Inflation of the drug Daraprim

In Hamza’s blog post, he discussed the social injustice that is Daraprim. Daraprim is a drug that is used to decrease and subdue the virus and parasites that come with the disease AIDS. He argues that it is inhumane and disgusting that manufacturer and owner of the drug, Martin Shkreli, is charging a price of $750 per pill. This of course is outrageous. It seems like it should violate some sort of human rights code to charge so much for a drug that many people need to survive.

However, as unpopular and awful it may seem, I am going to look at this from strictly a business point of view. Hamza’s blog post directs the blame of the high cost to the FDA for not having stricter pricing regulations in regards to life maintaining drugs such as Daraprim. Why wouldn’t the FDA place a price ceiling on the drug?

If they did so, it eliminates the incentive for anyone to produce the drug in the first place. Why would anyone spend the millions, maybe billions of dollars on research making the drug, just to have selling price capped so that they can’t make a profit for dozens of years to come? For this reason, it makes sense from a business perspective for the FDA to disallow any pricing boundaries on the drug. In no way do I support this point of view, which allows for such high pricing on this necessary drug, but I am arguing that I am able to see the reasons for which the price is so high.