Last May, Turing Pharmaceuticals, then a little-known drug company, was nearing a deal to acquire Daraprim, a 62-year-old drug that fights a rare but severe parasitic infection.

“Very good. Nice work as usual,” the company’s young chief executive, Martin Shkreli, wrote to the chairman of the board. “$1 bn here we come.”

In August, he wrote to a contact outside the company that raising the price of the drug would bring in $375 million a year – “almost all of it profit,” which he predicted would continue for three years.

“Should be a very handsome investment for all of us,” Shkreli wrote. “Let’s all cross our fingers that the estimates are accurate.”

By the end of that year, Shkreli would be a minor celebrity – a “pharma bro” notorious for his unapologetic drug price increase, which cast an intense spotlight on how the pharmaceutical industry operates. Turing, which jacked up the price of a single pill of Daraprim by more than $700, would be under congressional investigation.

In the run-up to a congressional hearing on drug prices Thursday, Rep. Elijah E. Cummings (Md.), ranking Democrat on the House Committee on Oversight and Government Reform, released two memos summarizing some of its key findings. The committee received more than 250,000 pages of documents from Turing and more than 75,000 pages from Valeant Pharmaceuticals International, a second company that appears to have built its business model around significant price increases of drugs that it did not invent.

The internal documents provided by Turing provide a window into its operations, showing that the skyrocketing drug price was part of the plan from the beginning. The company anticipated that the drug’s main audience – HIV patients whose weakened immune systems make them vulnerable to infection – could pose a problem because of their expert use of advocacy. But Turing thought it could be kept under control by making sure patients had access to the drug even as the list price shot up. Although the company has emphasized that its patient-assistance programs and discounts mean that no patients paid full price for the drug, internal documents reveal that some were hit with $6,000 co-pays, with at least one patient facing a $16,830 payment.

“We may need to make some updates based on co-pay amounts we’ve been seeing since the price change. . . . There are patients waiting now for product who have a $6,000 co-pay,” Tina Ghorban, director of business analytics and consumer insights at Turing, wrote in an internal email in August.

How 2015 became the year of prescription drug price outrage

How 2015 became the year of prescription drug price outrage

Prescription drug prices, always a hot-button issue, reached the boiling point this year after several small pharmaceutical companies bought the rights to established lifesaving drugs and jacked up prices by huge margins.

The poster child for pharmaceutical greed, Martin Shkreli, captured the nation’s…

Prescription drug prices, always a hot-button issue, reached the boiling point this year after several small pharmaceutical companies bought the rights to established lifesaving drugs and jacked up prices by huge margins.

The poster child for pharmaceutical greed, Martin Shkreli, captured the nation’s…

(John Russell)

But even as these wrinkles developed, the company continued to make significant revenue from the drug.

In mid-September, Ghorban forwarded an order for 96 bottles of Daraprim internally. At the drug’s new price of $75,000 a bottle, that order nearly equaled the annual sales of the drug under its previous owner.

“Another $7.2 million,” Ghorban wrote. “Pow!”

Hospitals also began to complain to the company. Massachusetts General Hospital in Boston said that after a week of trying to obtain Daraprim for an uninsured patient, it had not had success and had received inaccurate information from the team.

“I think we are acting a little like a deer in the headlights, and need to take some action steps now,” Ed Painter, head of investor relations, wrote in an email.

Shkreli said that the company was giving away the drug to those who couldn’t afford it, saying for example that the price to Medicaid was very low: “90%+ off the list price,” he wrote on Twitter.

In internal communications, that compassionate tone shifted. When Shkreli was told that Medicaid patients accounted for 23 percent of the drug it was selling to Walgreens, he responded: “Nice, so only 23 percent of drug is being given away?”

An outside consultant brought in during October suggested that Shkreli be removed as chief executive and the drug price be slashed.

“This will force reporters to focus on the byzantine nature of drug pricing and health care and ensure the patient message gets out,” the consultant wrote.

Instead, Shkreli stayed and the price did not budge.

It was not until Shkreli was charged with securities-fraud counts for his actions at previous companies, unrelated to the drug price increases, that he stepped down as chief executive.

“These new documents provide a rare, inside look at the motivations and tactics of drug company executives,” Cummings said in a statement. “They confirm what Americans across the country have experienced firsthand for years – that many drug companies are lining their pockets at the expense of some of the most vulnerable families in our nation. The documents show that these tactics are not limited to a few ‘bad apples,’ but are prominent throughout the industry.”

Pharmaceutical Research and Manufacturers of America, the trade group representing the drug industry, has distanced itself from Turing and Valeant, saying their strategies more closely resemble a hedge fund than a pharmaceutical company.

Turing responded to the memo with an emailed statement that said the company has invested all of its net profit and 60 percent of its revenue in research and development.

The hearing will be a strange lineup. J. Michael Pearson, chief executive of Valeant, the other company under investigation, has been out on medical leave since December after being hospitalized with severe pneumonia. So Howard Schiller, the interim chief executive, will attend in his stead.

The documents provided by Valeant reveal that the company bought two heart drugs administered at hospitals with the intention of increasing the price.

Ultimately, the company tripled the price of Nitropress and increased the price of Isuprel by more than 500 percent.

The star of the hearing is inarguably Shkreli. The company’s chief commercial officer, Nancy Retzlaff, will be there, but Shkreli, who has become a celebrity of sorts for his carefully cultivated social-media personality, is the one people will be interested in – although his presence may be disappointing, since he has vowed to take the Fifth Amendment.

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