Martin Shkreli’s biggest foe in the House of Representatives spits venom when he speaks about price gouging by the drug industry.
Rep. Elijah Cummings (D-MD) has been in office since 1996. And he’s been taking on drug companies since 2011.
He’s the top Democrat on the House Oversight and Government Reform Committee, which is holding hearings into the issue and this month called up Shkreli, who as CEO of Turing Pharmaceuticals grabbed headlines by boosting the price of a rare drug by over 5000%.
Also called before the committee was the chief executive of Valeant Pharmaceuticals, which has pledge to end its dependence on sharp price hikes.
In a telephone call, Cummings spoke with Business Insider about what drew him to the issue of price increases by the drug industry and whether Congress can be effective in deterring companies from hiking prices too fast.
Here’s some of what he had to say, with a lengthier transcript of the conversation below:
Cummings wants pharma companies that aren’t so aggressive about price hikes to be “screaming at the top of their lungs” against the practice.
“I think companies that are doing the right thing they ought to be joining me in looking for the Shkrelis of the world.”
The money that Shkreli has spent on things like the Wu-Tang Clan’s latest album is “blood money.”
“While he’s running around buying albums, he is buying it at the expense of the American people and patients who probably are not getting the medication, and that is a problem that we must solve as a Congress, and we cannot remain silent.”
He has no plans to let Congress ease up on the pressure it’s putting on drug companies, though he expects the public will have the “phenomenal impact” on price gouging.
“It’s not a Republican issue, it’s not a Democratic issue. It’s an American issue.”
This interview has been edited for length and clarity.
Business Insider: How did this all come about? What sparked your interest in focusing on drug pricing?
Elijah Cummings: The head [women’s basketball] coach of the University of Maryland had contacted me. One of her doctors had mentioned to her that there was a shortage of the drugs to treat this particular cancer for children. She just couldn’t believe it because there were just so many young people that suffered from this disease. She found out that apparently people were hoarding the drugs, jacking up the prices and making it very difficult for hospitals to get the drug at a reasonable cost.
And that started my efforts with regard to drug pricing trying to figure out exactly why that was happening. When I thought about the Shkreli situation and the Valeant situation where you have folks who, in the instance of Shkreli and Turing, buy a drug that’s been sold for 60 years at the price range of $13.50, then overnight to raise it to $750 per pill — and we’re talking about life-saving drugs — that really concerned me.
Then we began to talk to hospitals, such as Johns Hopkins right here in Baltimore, smack dab in the middle of my district, and they were telling us that they were losing millions of dollars on drugs that Valeant produces.
When you have these kinds of price hikes, which in some cases I believe are just simply criminal and they are done because of greed, it’s like putting a gun to somebody’s head and saying you need to pay me this very high price for the drug or you die.
BI: You wrote in your memo releasing some of the internal documents from Turing and Valeant that this is a problem that’s “prominent throughout the industry.” When are other CEO’s going to be called in? For example, Pfizer raised the prices on more than 100 drugs in 2016. Are they next?
Cummings: We’re looking at several drugs, but I won’t go into those names.
Let me clear: I have absolutely no problem with companies making a reasonable profit. Nor do I have an issue with them being able to recover their R&D. I think that’s very important, I think we need to encourage companies to continue to do research. Drugs play a major role, but we have to strike a very careful balance here. There comes a point here where price hikes have nothing to do with R&D and have nothing to do with reasonable profit.
I think companies that are doing the right thing they ought to be joining me in looking for the Shkrelis of the world. They ought to be screaming at the top of their lungs because what it does is it gives the entire industry a bad image.
The other thing that concerns me is when other drug companies like Pfizer, the ones that you may have in mind, are about to raise prices. They say, well you know it would be reasonable for us to raise our prices 5%. After all, we have more R&D, we deserve a little bit more profit because of certain improvements we’re making to our manufacturing plants and things of that nature. They see a Shkreli going up 5,000%, and they have to scratch their head and think, why go up 5-10% when you’ve got a guy going up 5,000%?
No matter how you look at it, the public ends up paying.
I think one of the reasons why it’s become the number one health issue for Democrats, Republicans and Independents, is because it affects almost every person. You can rarely find anyone today who is not complaining about skyrocketing unreasonable costs of prescription drugs.
BI: What can Congress do about these price hikes?
Cummings: The research has shown, first of all, that whenever [Congress] shine a light on prescription drug companies with regard to price hikes automatically they have a tendency to slow down the rate of price hikes. Once that light goes off, then they regroup and move toward raising them even more.
I think the key here is for us to keep a light on this problem. I’m going to spend a lot of time a lot of effort to make sure that happens. And I think there are other members of Congress that feel the same way.
We’ve passed legislation where we now have a way for Medicaid, if the drug company raises prices higher than inflation, there has to be a rebate. So that I think hopefully will help.
We’ve got some legislation out there, but I think the public is going to have a phenomenal impact on this whole issue. As the public is screaming bloody murder, again this is a top priority. Now you even have the Republicans slowly but surely coming around. First they seemed reluctant to have any hearing on this issue. But I think Chairman Chaffetz and the Republicans saw that they cannot just their head away from this issue while their constituents suffer. It’s not a Republican issue, it’s not a Democratic issue. It’s an American issue.
BI: Corporate CEOs often say that they need to prioritise the needs of shareholders and price increases are a way to do this. Are they wrong to think that this is a good idea?
Cummings: The American way is for corporations to make a reasonable profit. I don’t think you’ll meet any member of Congress that will argue with that. The question is, what is reasonable. And you will never convince me that somebody that goes up on a drug 5,000% overnight is being reasonable. Or a company that is basically claims they’re doing R&D but there is very little evidence of R&D and that’s the development part and that’s advertising perhaps. At some point we have to say this is where you step over the line.
I know that Shkreli and Valeant and Turing are the extreme end, but there are those who are at the other end are still raising prices that have no relationship to R&D and have no relationship to a reasonable return to investors. And so at some point it becomes basically robbing the public. I think we have to address that.
I am convinced that the Congress is the last line of defence. If we ignore this information, and if we don’t try to act on it — so our constituents can afford the medications that they need and so that the taxpayers aren’t being ripped off — then we become a part of the problem. And I for one did not come to Congress to become a part of the problem.
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