How Martin Shkreli Raised the Price of Daraprim 5,000 Percent, and What Happened Next

How did Martin Shkreli raise the price of Daraprim, and what happened next? In 2015, Turing Pharmaceuticals, led by Martin Shkreli, bought the rights to Daraprim, a decades-old drug for the parasitic infection toxoplasmosis, and raised its price overnight to $750 per tablet, an increase of more than 5,000 percent. Turing then restricted distribution to block generic competitors. In 2022 a federal judge banned Shkreli from the drug industry for life and ordered him to return $64.6 million.

Few business decisions have provoked as much public anger as the Daraprim price hike. Shkreli, a former hedge fund manager, became a symbol of drug price gouging, criticized by presidential candidates of both parties and summoned before Congress. The case revealed how a company could exploit gaps in the generic drug market to charge extraordinary prices for an old, off-patent medicine with no competitors. It also led to a landmark antitrust case. This article explains how the scheme worked, who was affected, how regulators responded, and what the episode reveals about drug pricing in the United States.

What Is Daraprim, and Who Needs It?

Daraprim is the brand name for pyrimethamine, a medicine first approved in the 1950s. It is a standard part of treatment for toxoplasmosis, an infection caused by the parasite Toxoplasma gondii. A 2004 review in The Lancet by Jose Montoya and Oliver Liesenfeld explains that the parasite infects up to a third of the world’s population, usually through undercooked meat or contact with cat feces, and causes few problems in healthy people. In people with weakened immune systems, such as those with advanced HIV, cancer, or organ transplants, it can reactivate and cause life-threatening brain infection, and infection during pregnancy can severely harm the fetus. The authors described pyrimethamine combined with sulfadiazine as probably the most effective regimen. Daraprim was not a blockbuster; relatively few patients needed it, which made its market small and vulnerable.

How Did the Price Hike Work?

In August 2015, Turing Pharmaceuticals acquired U.S. rights to Daraprim from Impax Laboratories and raised the price to $750 per tablet. Because the drug was off-patent, any company could in theory make a generic version, but none were on the U.S. market. To win FDA approval, a generic maker needs samples of the brand drug for comparison testing. According to the court’s findings reported by CNBC and others, Turing, later renamed Vyera Pharmaceuticals, sold Daraprim only through a closed distribution system that prevented potential competitors from buying samples, and it signed exclusive deals with suppliers of the drug’s active ingredient. These moves delayed generic competition for years and allowed the company to keep its high price. Turing offered discounts to some hospitals and patient assistance, but even half-price was many times the previous cost.

How Did the Price Hike Affect Patients and Hospitals?

Hospitals and HIV clinics reported difficulty obtaining the drug, delays in treatment, and large budget hits. A 2014 article in The New England Journal of Medicine by Jonathan Alpern, William Stauffer, and Aaron Kesselheim, published the year before the Daraprim hike, had already warned that old, off-patent drugs with few manufacturers were seeing dramatic price increases, threatening access for patients. Many clinicians turned to trimethoprim-sulfamethoxazole, an inexpensive antibiotic, as an alternative. A 2023 systematic review in Clinical Infectious Diseases by Connor Prosty and colleagues found that, in mostly older studies of people with HIV, trimethoprim-sulfamethoxazole had similar response and death rates to pyrimethamine-based regimens and fewer treatment stops due to side effects, supporting calls to reconsider guidelines. Patients with sulfa allergies or other complications still need pyrimethamine.

What Did the Courts and Regulators Decide?

In January 2020, the Federal Trade Commission and several states sued Vyera, its parent company Phoenixus, Shkreli, and another executive, alleging an illegal scheme to block generic competition. Vyera and Phoenixus settled in December 2021, agreeing to provide up to $40 million in relief to consumers over 10 years and to make Daraprim available to potential generic competitors at cost. Shkreli went to trial. In January 2022, U.S. District Judge Denise Cote found that he had orchestrated the anticompetitive scheme, barred him from participating in the pharmaceutical industry for life, and ordered him to pay $64.6 million. The judge called the scheme particularly heartless and coercive. In January 2024, the Second Circuit Court of Appeals affirmed the ruling. Separately, Shkreli had been convicted in 2017 of securities fraud related to his hedge funds and sentenced to seven years in prison.

