosis, say that pyrimethamine therapy may need to be extended for the better part of a year.