Health Care

KC CEO who hiked drug price 400% fires back at McCaskill, says he got death threats

Nirmal Mulye, the CEO of a small Kansas City pharmaceutical company, got Twitter-famous — or infamous — last week after he was quoted saying he had a “moral requirement” to raise a drug price 400 percent.

“Everybody’s attacking me,” Mulye said in a brief phone interview this week. “I’m getting death threats and what have you, and then the senators get on the bandwagon.”

After the story broke, U.S. Sen. Claire McCaskill, a Missouri Democrat, and U.S. Sen. Susan Collins, a Maine Republican, sent Mulye a series of questions about the price increase on nitrofurantoin, an antibiotic for treating urinary tract infections.

This week Mulye responded, but it appears that won’t be the final word.

Mulye’s seven-page letter to the senators repeated assertions that his comments in the Financial Times last week were misconstrued. He did not directly answer several of the nine questions the senators posed to him, instead saying they weren’t relevant to the pricing of the drug.

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Nirmal Mulye, Nostrum Laboratories founder and CEO Submitted photo

“Getting caught up in the sensationalism and vilifying either any individual involved with the drug industry or the drug industry as a whole will not bring down the prices for the drugs and is not in the public interest,” Mulye wrote. “It is more important that members of Congress are committed to finding the truth about high drug prices and their causes than using politics to blame a person or a group.”

Asked for reaction, McCaskill’s office issued a one-sentence statement that suggested she’s not satisfied.

“Sen. McCaskill’s investigation into sudden and dramatic spikes in prescription drugs, particularly off-patent medications, is ongoing and she looks forward to continuing to explore why it happened in this case,” said McCaskill spokesman Jonas Edwards-Jenks.

McCaskill has made high pharmaceutical prices a campaign issue and worked with Collins this year on legislation to end “gag clauses” in insurance plans that prevent pharmacists from telling customers when they could pay less for drugs by paying out-of-pocket rather than using their insurance.

Mulye and his company, Nostrum Laboratories, 1800 N. Topping Ave., were largely unknown nationally until the Financial Times story dropped Sept. 11.

A New York-based reporter for the London publication quoted Mulye as saying it is “a moral requirement to make money when you can … to sell the product for the highest price,” when asked why he raised the price of liquid nitrofurantoin from about $475 a bottle to about $2,400.

The story went viral and drew caustic replies online, including a series of tweets by U.S. Food and Drug Administration Chief Scott Gottlieb that accused Mulye of price gouging.

Mulye said that his comments were taken out of context and that he was talking about his obligation as CEO to keep afloat Nostrum, which he said has lost money in eight of the last 11 years. Nostrum employs about 100 people in Kansas City at annual salaries ranging from $40,000 to $200,000, according to Mulye.

“The senator is not supporting the people of Missouri, I can tell you that,” Mulye said.

In his letter to McCaskill and Collins, Mulye said subsequent articles by CNBC and S&P Global more accurately captured his position. The Financial Times declined to comment publicly, but stands by its story.

Len Nichols, a professor of health policy who has studied pharmaceutical pricing, said Mulye probably should have chosen different words in his interview with the Financial Times, but there’s some truth to what he said.

“It’s certainly true that he is correct: You have to make money or you’re not going to have companies doing business,” said Nichols, the director of the Center for Health Policy Research and Ethics at George Mason University.

Nichols also said Mulye is correct in noting that Nostrum’s generic version of nitrofurantoin is still cheaper than the brand name version, which was raised to $2,800.

But Nichols said the better move for Nostrum’s reputation long-term might have been for Mulye to take less short-term profit and charge far less than the brand price, given that the drug in question is critical for some patients and Nostrum sells the only generic version that comes in liquid form.

“This particular drug is for urinary tract infections, which, if you’ve ever had one, or you know someone who has had one, they’re excruciatingly painful and debilitating and that’s why the World Health Organization has this drug on the list of things that are considered essential,” Nichols said. “… What therefore these guys are doing is taking advantage of that insatiable need for help.”

The Infectious Diseases Society of America and HIV Medicine Association put it more starkly in a Sept. 14 editorial that called Nostrum’s nitrofurantoin price hike “opportunistic greed in its most indefensible form.”

Nichols said the drug industry in the United States is a free-wheeling market that depends on competition, rather than government price controls, to keep life-saving medications affordable. But there’s not enough competition for many products, which leaves consumers who quite simply can’t say no at the mercy of manufacturers who can charge whatever they want.

Many are taking advantage of that system, Nichols said, and Mulye’s nitrofurantoin price hike pales in comparison to others that have drawn far less scrutiny.

“He is nowhere near the most egregious practitioner of this dark art,” Nichols said.

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