Why Can Old Generic Drugs Become So Expensive?

Because competition, not patents, keeps generic prices low. A 2016 review in JAMA by Aaron Kesselheim, Jerry Avorn, and Ameet Sarpatwari explained that U.S. drug spending per person far exceeds that of other wealthy countries, driven largely by brand-name prices, and that generic availability is the main way prices fall, though business and legal strategies can delay generics. A 2017 analysis in The New England Journal of Medicine by Chintan Dave and colleagues reported that generic drug prices are associated with the number of manufacturers, with higher prices when few companies make a drug. Small-market generics like Daraprim may attract only one maker, and when that company raises prices, others need time and investment to enter, especially if they are blocked from getting samples.

How Did the Public and Politicians React?

The reaction crossed party lines. During the 2016 presidential campaign, Hillary Clinton called the increase price gouging and Donald Trump called Shkreli a spoiled brat. Medical societies, including infectious disease and HIV medicine groups, wrote to the company urging it to reverse the increase. In February 2016, Shkreli appeared before the House Oversight Committee, invoked his Fifth Amendment right against self-incrimination, and later posted dismissive comments about the lawmakers online, deepening public anger. His public persona made him a lasting symbol, but committee members and experts emphasized that the underlying problem was structural, not just one executive’s behavior.

Could Something Like This Happen Again?

The risk has been reduced but not eliminated. Laws like the CREATES Act make it harder to block generic makers from obtaining samples, the FTC has shown it will pursue executives personally, and the FDA tracks drugs without competition. However, many old drugs still have only one or two manufacturers, and companies can still raise prices legally when competitors are absent. Supply disruptions and shortages can also create opportunities for price increases. Continued monitoring by regulators, transparency about price changes, and support for multiple manufacturers of essential medicines are the main safeguards.

How Did the Market and Lawmakers Respond?

Several responses followed. In 2015, a compounding pharmacy company announced it would sell a compounded combination of pyrimethamine and leucovorin for about a dollar per capsule, showing how cheap the ingredients were, though compounded drugs are not FDA-approved products. The first FDA-approved generic pyrimethamine reached the market in 2020, years after the price hike. In 2019, Congress passed the CREATES Act, which lets generic makers sue brand companies that refuse to sell them samples needed for testing, directly targeting tactics like those used with Daraprim. The FDA also began prioritizing review of generic applications for drugs with little or no competition and publishing lists of off-patent drugs without generics. Broader reforms, including Medicare drug price negotiation for some brand-name drugs under a 2022 law, reflect continued public concern about drug costs.

Was Daraprim an Isolated Case?

No. Around the same time, other companies acquired old drugs and raised prices sharply, including heart medicines and antiparasitic drugs, and prices for some long-available generics such as doxycycline rose steeply amid shortages and limited competition. Congressional hearings in 2016 examined several of these cases. Daraprim stood out because of the size of the increase, the obscurity and life-saving nature of the drug, and Shkreli’s public defiance, but the underlying vulnerability, a single manufacturer with control over distribution, was not unique. Our article on where medicines are made explores related supply chain risks that can contribute to shortages and price spikes.

How Do Tools for Controlling Drug Prices Compare?

Tool	How it works	Limits
Generic competition	Multiple makers drive prices down	Small markets may attract few makers
CREATES Act (2019)	Lets generic makers sue to obtain samples	Litigation takes time
FDA priority review for generics	Speeds approval where competition is lacking	Companies still must choose to enter
Antitrust enforcement	Punishes schemes that block competition	After the harm has occurred
Medicare price negotiation	Government negotiates prices for selected brand drugs	Limited number of drugs; does not target old generics

How Did Shkreli Defend the Price?

