Without pharmaceutical price regulation, gouging is to be expected

Pharma chief defends 400% drug price rise as a ‘moral requirement’

By David Crow
Financial Times, September 11, 2018

A pharma executive has defended his decision to raise the price of an antibiotic mixture to more than $2,000 a bottle, arguing there was a “moral requirement to sell the product at the highest price.”

Last month, Nostrum Laboratories, a small Missouri-based drugmaker, more than quadrupled the price of a bottle of nitrofurantoin from $474.75 to $2,392, according to Elsevier’s Gold Standard drug database.

Nitrofurantoin is an antibiotic used to treat bladder infections that was first marketed in 1953, which appears on the World Health Organization’s list of essential medicines.

In an interview, Nirmal Mulye, Nostrum chief executive, said he had priced the product according to market dynamics, adding: “I think it is a moral requirement to make money when you sell the product for the highest price.”

Mr. Mulye said Nostrum was responding to a price rise from Casper Pharma, which makes a branded version of the product known as Furadantin. Casper increased the price of its product by 182 per cent between the end of 2015 and March 2018, taking a bottle to $2,800, according to the Elsevier database.

He also defended the actions of Martin Shkreli, who became infamous in 2015 for his decision to raise the price of an Aids and cancer drug from $13.50 to $750 per tablet. Shkreli was jailed earlier this year on unrelated fraud charges.

“I agree with Martin Shkreli that when he raised the price of his drug he was within his rights because he had to reward his shareholders,” said Mr. Mulye.

Mr. Mulye pointed out that Shkreli was able to increase the price of Daraprim so dramatically because his company was the only one making it.

“If he’s the only one selling it then he can make as much money as he can,” said Mr. Mulye. “This is a capitalist economy and if you can’t make money you can’t stay in business.”

In a tweet responding to Mr. Mulye’s comments, Scott Gottlieb, FDA commissioner, said, “There’s no moral imperative to price gouge and take advantage of patients. FDA will continue to promote competition so speculators and those with no regard to public health consequences can’t take advantage of patients who need medicine.”



By Don McCanne, M.D.

Appalling drug price gouging will continue until our government fulfills its responsibility to protect the consumer, that is, the patient. FDA Commissioner Scott Gottlieb represents the view of current and previous administrations when he says that we need to promote competition, as if the market will take care of it.

But that's not the way markets really work. The 400 percent price increase of this generic nitrofurantoin was to bring the price closer to the competition - the branded version, Furadantin. Nostrum chief executive Nirmal Mulye explains to us the way markets really work, "I think it is a moral requirement to make money when you sell the product for the highest price." A moral requirement, he says.

Maybe we should begin discussions of nationalizing the pharmaceutical industry. That might make them nervous enough that they would finally agree to regulation of prices as is done in other civilized nations. Whether they agree or not, we need to do it.

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