Washington, DC -Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, issued the following statement in response to the arrest and resignation of former hedge fund manager and Turing CEO Martin Shkreli:
“For the past several years, I have been conducting an investigation of drug companies that exponentially increase their prices out of pure greed rather than due to an increase in production costs, research and development, or other expenses. These companies are pursuing a business model in which they acquire drugs that have been on the market for years at reasonable prices and then jack up the prices because they have little competition.
Mr. Shkreli used this business model when he acquired Daraprim-a drug used by cancer patients, people with AIDS, and others with compromised immune systems-and increased the price by 5,000% overnight. One tablet used to cost $13.50, but after Mr. Shkreli executed his plan, a single tablet cost $750. Mr. Shkreli became the poster child for this approach because of his outrageous statements, such as claiming that his biggest mistake was not raising his prices even more to make more money for Turing’s shareholders or that his actions were ‘a great thing for society.’
Mr. Shkreli lined his own pockets at the expense of some of the most vulnerable people in our society, and he fully embraced the despicable caricature he became. Unfortunately, Mr. Shkreli is not alone. These tactics are being used by drug companies across the country.
For example, J. Michael Pearson, the CEO of Valeant Pharmaceuticals, used this same approach when he acquired two heart medications-Isuprel and Nitropress-and raised the prices by 525% and 212% immediately after buying them in February. Valeant is the only company that sells these two life-saving medications. Like Turing, Valeant officials defended their actions by claiming that ‘our duty is to our shareholders.’
During a call with investors on Wednesday, Mr. Pearson justified his massive price increases by explaining that he did only what others across the industry are doing: ‘If you look across the pharmaceutical industry, and you actually look at the data, all these large companies have taken significant price increases as well.’
Just this week, the Inspector General at Department of Health and Human Services issued a new report highlighting how the skyrocketing prices of generic drugs has cost taxpayers $1.4 billion over the past ten years. In fact, one drug exceeded the rate of inflation by an average of 2,363% for all of the quarters it was reviewed, according to the IG.
Although Mr. Shkreli has now been ousted as CEO and hauled into federal court, his criminal charges relate to an alleged Ponzi scheme with his former company. Mr. Shkreli has not been charged with price gouging or any crime relating to his drug price increases because there is no law on the books that prevents drug companies from engaging in these abuses.
Perhaps the biggest disappointment is that House Republicans refused for the entire year to send even one letter to one drug company seeking one document. The 2015 congressional session has now come to a close without any significant action by House Republicans to investigate the abuses of these drug companies.
This is not a Democratic or Republican issue, it’s an American issue. The nonpartisan Kaiser Family Foundation reported that 77% of Americans identified the increasing prices of prescription drugs as their number one healthcare concern. Our constituents are fed up with watching arrogant corporate executives rake in record profits while they struggle to afford their medicines.
Mr. Shkreli and the CEOs of other major drug companies should be called to testify before Congress immediately, they should be required to produce all of the documents that have been requested of them, and House Republicans finally need to join our efforts to investigate these abuses and explore solutions to prevent them in the future."
