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Martin Shkreli is still refusing to answer to the US government for jacking up the price of a critical drug, and he's not alone

This week, both houses of Congress took up the issue of gouging by drugmakers — the practice of taking an older drug and drastically raising its price.

In the Senate, the Special Committee on Ageing rallied bipartisan support for an investigation of four companies deemed the worst offenders: Valeant Pharmaceuticals, Turing Pharmaceuticals, Retrophin Inc., and Rodelis Therapeutics.

Not to be outdone, Democrats in the House of Representatives launched an Affordable Drug Pricing Task Force to address the issue. In a letter sent Wednesday to Oversight and Government Reform Committee chairman US Rep. Jason Chaffetz (R-UT), committee Democrats called on him to hold a hearing on Valeant and Turing later this month.

So what’s the goal of all these Congressional task forces, investigations and letters? Getting a more transparent account of what goes into a drug’s wholesale price, especially when it rises faster than the rate of inflation.

But the drug companies won’t be quick to give up that information, even if they say they will cooperate with the Senate’s investigation and whatever the House can cook up.

A record of cagey responses

Already, Valeant, run by J. Michael Pearson, and Turing, run by Martin Shkreli, have rebuffed requests for information on how they set their prices

“The specific documents and information referenced in your letter are highly proprietary and confidential,” Valeant’s Senior Vice President of Investor Relations Laurie Little wrote in response to letters from Rep. Elijah Cummings (D-MD) and Democratic presidential candidate Sen. Bernie Sanders (I-VT).

Among the drugs Sanders and Cummings requested information about were Nitropress and Isuprel, two heart drugs that have shot up in price in recent years.

Similarly, Turing said it is “unable to provide certain numbers and data related to proprietary information,” in response to a similar letter about the drastic increase of Daraprim, a 62-year-old drug that’s used to treat malaria and parasitic infections in patients with weakened immune systems.

The Senate’s probe

The Senate will hold its hearing on drug prices on Dec. 9.

When we asked Turing CEO Martin Shkreli about the Senate investigation earlier this week, he said he wasn’t convinced he’d have to attend the hearing at all.

“When my lawyers tell me I absolutely have to go, I’ll go,” he said. “They don’t have subpoena power until they have got widespread support. I don’t have to go to a hearing unless there’s widespread support.”

And here’s what his company, Turing Pharmaceuticals, sent Business Insider in regards to the Senate’s letter:

“We are reviewing the Committee’s request and, as we have and continue to do with similar congressional inquiries, we look forward to having an open and honest dialogue about drug pricing.”

Valeant’s Little issued a similarly cagey response, saying “the prices of individual drugs fluctuate due to a number of factors.”

Two other drug companies who received Senate letters appear to be responding, if only partially:

Retrophin, whose drug Thiola (used to treat a rare disease that causes stones in the kidney, ureter, and bladder) rose from $US1.50 a pill to $US30 while Shkreli was the head of the company. The company responded to the letter calling them out on it by saying they’d work with the Senate Committee.

Retrophin told Reuters that setting prices that are affordable but still allow innovation is important to the company.

And Rodelis, which recently raised the price on one antibiotic from $US500 for 30 capsules to $US10,800, has since dropped its price to $US1,050.

What’s ahead

It’s unlikely the other companies will go down without a fight.

After refusing to lower the price of Daraprim weeks after he said he would, Turing CEO Martin Shkreli told Business Insider earlier this week that he has now committed to reducing the price by Dec. 25. He said the decrease will be “modest,” however, and he might wait until other companies lower their prices to take any action.

In the meantime, Turing has hired lobbyists with experience working with the FDA, Centres for Medicare and Medicaid Services, and the Department of Health and Human Services.

And while Valeant, which is running into other problems related to its business model and falling shares, spends much less on government relations and lobbying the US government than its Big Pharma counterparts, according to Bloomberg data, this could change in light of investor pressure and the impending investigation.

If the Senate’s investigation is successful, it could set an entirely new precedent for the way drugs — old and new — are priced.

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