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Turing Pharmaceutical – Healthcare Cost Inflation: Cable Car

Turing Pharmaceutical - Healthcare Cost Inflation by Cable Car Capital

Disclosure: Short EXAS.

CMS has preliminarily determined not to change the reimbursement rate for Cologuard.

Turing Pharmaceutical’s decision to dramatically increase the price of Daraprim in order to achieve investment returns and fund incremental research drew widespread condemnation this week. Turing became emblematic of wider biotechnology industry practices that collectively contribute to healthcare cost inflation. Optimal drug pricing is a more nuanced question than the immediate outrage suggests, but the systemic problem is not limited to pharmaceuticals.

Even government payors do not always feel empowered to consider cost-effectiveness when establishing reimbursement rates. Unlike the niche commercial toxoplasmosis market served by Daraprim, CRC screening is in large part a...