Congress tried to show it feels America's pain over high prescription-drug costs by calling Martin Shkreli to account Thursday.
Shkreli is the former head of Turing Pharmaceuticals, currently out on $5-million bail after being charged with securities fraud and conspiracy. He became the face of Big Pharma greed after jacking up the price of a one-of-a-kind infection medication by 5,000%.
Shkreli clammed up Thursday by citing his 5th Amendment right against self-incrimination. He did tweet, however, that lawmakers are "imbeciles."
"I don't think I've ever seen the committee treated with such contempt," fumed Rep. John Mica, a Florida Republican.
Politicians can skip the phony outrage. Shkreli may be the poster boy for drug-industry rip-offs, but he's by no means alone. Pharmaceutical companies are crawling with profit seekers preying on the sick, and Congress has done nothing to fix that.
I had an interesting chat the other day with Dinesh Ghiya, a Whittier pediatrician who wanted me to know what's going on with Cortisporin-TC Otic Suspension, an ear drop that's used to treat what's commonly known as swimmer's ear.
"A vial used to cost about $6," Ghiya said. "I got some for a patient recently and it was a lot more. I called my pharmacist and was told that the price will probably go up again this year."
He said he treats dozens of local kids with Cortisporin every summer.
There are cheaper generic alternatives available, but pediatricians often prefer the brand-name original because it's formulated thicker and doesn't drip out of the ear. Basically, it works better.
"If kids can't afford Cortisporin, that can mean pain, excruciating pain," Ghiya said. "If the infection goes deeper into the ear, it can mean surgery."
I asked Ghiya why the cost of Cortisporin has risen so much.
"I don't know," he replied. "Because it can."
The answer is actually more troubling — and illustrates multiple problems with the U.S. healthcare industry, including unwarranted markups as a result of repeated corporate acquisitions and the slimy practice of ducking U.S. taxes by relocating abroad.
Unlike the drug for parasitic infections Shkreli cashed in on, which is more exotic in nature, Cortisporin couldn't be more banal. That a remedy for something as ubiquitous as kids' ear infections can become a profit center speaks volumes about what healthcare consumers are up against.
Cortisporin was originally developed by Glaxo Wellcome and was approved by the Food and Drug Administration in 1975.
"It's been around since the dawn of time," said Robert Hamilton, a Santa Monica pediatrician. "There's nothing complicated about it."
As best as I can tell, Cortisporin originally cost just a few bucks for a 10-milliliter vial, which is about a month's supply and sufficient to treat even the most stubborn ear infection.
Sarah Spencer, a Glaxo spokeswoman, said Cortisporin has been on the market for so long, no one at the company even remembers how much it used to cost. "We no longer own the medicine," she noted.
Indeed, Cortisporin has had a decidedly tumultuous life considering how mundane it is.
Glaxo sold the U.S. rights to Monarch Pharmaceuticals, a subsidiary of King Pharmaceuticals, in 1997.
Ten years later, King sold Cortisporin to JHP Pharmaceuticals. JHP Pharmaceuticals was acquired by Par Pharmaceutical in 2014.
Last year, Par was acquired by the drug company Endo International for a hefty $8 billion.
Endo underwent its own transformation in 2014, changing its name from Endo Health Solutions and moving from Pennsylvania to Ireland to avoid paying millions of dollars in U.S. business taxes.
Rajiv De Silva, Endo's chief executive, said at the time that "strategic acquisitions" will "play a key role in maximizing our growth potential and creating value for Endo International shareholders."
That's pharma-speak for "we're going to buy other drug companies and mark up the price of their meds so we can make a lot more money."
Heather Zoumas Lubeski, Endo's senior director of corporate affairs, told me that the company "is committed to providing top-quality products to patients to improve lives" and believes its pricing "is rational and appropriate."
Regarding Cortisporin, she said, "Endo has taken price increases in line with market conditions and competitor product pricing."
Pharmacists say otherwise. Benjamin Khorsandi, a Santa Monica pharmacist, said he could recall that "only a few years ago, Cortisporin was selling for about $10."
Last year, he said, the price surged to about $100, "and now it's going for double that."
Greg Avale, a Century City pharmacist, confirmed Khorsandi's experience. "Cortisporin is selling for $195," he said. "The generic version costs $144."
Remember, we're talking about a drug that's been around more than 40 years. It doesn't fight cancer. It won't cure hepatitis. It helps kids get over ear infections from summertime swims.
"It blows my mind," said Ben Kadkhoda, a Brentwood pharmacist. "It seems like all the brands go up in price at least once a year."
"Because they can."
Which is exactly what Dr. Ghiya said.
I understand people who insist that you can't have price controls for prescription meds. It would stifle innovation, they say, and undermine research into new treatments. There's something to that.
But then there are the Cortisporins — everyday drugs that have been around forever but that keep going up in price for no better reason than because a new owner figures he can wring more profit from it than the last guy.
What to do?
Here's a start: Allow Medicare/Medicaid to negotiate drug prices with manufacturers. This is how other developed countries keep drug prices at reasonable levels. It's nuts that we prohibit our biggest public insurance system from applying the same market muscle.
Instead, we're stuck with an imbalanced playing field where a guy like Shkreli can fleece consumers and then smirk and giggle his way through what should have been a public flogging.
"It's not funny, Mr. Shkreli, people are dying," admonished Rep. Elijah Cummings (D-Md.).
Like that has anything to do with maximizing growth potential and creating value for shareholders.
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