Another Pharma Bro: CEO said he had ‘no choice’ but to raise schizophrenia drug price by 1,650 percent
A generic drug company has so far flown under the radar after jacking up the cost of a drug used to treat schizophrenia by 1,650 percent over three months.
Lannett dramatically increased the cost of fluphenazine, which treats some symptoms of the chronic mental illness, earlier this year as public outrage simmered over price-gouging drug companies such as Valeant and Turing, reported Forbes.
The drugmaker Mylan and its CEO, Heather Bresch, have also come under scrutiny for hiking the cost of EpiPens after the U.S. Congress encouraged schools to stock the emergency allergy remedy and some states made the brand mandatory in schools.
The prescription tracking firm IMS Health found the Philadelphia-based drugmaker sold 32,072 prescriptions of fluphenazine in the first three months of this year for $358,000 — yielding a net price of $11.17.
But the company sold 37,320 prescriptions for $7.3 million in the next three months — for a net price of $195.53.
That’s nearly twice the $3.9 million in net profits Lannett made in 2012, the year before the company changed direction under CEO Arthur Bedrosian and hiked the cost of three key drugs.
Under Bedrosian’s leadership, Forbes reported, the generic drugmaker reported $150 million in profits for the fiscal year 2015 — and Fortune called Lannett, which was founded in 1942, the fastest-growing company in America last year.
The 70-year-old Bedrosian has served as CEO since 2006, but has pursued an aggressive strategy of raising costs of some drugs after competitors abandon a market.
“Sometimes you have no choice but to raise the price or discontinuing a product if you’re not going to make money on it,” Bedrosian told the Wall Street Journal last month.
The company insists its pricing is consistent with industry norms, saying the company doesn’t sell directly to consumers and is just one link in a chain.
“Before a patient purchases a prescription medication, drug distributors, wholesalers, insurance companies, and pharmacies impose markups that increase the price that the end consumers ultimately pays,” the company said in a statement.
Lannett’s pricing strategy has made market analysts worry the company and its CEO could become a political target — like former Turing Pharmaceuticals chief Martin Shkreli, also known as “Pharma Bro.”
This year’s price increases for fluphanzine, along with two other drugs — terbutaline and clindamycin — came as Lannett acquired Kremers Urban Pharmaceuticals for $1.2 billion, financed mostly with debt.
The company’s stock price hit a low in March, but Forbes reported it’s back up 60 percent.
Watch Bedrosian discuss drug pricing in this interview with Fox Business: