C Citigroup Inc

Turing Pharmaceuticals AG, the small drug maker that gained notoriety for raising the price of an anti-parasite tablet more than 50-fold, is drawing up plans to discount the drug as much as 50% to hospitals, according to a person familiar with the matter.

Even with the discounts, the drug—Daraprim—would still cost hospitals far more than it did before Turing bought the U.S. rights in August and raised the price to $750 a tablet, from $13.50. The amount of the discount will depend on how much of the drug hospitals use, the person said.

Nor would the discounts be given for out-of-hospital use, so health insurers would have to pick up the tab for patients who keep taking the drug after leaving the hospital, the person said.

How much Turing would cut the cost of Daraprim has been a question since the company and Chief Executive Martin Shkreli drew criticism for the price hike from patient advocates and politicians including Democratic presidential candidates Hillary Clinton and Bernie Sanders.

The Wall Street Journal reported in September that Turing would cut the price, but was still working out by how much.

The discounts that Turing is considering could be announced next week, the person said.

Daraprim is a half-century-old drug that treats an infection from the toxoplasma parasite that can threaten the lives of HIV patients, pregnant women and others with weakened immune systems. Each year, more than a million people in the U.S. deal with the infections.

Turing's price rise became a featured example of the massive price increases that several pharmaceutical companies have taken, even though the companies hadn't done the research behind the medicine. Democrats in Congress have launched investigations.

Privately held Turing, a nine-months-old startup founded by hedge-fund manager Mr. Shkreli, countered that it was using the higher revenues from the Daraprim price hike to fund its own drug research-and-development programs.

The hospital discounts are among a number of steps that Turing plans to address the impact of Daraprim's higher price, the person familiar with the matter said.

Turing also will start selling bottles containing 30 tablets, which the person said should help hospitals that don't use a lot of the pills and don't go through all of the 100-tablet bottles that have been on sale.

In addition, Turing will start giving out free samples to doctors for starting patients on the drug, the person said.

After raising $90 million during its first financing round in August, Turing plans a new round with the goal of raising another $50 million to $100 million by early next year, the person familiar with the matter said.

The latest financing would value Turing at roughly $500 million and be the next step toward taking Turing public later in the year, the person said.

Mr. Shkreli gained control of a majority of shares of KaloBios Pharmaceuticals Inc. earlier this week, after the biotech announced it was running out of cash and would wind down operations. Turing doesn't have plans to reverse merge into KaloBios in order to go public, the person said.

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

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(END) Dow Jones Newswires

November 20, 2015 17:05 ET (22:05 GMT)

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