Shkreli argued that the price increase was a legitimate business decision, that profits would fund research into better toxoplasmosis treatments, and that insurance and patient assistance programs meant few patients would pay full price. Critics responded that insurers, hospitals, and public programs ultimately pass costs on to everyone, that patient assistance does not cover every situation, and that no new drug resulted from the profits. The court case focused less on the price itself, which is not illegal in the United States, than on the steps taken to prevent competitors from entering the market, which violated antitrust law. That distinction matters: U.S. law generally allows companies to set high prices but not to unlawfully block competition.

What Can Patients Do When a Drug Becomes Unaffordable?

Several options can help. Ask the prescriber whether an equally effective alternative exists, as with trimethoprim-sulfamethoxazole for some toxoplasmosis patients. Check manufacturer patient assistance programs and nonprofit foundations that help with specific conditions. Compare cash prices across pharmacies using price comparison tools, since prices can vary widely. Hospitals and clinics that serve low-income patients may qualify for discounted drug pricing programs. People with HIV can seek help from Ryan White program providers. Reporting sudden price spikes to state attorneys general and to lawmakers has also contributed to investigations and policy changes.

What Lessons Did the Daraprim Case Teach?

The case showed that patents are not the only path to monopoly pricing; control over distribution and supply chains can achieve the same result for old drugs. It demonstrated that antitrust enforcement can hold individual executives personally accountable alongside their companies. It exposed how small patient populations can be especially vulnerable, since few manufacturers find their markets attractive. And it fueled ongoing debates about whether the United States should regulate drug prices more directly, as many other wealthy countries do, or rely mainly on competition and targeted enforcement. These questions continue to shape health policy, as described in our article on lobbying and drug policy.

How Common Is Toxoplasmosis?

Toxoplasma infection is very common worldwide, but serious disease is uncommon. In the United States, an estimated 11 percent of people aged 6 and older have been infected, according to the CDC, usually without symptoms. People become infected by eating undercooked meat, especially pork, lamb, and venison, by eating unwashed produce or drinking water contaminated with soil, or by contact with cat feces in litter boxes or gardens. Pregnant people are advised to avoid undercooked meat, wash produce, wear gloves when gardening, and have someone else change cat litter, because infection during pregnancy can cause miscarriage or serious harm to the baby. People with HIV and low CD4 counts often take preventive antibiotics to avoid reactivation.

Why Do Small-Market Drugs Face Shortages and Price Spikes?

Drugs used by relatively few patients generate little revenue, so few companies make them, and those companies may exit if profits are thin. When a single supplier leaves or has manufacturing problems, shortages follow; when a single supplier remains, it may raise prices. Old sterile injectable drugs and drugs for rare infections are especially vulnerable. Economists and policymakers have proposed solutions such as guaranteed purchase contracts, government or nonprofit manufacturing of essential generics, and incentives for multiple suppliers. Some nonprofit drug manufacturers formed in recent years aim to produce low-cost generics that commercial companies neglect.

What Happened to Turing Pharmaceuticals?

Turing renamed itself Vyera Pharmaceuticals in 2017 and continued operating under the parent company Phoenixus. Under its 2021 settlement with the FTC and states, it agreed to provide up to $40 million in relief to consumers over 10 years, to make Daraprim available to competitors at the cost of production, and to accept restrictions on future anticompetitive conduct. Another former executive agreed to a seven-year ban from working for pharmaceutical companies. The settlement and court ruling together marked one of the most significant antitrust actions involving an individual pharmaceutical executive in the United States.

Common Myths

“Shkreli went to prison for the Daraprim price hike.” His prison sentence was for securities fraud; the Daraprim case was a civil antitrust action.

“Raising drug prices is illegal.” U.S. law generally allows high prices; the illegal part was blocking competition.

“Generic drugs are always cheap.” Off-patent drugs with one maker can see sudden, steep price increases.

“Patients never paid the full price.” Costs reached hospitals, insurers, and public programs, and some patients faced barriers and delays.

“Nothing changed afterward.” The CREATES Act and FDA generic priority policies targeted the tactics involved.

