The Senate just got closer to figuring out how to stop people like Martin Shkreli, aka 'Mr. Wu-Tang,' from hiking drug prices

The drug pricing debate has officially kicked off in the Senate’s committee hearing rooms.

On Wednesday, Special Committee on Ageing members heard health experts speak out sharply against price gouging, the practice in which companies acquire older drugs with no generic competition and suddenly raise their price.

Notably missing from the panel of witnesses — which mainly focused on actions by Valeant and Turing Pharmaceuticals — were the companies who have done so. Martin Shkreli, the CEO of Turing, said in a tweet Wednesday that although he’d not been called on, he “would have loved to insult Congress.”

Even without his presence, inside jokes weren’t hard to come by. For her part, Sen. Claire McCaskill (D-Missouri) referred to Shkreli as “Mr. Wu-Tang;” other senators referred to CEOs who’ve price gouged as “hedge fund folks.”

Hearing from those affected by Shkreli’s price hikes

At the hearing, Dr. David Kimberlin, who specialises in pediatric infectious disease at the University of Alabama, spoke of a situation in September, around the time Daraprim’s price went up, in which he found barriers to getting the drug because the monthly cost for four tablets suddenly spiked from $54 to $3,000.

Because babies infected with toxoplasmosis, a parasitic infection that can be deadly in infants as well as adults with weakened immune systems, have to take Daraprim for a full year, increasing dosage along the way, that cost was suddenly prohibitive for some of his patients.

Kimberlin also told the committee that he’d heard of at least 30 cases in 21 states in which doctors and patients had trouble accessing Daraprim, though he didn’t specify whether these cases had occurred after Turing slightly revised its pricing strategy.

Two possible solutions

The hearing boiled down to two solutions to the market failure that happens when there’s no generic competition for off-patent drugs with relatively small patient population.

No. 1: Compounding pharmacies

One centered on the use of compounding pharmaceutical companies, which could offer low-cost alternatives the way Imprimis Pharmaceuticals was able to provide a $1/pill alternative to $750/pill Daraprim.

Imprimis provides a version of pyrimethamine, the active part of Daraprim, combined with leucovorin, a form of B-vitamin folic acid that’s recommended to treat toxoplasmosis.

But across the board, the hearing witnesses seemed wary of using this as a long-term solution.

“Compounding is essential for some patients,” Fox said. “But compounding should not be a blanket one-size-fits-all solution. I really don’t think it’s a solution for many patients.”

Mark Merritt, the CEO of Pharmaceutical Care Management Association, the trade association that represents pharmacy benefits managers like Express Scripts, who recently partnered with Imprimis to provide its compounded version of Daraprim at a cheaper cost, made it very clear that he’d rather see generic competition than compounded versions.

“We’ve gotta figure out what’s the alternative,” he said before proposing pathways for generics to get approved. “In the interim, we’ll do more compounding and allow that to occur. Then we might have to take a look at taking it in from another market.”

No. 2: Generics

Generics appeared to be the preferred way to fix the lack of competition for new drugs.

Merritt cited a generic drug approval backlog at the FDA as one of the reasons why many drugs don’t face generic competition just yet. He suggested coming up with a faster approval timeline for generics coming to market to take on drugs with high prices.

Merritt also suggested compiling a definitive list of all the drugs like Daraprim that look ripe for acquisition. The Senate members seemed to enjoy that idea.

“Let the word go out to investors and hedge funds: We’re paying attention to this practice,” McCaskill said in closing remarks. “If it is a matter of making a list of the off-patent drugs, I think that’s a really good idea.”

Committee members have until December 21 to submit more questions for the record.

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