(Bloomberg) -- Martin Shkreli, the pharmaceutical CEO arrested on securities fraudcharges this week, may have made drug price increasesnotorious in the U.S.

But his strategy of finding an old drug, raising its price, andtaking the profit is one that’s increasingly common among anew breed of drugmakers.

Disdaining a business model dependent on expensive research anddevelopment, companies like Shkreli’s Turing Pharmaceuticals AG,Valeant Pharmaceuticals International Inc., Rodelis Therapeutics,and others have taken advantage of inefficiencies in the U.S.health-care system.

Read: Drug prices hurt patients, disrupt thepractice of medicine

Old drugs can be sold at much higher prices if the owner iswilling to push the boundaries of what the market will bear.

Turing, for example, took a decades-old drug, Daraprim, andraised the price to $750 a pill from $13.50.

Shkreli was arrested Thursday in New York on charges related tohedge funds he ran and his old drug company Retrophin Inc.

He has denied the charges, which aren’t related to drug pricing.Turing declined to comment. The company announced today thatShkreli has resigned as CEO.

“Shkreli has become the Wolf of Pharma Street--he’s basicallycome to represent everything that was bad and wrong with pharma,”Art Caplan, a medical ethicist at New York University, said byphone.

And while Shkreli may be reviled, said Caplan, “he’s not doinganything in terms of prices that other companies haven’t done.”

Like Shkreli, Valeant Chief Executive Officer Mike Pearson hasexcelled at finding cheap drugs, boosting their cost and reapingthe rewards.

The company took two heart drugs, Nitropress and Isuprel, andraised their prices by 212 percent and 525 percent, respectively.Rodelis boosted a tuberculosis treatment to $360 a pill from $20,before saying in September that it would give up rights to thedrug.

Rodelis was working to ensure “long-term availability” of thetuberculosis drug, and planned to maintain patients’ access, thecompany said on its website.

The drug’s rights were returned to the nonprofit Purdue ResearchFoundation, who sold it to Rodelis earlier this year, in Septemberafter an outcry over the price increase.

Not a new practice

Such price increases aren’t a new strategy. From 2005 to 2008,Questcor Pharmaceuticals Inc., now owned by Mallinckrodt Plc,increased the price of the drug H.P. Acthar from $1,235 a vialto $29,086. Mallinckrodt had no immediate comment.

Questcor raised the price in 2007 because Acthar was no longerprofitable, according to Mallinckrodt, and since it was acquiredMallinckrodt says its price increases have been in line with orbelow inflation.

Big price increases are just business, Shkreli has said. “Ithink health-care prices are inelastic,” he said at an event in NewYork this month. “I could have raised it higher and made moreprofits for our shareholders.”

Shkreli has previously said that his goal is to use hisfinancial gains to develop new drugs and that he gives much of hiscompany’s medicine away for pennies.

‘Ridiculous’

At Valeant, after facing criticism of price increases, Pearsonsaid in October that the company won’t be as reliant on thepractice. And he’s taken pains to distance himself from Turing andShkreli.

“To compare us to Turing is ridiculous,” Pearson said during aDec. 15 interview with CNBC. “That is a single-product company.”Valeant declined to comment for this story.

Yet Pearson has criticized Big Pharma companies for overspendingon research, and the company has said that it looks for productsthat can be sold better and more profitably by Valeant.

In Daraprim, and other drugs, Shkreli may have seen the sameopportunity.

“If you talk to anyone in pharma, maybe I don’t have the sameresources as Pfizer, I may not have the same experience as Merck,but I’m crafty as f---,” Shkreli said in a Dec. 16 interview withthe publication HipHopDX.

Lobby group

The drug industry’s lobby group, Pharmaceutical Researchand Manufacturers of America, has gone after both Valeant andTuring, saying in September that Turing doesn’t represent itsvalues, and in October that Valeant’s strategy "is more reflectiveof a hedge fund than an innovative biopharmaceutical company.”

Turing fired back that other drugmakers raise prices frequently.Valeant said that it should be judged by how many products itbrought to market, not what it spent on R&D.

Companies like Turing and Valeant that acquire drugs instead ofdeveloping them are the “exceptions and not the rule,” said RobertLanger, a professor at MIT and co-founder of more than 25biotechnology companies.

Common Practice

Yet price increases are common across the industry, from bigplayers such as Pfizer Inc. and Merck & Co., to manufacturersof generic drugs.

In October a price survey of more than 21,000 generic drugs forBloomberg News by DRX, a unit of Connecture Inc. that tracks drugprices, found that more than 3,500 have doubled or more since late2007, ranging from basic chemotherapy medicines to oldantibiotics.

“It’s becoming a new financial model, it’s not justTuring--Horizon does this, Valeant does this,” Steve Miller, chiefmedical officer at drug-benefit manager Express ScriptsHolding Co. said by phone.

Miller has been a frequent critic of drugmakers, and he sits atthe other side of the negotiating table, managing pharmaceuticalcosts for health insurers.

“We have a new class of leadership at these organizations thatno longer feels encumbered by the social contract that hadpreviously existed,” Miller said.

Horizon, for example, raised the price of the pain drug Vimovoby almost 600 percent after buying the rights from AstraZeneca in2013, the Wall Street Journal reported in April, citing TruvenHealth Analytics.

“Pricing is not, nor has ever been a key driver for ourbusiness,” Geoff Curtis, a Horizon spokesman, said in an e-mail. Hesaid the company makes proprietary drugs and grows by increasingprescriptions, not prices.

Flying high

Until Thursday, Shkreli had been flying high despite thepersonal scorn his business practices had brought upon him.

Turing had announced that U.S. regulators had given its new druga fast-track designation in its approval process. Last month, heacquired a majority stake in a floundering drugmaker, KaloBiosPharmaceuticals Inc., sending its shares soaring, and named himselfCEO.

Shkreli had continued to attract investors even after theRetrophin board ousted him last year. He arranged a deal with hisformer employer to take two drugs with him to his new company,Turing.

That gave him a foundation he then added to with the acquisitionof Daraprim in August.

The increase in the price of Turing’s drug, a potentiallylife-saving treatment for some children and people with HIV, isn’tright, said Hank Greely, a Stanford University bioethicist.

“It may be legal, but exploiting people like this is wrong,”Greely said.

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