Key Terms

Pyrimethamine: The active ingredient in Daraprim, used to treat toxoplasmosis.

Toxoplasmosis: Infection with the parasite Toxoplasma gondii, dangerous in people with weak immune systems and in pregnancy.

Closed distribution: Selling a drug only through selected channels, which can keep it away from competitors.

Disgorgement: A court order to give up profits gained through illegal conduct.

CREATES Act: A 2019 law helping generic makers obtain brand-drug samples.

The Bottom Line

In 2015, Martin Shkreli’s Turing Pharmaceuticals raised the price of Daraprim, a 1950s drug for toxoplasmosis, from about $17.50 to $750 per tablet and used restricted distribution to keep generic competitors out. Hospitals and patients faced higher costs and access problems, and many clinicians shifted to an inexpensive alternative with similar effectiveness. A federal court later found the scheme illegal, banned Shkreli from the industry for life, and ordered him to pay $64.6 million, a ruling upheld on appeal. The case exposed weaknesses in the generic drug market that Congress and the FDA have since begun to address.

Frequently Asked Questions

What did Martin Shkreli do with Daraprim?

In 2015, his company Turing Pharmaceuticals bought the rights to Daraprim, a decades-old drug for the parasitic infection toxoplasmosis, and raised the price to $750 per tablet, more than a 5,000 percent increase. The company also restricted distribution so generic manufacturers could not obtain samples, delaying cheaper competition for years.

Was Shkreli punished for raising the price of Daraprim?

Yes, through a civil antitrust case. In January 2022, a federal judge found he had orchestrated an illegal scheme to block generic competition, banned him from the pharmaceutical industry for life, and ordered him to pay $64.6 million. An appeals court upheld the ruling in 2024. His prison sentence was for unrelated securities fraud.

What is Daraprim used for?

Daraprim, or pyrimethamine, treats toxoplasmosis, an infection caused by the parasite Toxoplasma gondii. It is especially important for people with weakened immune systems, such as those with advanced HIV, in whom the infection can cause life-threatening brain inflammation, and in some cases of infection during pregnancy.

Is there a cheaper alternative to Daraprim?

A generic version of pyrimethamine was approved in 2020. Many clinicians also use trimethoprim-sulfamethoxazole, an inexpensive antibiotic; a 2023 review found it had similar effectiveness and fewer treatment stops due to side effects in studies of people with HIV. The best choice depends on the patient, so treatment decisions should be made with a doctor.

Why can old generic drugs suddenly become expensive?

When only one company makes an off-patent drug, it can raise prices sharply because competitors need time, investment, and samples to enter the market. Research shows generic prices are lower when more manufacturers compete. Laws like the 2019 CREATES Act and FDA priority review for drugs without competition aim to reduce these risks.

References

1. Montoya JG, Liesenfeld O. Toxoplasmosis. Lancet. 2004;363(9425):1965–1976. PMID 15194258
2. Alpern JD, Stauffer WM, Kesselheim AS. High-cost generic drugs: implications for patients and policymakers. New England Journal of Medicine. 2014;371(20):1859–1862. PMID 25390739
3. Kesselheim AS, Avorn J, Sarpatwari A. The high cost of prescription drugs in the United States: origins and prospects for reform. JAMA. 2016;316(8):858–871. PMID 27552619
4. Dave CV, Hartzema A, Kesselheim AS. Prices of generic drugs associated with numbers of manufacturers. New England Journal of Medicine. 2017;377(26):2597–2598. PMID 29281576
5. Prosty C, Hanula R, Levin Y, et al. Revisiting the evidence base for modern-day practice of the treatment of toxoplasmic encephalitis: a systematic review and meta-analysis. Clinical Infectious Diseases. 2023;76(3):e1302–e1319. PMID 35944134
6. CNBC. “Pharma Bro” Martin Shkreli banned for life from drug industry, ordered to pay $64.6 million. January 14, 2022. cnbc.com

Last updated: October 10, 2026