Prescription Drug Price Gouging Results From FDA Practices

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Behind the ongoing debate about health care cost is a popular perception that the insurance companies are the bad guys and will never do the right thing short of compulsion – law or regulation.  Now along comes a drug company that is taking advantage of the new insurance regulations to literally steal from vulnerable women in full view of and with the support of the FDA!

The drug, Makena, is not the result of years of expensive and unpredictable research and testing leading to an important new therapy.   It is an old drug (Hydroxyprogesterone caproate) originally developed by Squibb.  It was brought to market in 1956 to treat pregnant women at risk of premature delivery.  It was withdrawn in 1999 after anecdotal evidence suggested that there might be long-term adverse results for mother and child.   In industry terms, the drug was “orphaned”.

A later study by Wake Forest Medical School, suggested that the drug could be used safely.   Since 2003 its been compounded by pharmacies and administered weekly in the doctor’s office at a cost of about $15 a week.  The patients were often mothers of limited means.

Enter KV Pharmaceuticals – a generic drug manufacturer.   KV approached the FDA with an offer.  In exchange for an exclusive right to compound and package a standard dosage of the drug under the brand name Makena, the company would conduct a follow up study of <1000 patients.  The 5 year study would quantify post-partum adverse results and determine whether pre-mature delivery negatively impacts the development of children in the first 5 years.    No basic research, no clinical trials, just a statistical study.

FDA exclusive approval of this resurrected orphan drug was widely applauded until KV Pharmaceuticals announced the price –  $1500 a week.  Insurance companies, doctors and patients all expressed outrage.   My ear is tuned to the FDA?   —- Nothing, yet.

KV justified the unjustifiable in a statement comparing the drug cost $30K per pregnancy to the cost of premature delivery –$50K.  KV actually argued they were saving insurance companies money!!!   Amid the continuing outcry, and as the former CEO of KV was sentenced to a prison term over the mislabeling of morphine tablets, KV hired a public relations firm.

The story of Makena would be outrageous even it was an isolated incident but it is not isolated

It can be argued that BOTH the drug companies and the insurance companies behave like robber barons.   And there is some truth to that argument.    Ultimately, we consumers are hostages to both, but isn’t that why there are government regulators?

There is a legitimate need for exclusive licensing of new drugs that result from years of expensive, uncertain primary and clinical research.   Without the ability to recover development costs in the billions of dollars, no company could afford to research new drugs.

The question is how can the FDA insure the safe and effective re-labeling of “orphan drugs” without either price gouging or price control?   The answer is competition.  No drug company should be offered an exclusive right to manufacture an orphan drug.  Competition would control pricing and expand the post-approval statistical follow up studies.  There would, also,  be the incentive to develop new manufacturing techniques that could, also, reduce the cost of other branded and generic drugs.

There is a shocking lack of customer focus, imagination, and flexibility at the FDA.   Efficacy at any price – is so 20th century.

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