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A 400% price hike on a decades-old drug is a risky move in a post-Martin Shkreli world. But Nirmal Mulye, founder of Nostrum Pharmaceuticals, said he had to raise prices or continue to lose money by making generic drugs.
Chip Davis, President and CEO of the Association for Accessible Medicines, the trade group representing generic drug companies, suggested that some of Mulye's problems could be misplaced.
"We view the recent statements and actions of Laboratoires Nostrum as detached from the realities of the market," Davis wrote in an email. Nostrum is not a member of the AAM.
The FDA, under the leadership of new Commissioner Scott Gottlieb, has been working to accelerate the approval of generic and branded drugs under a directive by President Donald Trump aimed at reducing drug prices. This has been widely praised for this.
But Mulye does not agree. He said the new FDA guidelines on elemental impurities in drugs required nitrofurantoin reformulation, so Nostrum removed the product from the market while making the necessary changes. He plans to reintroduce it "shortly," said Mulye.
"After the coming into force of the regulations, I do not think anyone made the product," Mulye said. "This will create exclusivity on the market and then the price goes up."
For that, he said, he accuses the FDA. But he also claims that it is necessary to charge as much as he can because he incurs high costs for the rest of the business – which he says can often not be recovered if it does not happen to market its products fast enough or if competitors emerge, resulting in lower prices.
Mr. Mulye also says that the price he will get will not be the list price, echoing an argument from many drug manufacturers about the difference between catalog prices and sharply reduced net prices.
"This is going to be significantly reduced" according to what Nostrum's customers like Walmart and Walgreens are willing to pay for the drug, Mulye said. And, he said, its price is capped by the price of the branded version, which is $ 2,800.
Davis, from the Generic Drugs Association, acknowledges that "the threats and challenges facing the generic drug industry in the United States remain very real," despite the disagreement with Nostrum's decisions.
"The US generics market is under unprecedented financial pressure that continues to threaten the sustainability of manufacturers and, by extension, the ability of patients to access the medications they need," Davis wrote. He pointed out that product abandonment is on the rise and that although more and more generic drugs are being approved, the number of approvals that are not being issued has also increased.
Nostrum's was not the only price increase last month; he was one of 60, according to Wells Fargo. The most important was the 482% increase in fluoxetine, an antidepressant, from Alembic Pharmaceuticals. Most price increases were made by small generic companies; Many major brand-name drug companies have recently delayed price increases due to political control.
Ronny Gal, an analyst at Bernstein, does not buy Mulye's reproaches.
"There is no relation to the cost of the drug, which must be a fraction of the price, given the past market price," Gal wrote in an email. "It pretty much tells you that it has raised prices because there was an opportunity in the market to do it … using FDA fees to raise prices is pretty low."
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