Lawmakers cite notorious pharma bro in new letter demanding loopholes be closed

By now you’ve probably heard about how Martin Shkreli, the CEO of a pharmaceutical company, has been jacking up the price of a life-saving drug by hundreds and hundreds of dollars. A group of lawmakers suspects he may also be taking advantage of what they say are Food and Drug Administration policy loopholes.

For years, the Food and Drug Administration has been giving out vouchers to drug companies that set aside resources for developing treatments of rare diseases. If those drugs are approved, the companies receive vouchers—called priority review vouchers, or PRVs— that allow them to speed approval of another preferred drug.

But companies that receive those vouchers are not necessarily required to use them. Instead, they can sell the vouchers—sometimes for hundreds of millions of dollars.

In a letter to the FDA on Tuesday, Republican lawmakers say that tactic is an abuse of the system. In the footnotes to the letter, they cite a Forbes article specifically about Shkreli to illustrate how the practice can be abused.

Shkreli did not respond to a request for comment.

The Forbes article notes a company called KaloBios, which Shkreli recently took over, has been developing a treatment for a condition known as Chagas disease. If successfully approved by the FDA, KaloBios would be eligible for a voucher.

“Skyrocketing PRV resale prices, and the recent acquisition of KaloBios, have raised questions about the potential exploitation of the PRV Program by those who may be applying for PRV not to develop new therapies but rather soley to capitalize on the PRV resale market,” says the letter. It is signed by a group of 13 lawmakers on the House of Representatives’ Oversight Committee, led by Jason Chaffetz, a Utah Republican.

The letter also asks the FDA to look into its generic drug approval program, which has helped Shkreli raise drug prices. As Bloomberg’s Anna Edney notes, approving generic drugs has not been a priority at the FDA. As a result, a company that controls the one treatment available for a condition can charge whatever they want for it. Shkreli took advantage of this fact when he raised the price of the drug Daraprim more than 5,000%.

FDA administrators have until January to respond.

Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.