Exclusive: Meet One Pharma CEO Who's Doing Something To Bring Down Drug Prices
Benzinga recently had the chance to speak with Imprimis Pharmaceuticals Inc (NASDAQ: IMMY)’s Founder and CEO, Mark L. Baum J.D., one of the few guys in the pharma industry who’s doing something to fight drug price-gouging.
A Little Background
Imprimis develops, produces and distributes custom drug formulations for individual patients in the US. The company acquired plenty of notoriety back in 2015, when it decided to offer an alternative to the drug formulation that Martin Shkreli decided to hike from $13.50 to $750 per pill; Baum’s alternative was about $1 per pill.
The formulation in question (of the antiprotozoal drug pyrimethamin) is used to treat patients with HIV/AIDS and cancer, among other diseases, so Shkreli was highly criticized when he increased the price of the drug so rapidly and radically. Shkreli argued the drug had no way of posting a profit at $13.50 per pill; Baum set out to prove him wrong.
"That base chemical [pyrimethamine] happens to be incredibly inexpensive and the most expensive part of building this formulation is labor, believe it or not," he said. "His issue is the cost of capital. He paid $55 million for that formulation. He’s gotta cover that cost. So, based on his input, he’s gotta sell it for a lot more than we do."
The Man Behind The Resistance
Baum began, "The truth is that every time, every article I read about drug pricing and the Pew Charitable research, and this Congressional committee… talking about drug pricing and the problems associated with drug pricing, we’re actually the only company I think that’s actually solved the problem and taken drugs that were really expensive and created an alternative that is market based."
"We didn't talk about importing drugs from Canada or price controls or you know, drafting legislation, or any of that stuff," he continued, explaining that the company’s strategy was aimed at building drugs and making them affordable, to help people quickly. "So the whole idea of making drugs affordable again is something that we've done, and we want to do more of. I think that's going to be a theme for us going forward."
The CEO then went into politics. No matter who wins the presidential election, next year will witness "fairly major healthcare legislation… [which] will get signed into law," he predicted. “Hillary Clinton has a record of being able to, I think, work with Congress on those sorts of issues… and I think Trump will also want to push through certain reforms."
But, while Baum would like to think that Congress will take action in the drug pricing arena, seeking to incentivizing competition, he believes "there are so many forces at work from companies that are going to have their oxes gored to politicians that have specific interests," that nothing will actually happen in practice.
The Marketplace Right Now
Baum went on to discuss the marketplace. One thing we can be sure about is that reimbursement is changing, he said, saying that, "Bundling is happening… And bundling for services that are connected to qualitative measures for physicians, surgery centers, and hospitals."
What's not changing is the way patients approach paying for drugs. They will continue to seek to lower their expenses. Here's where Imprimis comes in.
"We're partnering with pharmacy benefit managers and their customers in order to make our formulations available more broadly," Baum assured. "So we're taking formulations for FDA approved drugs that happen to be very expensive, where the FDA approved drug is seen massive price spikes that are uncontrollable, and we're building alternatives that are using the same exact active ingredients and that we're able to lower the price for the payer by 60-70 percent."
He continued, "So the capital that we have raised is designed to not only build out this formulary, continue to build these relationships with the major pharmacy benefit managers, their insurance company customers, but also to build out our infrastructure so that we can handle the increased volumes of orders that we're receiving," order volumes have increased so much that the company needs to readjust.
Interestingly, Imprimis managed to increase sales, lower its OPEX and widen margins in the process of expansion.
"I think that trend should continue this year as we march towards profitability. That's what shareholders want to see and that's what I think the market wants to see," Baum voiced.
Benzinga’s Nicholas Donato contributed to this report.
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