This week, news came out that a life-saving drug invented in 1953 was recently acquired by a pharmaceutical company and the price was quickly raised from $14 a tablet to $750 a tablet. This price spike has created a flurry of outrage about greedy pharmaceutical companies, and most of it has been directed specifically towards Turing Pharmaceuticals’ CEO, Martin Shkreli.

Much of this public outcry has led to many questions: Who is this douchebag and why did he raise the price? What are patients supposed to do? Why are drugs so expensive in the first place? What would libertarians do about this?

Martin Shkreli is a former hedge fund manager. This is not the first time he’s used a company to acquire the rights to a drug and jack up the price. The last time he did was in 2014 while CEO for Retrophin Inc, and he was fired.

As of Tuesday, it appears that Martin Shkreli has heard the roar of public opinion and has announced he will lower the price, though there’s been no news on exactly what the new price will be.

Though there are many reasons libertarians might claim that this problem that wouldn’t happen in the first place without the FDA and patent law, I’d like to point out that the other way that a libertarian society would handle unfair pricing is consumers turning on companies through various forms of awareness (or “shaming”) campaigns. Such as what just happened in the last three days. No law needed, just social fury, as the social justice crowd has proven repeatedly.

Daraprim is a drug that fights toxoplasmosis. Toxoplasmosis is particularly dangerous for individuals who have weakened immune systems, such as pregnant women and AIDS patients. Daraprim was purchased by Turing Pharmaceuticals on August 10th, 2015 for $55 million. Drug prices rising upon ownership changing hands is pretty common. The percentage of this increase is what is so notable about it.

We all understand that prescription drugs tend to be expensive (if not for us, then for our insurance companies). It’s a common complaint, and it’s worth it to take a moment to understand why.

Those who understand how research and development works know that new medications cost tremendous amounts to create. Though a single pill of a medication may, in actual production, cost $2 to manufacture, the first pill of it might’ve cost millions to invent. According to some studies, research and development is up to $2.5 billion. This is the cost for a single drug, except that due to the high-failure rate of pharmaceutical research, this number often includes the expense of the failures for which there will never be a way to recoup costs. Other studies, and a book called The $800 Million Pill: The Truth Behind the Cost of New Drugs, puts the costs of new medications below a billion dollars.

Why are medications so expensive to manufacture? Besides the obvious thing about the miracles of modern medical science requiring a lot of trial, error, education and experimentation, there’s also the fact that the FDA must approve drugs before they can be sold.

On average, it takes over 12 years to get a drug from laboratory to pharmacy shelves.

Once a drug has been successfully developed in a laboratory, there will be three to four years of testing before an application can be sent to the FDA, which can then approve trials on humans. Only 1 in 1000 different drug compounds developed in a laboratory is likely to make it to human testing.

The process of human testing (for safety and effectiveness) is another three years. One in five drugs makes it through human testing. Upon successful completion of that step, the company submits an application averaging 100,000 pages to the FDA, which may take another two to three years to approve it.

One in 5,000 compounds developed in a laboratory will make it through the FDA’s entire approval process, after about 12 years. There’s all that other money: the ghosts of those pills that simply didn’t survive.

See More See Less


Leave us a review, comment or subscribe!

Meet the hosts

Austin Petersen is the chief executive officer of Stonegait LLC, a for-profit consulting firm specializing in photo and video services. Stonegait also provides social media advice, political campaign expertise and grassroots organizing strategies to candidates for office or to brands looking for more exposure. Petersen is the editor in chief of The Libertarian Republic news magazine, one of the most read political news sites in the United States. He also hosts The Freedom Report podcast, which has 30,000 daily listeners. Petersen is the former Director of Production at FreedomWorks and was an Associate Producer for Judge Andrew Napolitano’s show, “Freedom Watch” on the Fox Business Network. Petersen built Judge Napolitano’s social networks boasting over 600,000 fans and millions of clicks a month. His work has appeared in Getty, Reuters, the LA Times, NBC and Time Magazine. He is also a frequent contributor on television appearing on Russia Today and on dozens of local radio shows. Austin grew up on a farm in the Midwest in a town called Peculiar, Missouri. Graduating from Missouri State University with a degree in the Fine Arts, Petersen moved to New York City after graduation to a pursue a career in media.


  • This stuff is awesome. What other common goods do people use? Epic stuff!

    Jump to Discussion Post 0 replies
  • I’m an Anesthesiologist and am trying to reach out to other Anesthesiologists in the nation to request their support. This year at the society meeting (over 15K attendees) the ASA has Dr. Michael Portman, an economist, head of the Harvard Business school… as the keynote speaker.  I’d like to counter with an Austrian economist at next year’s conference in Boston.  I’ve corresponded with Tom Woods, and now just need to get the ASA to hear from members and/or attendees, that they’d like the ASA to invite Dr. Woods. I’d be most grateful for any and all help getting ASA members, anesthesiologists, nurse anesthetists, anesthesia assistants, to contact the ASA and encourage them to invite Dr. Tom Woods. [email protected] even if you could forward my request to folks you believe may be able to assist, I’d be grateful!   thanks!

    Jump to Discussion Post 9 replies
  • I’ve just recently blogged about Insidious Government Encroachment which I believe would provide the basis on a useful discussion here.   I’d be interested and hearing the views and experiences of others from this group.

    Jump to Discussion Post 6 replies
  • This is horrifying.  As if Centralized Healthcare wasn’t enough, now they are trying to reign in what little progress we can hope for.  We should inform this debate and try to limit the regulation of this industry. 3D printing technology has started to be used quite often, and effectively, by makers of food products, medicinal methods and even biochemical compounds and tissues. All this boils down to a whole new field of science. And like any field of science likely to affect the quality of living, and humankind’s way of life in general, some rules need to be followed. Alas, it’s kind of hard to follow the rules when there’s no clear list of what the rules are. After a point, vague guidelines just don’t cut it anymore. So the Food and Drug Administration, or FDA for short, is preparing a public workshop meant to set those ground rules. The workshop will take place on October 8, 2014, from 8 AM to 5 PM, and will seek to understand the technology, and what problems lie ahead of it. That’s just one of three goals though. The purpose of the workshop is three-fold, tri-pronged in other words. The second “prong” is creating awareness. The participants will have to find ways to ensure the safety of 3D printed medical devices. This is one of the classes of 3D printed products that could have the greatest short-term impact, and a similarly essential effect in the long term. The third purpose of the workshop will be to establish collaborations between those already involved in the industry and the ones that need the educational materials, standards, and guidance they come up with. Perfecting the performance and reliability of 3D printed devices is essential after all. Significant strides have been made in this direction already, with the use of a different material for the support structures, and the better resolution / print size. All in all, the workshop will revolve around the discussion called “Additive Manufacturing of Medical Devices: An Interactive Discussion on the Technical Considerations of 3-D Printing.” It will take place at the FDA’s White Oak Campus, 10903 New Hampshire Ave., Bldg. 31 Conference Center, the Great Room (Rm. 1503), Silver Spring, MD. You don’t even need to reach the campus. If you want to comment, you can do it electronically, through the website. Don’t expect a sheet of directions to be sent out immediately though. These things take time, so the first official rule set might not be ready until 2016. Still, at least this all means that 3D printing technology has become a field of study, research and development unto itself.

    Jump to Discussion Post 0 replies