Hedge funder buys rights to drug used by AIDS patients and raises price from $13.50 to $750 per pill

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A hedge fund trader is at the centre of mounting controversy after the pharmaceutical company he bought raised overnight the cost of a life-saving treatment for people with Aids and weakened immune systems from $13.50 per pill to $750.

The 5,000 per cent increase was enacted last month for Daraprim, known generically as pyrimethamine, by Turing Pharmaceuticals of New York, a start-up firm, shortly after it bought the rights to the drug. The firm is headed by Martin Shkreli.

Daraprim fights toxoplasmosis, the second most common food-borne disease, which can easily infect people whose immune systems have been weakened by AIDS, chemotherapy or pregnancy, according to the Centres for Disease Control. About 60 million people in the United States may carry the toxoplasma parasite.

Earlier this the month, the Infectious Diseases Society of America (IDSA) and the HIV Medicine Association sent a joint letter to Turing calling the price increase for Daraprim “unjustifiable for the medically vulnerable patient population”.

“Please help us improve public health by immediately implementing a rational and fair pricing strategy for pyrimethamine that keeps treatment for a potentially fatal condition accessible to our patients,” the letter said.

A Turing spokesman, Craig Rothenberg, told USA Today the company was working with hospitals and providers to get every patient covered. This includes free-of-charge options for uninsured patients.

Mr Rothenberg defended Daraprim's price, saying that the company will use the money it makes from sales to further research treatments for toxoplasmosis.

“There has been no innovation in dealing with toxoplasmosis,” he said. “That has been a long neglect in the patient community.”

Daraprim, which is also used to treat malaria, was first approved by the Federal Drug Administration in 1953 and has long been made by GlaxoSmithKline.

The New York Times said Glaxo sold United States marketing rights to CorePharma in 2010. Last year, Impax Laboratories agreed to buy Core and affiliated companies for $700m. In August, Impax sold Daraprim to Turing for $55m, a deal announced the same day Turing said it had raised $90m from Mr Shkreli and other investors.

Only a few years ago, Daraprim cost only about $1 a tablet, but the drug’s price rose sharply after CorePharma acquired it.

On Monday, Mr Shkreli told Bloomberg News that firms that had previously owned the rights to the drug had been "virtually giving it away". He added: "It is still under-priced compared to its peers."