DARAPRIM SPECIALTY DRUG PRICING: A CASE STUDY

This case study tells the story of a young, unconventional CEO who executed a perfectly legal, totally unregulated strategy to acquire both great wealth and significant enmity: purchasing an older, neglected, specialty drug (i.e. a drug that has successfully treated a chronic or difficult health condition), significantly increasing its price, and tightly controlling its distribution (Pollack, 2015). These specialty drugs are highly effective in treating disease, but the number of patients desperately needing the drug is modest and stable, making it less attractive for generic drug manufacturers to enter the market. Free from competition, the specialty drug manufacturer can set any price it wants for the specialty drug, wreaking havoc on patients suffering from the disease the drug is designed to cure and the physicians and medical institutions trying to heal them. The purpose of this case is to evaluate this business model and ascertain if it might be appropriate to permit the Food and Drug Association (FDA) to participate in the negotiation of price increases of these specialty drugs.