Latest ‘price gouging’ scandal sees US drug company raises cost of acne cream 3,900%
US drug company Novum Pharma has raised the price of acne cream Aloquin by over 3,900% to $9,561 since May last year. The increase is the latest instance of “price gouging,” whereby companies buy the rights to drugs then vastly raise their price. The Journal of the American Medical Association has revealed that the price of over 400 generic drugs rose over 1,000% from 2008 to 2015. The issue has caused anger in the US, leading to calls to reform the healthcare system. Hillary Clinton has pledged to fine companies for price gouging if she is elected as President.

A US drug company has increased the price of an acne cream by more than 3,900% to $9,561 in less than 18 months in the latest example of drug “price gouging”, which has enraged the American public and become a central topic of debate in the presidential election campaign.



Novum Pharma, a recently formed privately held Chicago-based company, bought the rights to drug Aloquin in May 2015. The 60g cream, which contains two cheap ingredients, was sold by its previous owner, Primus Pharmaceuticals, for $241.50.

Novum almost immediately increased the price by 1,100%, and hiked the price higher still in January 2016. Figures seen by the Financial Times show the company increased the price a third time last week to take the cost to $9,561.

The revelation of the latest huge drug price hike on Wednesday comes as the US Congress prepares to grill the chief executive of Mylan, the company that increased the price of the allergic reaction treatment EpiPen by more than 500%.

So-called “price gouging”, in which companies buy the rights to older drugs and then vastly increase their cost, has provoked outrage across the country and led to calls for reform of the US healthcare system.

Martin Shkreli, a hedge fund manager-turned-pharmaceutical boss, was dubbed “the world’s most hated man” after he increased the price of a drug used to treat patients with HIV by 5,000%.

Earlier this month, Hillary Clinton, the Democratic presidential nominee, vowed that if elected she would fine companies for price gouging. “It’s time to move beyond talking about these price hikes and start acting to address them,” she said. “All Americans deserve full access to the medications they need – without being burdened by excessive, unjustified costs.”

Research by the Journal of the American Medical Association found that the prices of more than 400 generic drugs were increased by more than 1,000% between 2008 and 2015.

Clinton said she would change the law to allow the “emergency importation” of safe alternative treatments from abroad.

Aloquin contains two cheap active ingredients: a decades-old antibiotic, iodoquinol, and an extract from the aloe vera plant. Iodoquinol can be bought for as little as $30 a tube and aloe vera cream costs a few dollars.

The drug is labelled as “possibly effective”, as the US Food and Drug Administration has stated that there is only limited evidence that the drug is effective.

Novum has also drastically increased the price of its other two skin creams, Alcortin A and Novacort. The drugs are prescription only, with the cost being mostly covered by health insurance or government assistance. In instances when the full cost of the treatment isn’t covered by insurance, Novum provides coupons to reduce the proportion that patients have to pay, while collecting the rest from the health plan.

The company, which is privately held and does not publish figures on sales or profits, did not reply to requests for comment. A spokesman told the FT that the firm was founded by “a group of like-minded investors who believe in the firm’s focus of providing therapeutic innovations that are affordable for patients”.