Seizure drug works, but costs keep going up

One health economist said prescriptions are a legal monopoly.

PHILADELPHIA INQUIRER

PHILADELPHIA — There’s one drug most doctors turn to first when babies have catastrophic seizures: a natural hormone sold under the name H.P. Acthar. It’s the gold standard to stop seizures that can ruin a child’s chance for a normal life.

On Aug. 27, the lone maker of that drug raised the price from $1,650 a vial to more than $23,000 a vial, sending the price for an average patient to $100,000 or more.

The 14-fold increase stunned some caregivers and seemed to crystallize their frustrations over drug pricing.

“It’s an obscene increase. I could almost see doubling or tripling the price but (14) times seems ridiculous,” said Sarah Erush, clinical manager of pharmacy at the Children’s Hospital of Philadelphia.

Robert R. Clancy, a neurologist who directs the hospital’s Pediatric Regional Epilepsy Program, said, “Everyone understands it’s a business and they need to have a fair profit. But to go from $1,600 to $23,000 strikes me as old-fashioned greed.”

The maker, Questcor Pharmaceuticals Inc. of Union City, Calif., says it had no choice. The company, which has been losing nearly $1 million a month receives more than 90 percent of its revenues from Acthar. It had $12.8 million in total revenues last year.

“We had to take this kind of a pricing increase to insure that Acthar remains available,” said Steve Cartt, Questcor’s executive vice president for corporate development. “The company was in a bad situation.”

Cartt said the firm has revamped a patient assistance program to make more Acthar available at no cost to help uninsured parents, and it has started two copay assistance programs.

But the price increase has already caused at least one insurer to put in a more stringent pre-authorization process. Experts say it’s likely that many patients will find it harder to get this drug.

The increase is an extreme example of how drugs are priced in the United States: There is no regulation of drug prices. Companies can charge what the market will bear, and commercial insurers, who cover most employees’ prescriptions, often follow Medicare’s lead in covering drugs.

Prescription drugs are “a legal monopoly. We expect monopolists to behave like monopolists,” said Mark V. Pauly, a health economist at the Wharton School. “The argument is the higher profits will stimulate further beneficial research.”

Large spikes in drug prices are not uncommon, especially when the potential market is small.

In 2006, Ovation Pharmaceuticals raised the price of indomethacin, an injected anti-inflammatory drug often used in premature babies, from $100 to $1,875 for three vials, prompting howls of protest. “This is a rather astounding increase in price for a drug that has a stable niche market and requires no advertising,” declared Alan H. Jobe, a doctor at Cincinnati Children’s Hospital, in the journal Pediatrics.

Experts say it’s not uncommon for new drugs, especially for rare diseases, to cost more than $100,000 a year.