Two Hearings

Congress examined the Daraprim price increase in two hearings in early 2016. The House Committee on Oversight and Government Reform held the first on February 4. The Senate Special Committee on Aging held the second on March 17.

House Oversight Hearing: February 4, 2016

The hearing, titled "Developments in the Prescription Drug Market: Oversight," was chaired by Rep. Jason Chaffetz (R-Utah). Rep. Elijah Cummings (D-Maryland) was the ranking member.

Witnesses included Martin Shkreli, former CEO of Turing Pharmaceuticals, Nancy Retzlaff, Turing's chief commercial officer, Dr. Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research, and Mark Merritt, president and CEO of the Pharmaceutical Care Management Association. The committee also questioned executives from Valeant Pharmaceuticals.

Shkreli's Fifth Amendment

With defence attorney Benjamin Brafman beside him, Shkreli invoked the Fifth Amendment in response to every question. When Rep. Cummings asked about a pregnant woman with AIDS who could not afford Daraprim, Shkreli said: "On the advice of counsel I invoke my fifth amendment privilege against self-incrimination and respectfully decline to answer your question."

He gave the same answer when asked whether he believed he had done anything wrong and when asked about the company's R&D spending claims.

Before the hearing, Shkreli had told reporters he was eager to "educate Congress."

Demeanour

Shkreli smirked through the hearing, laughed at questions, and turned away from Rep. Cummings to pose for photographs while Cummings was speaking.

Rep. John Mica (R-FL) suggested holding Shkreli in contempt because of his conduct. Rep. Duncan told the hearing: "I've never seen... such childish, smart-alecky smirks, even turning away from ranking member Cummings to pose for pictures while the ranking member was speaking."

Rep. Cummings made a direct appeal: "You are in a unique position. You really are, sir. Rightly or wrongly. You can come clean and become one of the most effective patient advocates in this country or go down in history as the poster boy for greedy pharmaceutical executives." Shkreli said nothing.

Nancy Retzlaff's Testimony

Retzlaff said no patient who needed Daraprim would be denied access. She said most patients did not pay the $750 list price because of government and company assistance programs, and that 60% of net income was reinvested in R&D.

Chairman Chaffetz responded with internal spending documents. He asked whether the company had spent money on fireworks. Retzlaff said it had. He asked whether Turing had spent $800 on a cigar roller for a yacht event. Retzlaff said it had. Chaffetz told her: "Ok, so don't tell me that you're losing money. Don't try to pretend and tell us that this $750 is justified, when you got a woman whose got AIDS."

Rep. Peter Welch (D-VT) pressed Retzlaff on the pricing structure: "So most people have no idea what the price is after you go through the gymnastics you just described."

Senate Aging Committee Hearing: March 17, 2016

The Senate Special Committee on Aging hearing, titled "Sudden Price Spikes in Decades-Old Prescription Drugs: Inside the Monopoly Business Model," was chaired by Sen. Susan M. Collins (R-Maine). Sen. Claire McCaskill (D-Missouri) was the ranking member.

The committee subpoenaed about 400,000 pages of documents from Turing and Retrophin. The investigation focused on companies operating "more like hedge funds than traditional pharmaceutical companies."

Howard Dorfman's Testimony

Howard L. Dorfman was Turing's senior vice president and general counsel from December 2014 to August 2015. He testified under subpoena.

Dorfman said he and other management committee members "repeatedly raised business objections" to the Daraprim pricing plan. They believed it "would have a severely negative impact on Turing's business and reputation."

The price increase, Dorfman testified, was "not justified by any such actual expenditure" on R&D, clinical trials, or educational programs. Turing had no formal study protocol for next-generation toxoplasmosis drugs. It had not funded the educational materials it publicly cited as justification.

Dorfman also testified that Retzlaff had privately raised the same concerns in management committee meetings, even though she had defended the price increase before the House committee six weeks earlier.

The Weston Family

Shannon and Joshua Weston testified about their infant daughter, who was diagnosed with congenital toxoplasmosis. After the price increase, the family faced a medication bill of $28,000 per month. Without treatment, the child faced death or permanent disability.

Turing had said "no patient needing Daraprim will ever be denied access." The family's bill was $28,000 per month.

Dr. Adaora Adimora

Dr. Adaora Adimora, professor of medicine at UNC Chapel Hill and immediate past chair of the HIV Medicine Association, testified about the clinical impact on HIV/AIDS patients. She said the price kept healthcare providers from prescribing the drug to patients who needed it.

Sales Collapse

Sen. Claire McCaskill disclosed internal sales data during the hearing. Pills sold fell from 25,500 in August 2015 to 600 in December 2015, a 98% decline.

The "Imbeciles" Tweet

Shkreli was excused from the House hearing on February 4, 2016, while the session continued. He posted on Twitter: "Hard to accept that these imbeciles represent the people in our government."

Legislative Outcomes

The Prescription Drug Affordability Act proposed caps on out-of-pocket costs. The CREATES Act, or Creating and Restoring Equal Access to Equivalent Samples, targeted the restricted distribution practices Turing had used to block generic competition. The joint investigation documented annual cost increases for 10 generic drugs ranging from 390% to 8,200%. Bernie Sanders made pharmaceutical price reform part of his 2016 presidential campaign platform.

No comprehensive drug pricing legislation passed as a direct result. The CREATES Act was signed into law in December 2019 as part of a broader spending bill. It specifically addressed the restricted distribution barrier Turing had used.

The FTC antitrust case, filed in January 2020 and settled in December 2021, drew on the hearings' record. The investigation's 400,000-page documentary record supported that case.