Out-of-control drug pricing requires creative solutions

Mar 01, 2016

Urologists have direct experience with drug shortages and their impact on pricing, thanks to the recent shortage of BCG. A sudden hike in the price of a competing generic drug seemed to be no coincidence, Henry Rosevear, MD, writes. He ponders a few similar, troubling cases and some proposed solutions.

Henry Rosevear, MDUrology Times

 

I am usually not a fan of televised congressional hearings, but the highlights from Martin Shkreli’s appearance before the House Committee on Oversight and Government Reform are priceless. It’s like watching ESPN’s “Not Top 10 Plays” show; it makes you want to cry, laugh, and scream all at the same time. And like most health care-related stories recently, thanks to my beautiful twins, it affects me too.

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Some background first. Martin Shkreli is the former CEO of a pharmaceutical company named Turing Pharmaceuticals. (While CEO, Shkreli was charged with fraud related to a hedge fund he owned and subsequently resigned.) Turing recently purchased the rights to a drug called pyrimethamine (Daraprim). Daraprim, for those who don’t treat patients with HIV on a regular basis, is the sole and best treatment for toxoplasmosis. Toxoplasmosis is a condition resulting from infection with a common parasite. (It’s the reason, during your OB residency, that you told pregnant moms to avoid cats.)

This is where the story gets interesting. Daraprim is not new, and in fact has been off patent since the 1950s, but it remains the only drug that works well against toxoplasmosis. Why isn’t there a competitor? First, the FDA’s certification process for generic medications is, not surprisingly, a bit complicated and second, few companies apply given the small market (translation: limited profit potential) for drugs such as Daraprim.

Urologists have direct and personal experience with a similar situation. Remember the recent BCG shortage? It turns out that in 2012, Sanofi stopped production of BCG when the FDA found mold in its facilities. That left one manufacturer of BCG, Merck. Merck then ran into production problems, creating the shortage we all remember. During the BCG shortage, many of us switched to generic mitomycin C as the best, if inferior, alternative. But did anyone realize that exactly as we were switching to mitomycin C, that drug underwent a significant cost increase? It turns out that between 2000 and 2013, the average wholesale price of mitomycin C ranged between $312 and $392, but during the BCG shortage, the price increased significantly and is now almost $800.

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Why the sudden increase in price for this generic drug? Coincidence? Or is it related to the fact that only two companies make mitomycin C and good alternatives are lacking (and were especially lacking when BCG was in short supply? Call me cynical, but I’m not voting for the coincidence theory.

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The government has at least acknowledged this problem and in 2012 passed a law called “The Food and Drug Administration Safety and Innovation Act,” which required pharmaceutical companies to post on their websites any anticipated drug shortages. While this doesn’t address the root cause, namely that excessive regulation creates barriers to entry for competition in the generic medicine market, it at least gives physicians on the front lines of medicine time to find alternatives when shortages arise.

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Let’s be honest. Developing a new drug, winning FDA approval, and bringing it to market is an incredibly expensive and financially risky endeavor. According to a study from the Tufts Center for the Study of Drug Development, it costs $2.56 billion to develop a new drug and win FDA approval. As such, the press coverage of Gilead Science’s hepatitis C pill, ledipasvir/sofosbuvir (Harvoni), which costs $94,500 for a 12-week course (yes, that is $1,125 per pill), is not all favorable. But I would argue that as this innovative pill cures 90% of cases of hepatitis C type 1 with almost no side effects and hence significantly reduces the burden of disease including its long-term medical problems such as liver failure, it is likely ethically priced.

Further, Gilead went to extensive length with direct involvement from the FDA to price this pill, which is in direct comparison to Turing’s almost randomly chosen price of Daraprim, based on the documents released by the Congressional Committee on Oversight and Government Reform.

And while Shkreli is certainly becoming the poster boy of pharmaceutical executives gone bad, the concept of buying drugs already on the market and dramatically increasing their costs for no apparent reason isn’t new and isn’t limited to Turing. Valeant, for example, purchased isoproterenol) (Isuprel) and nitroprusside (Nitropress) in 2015 and then increased their prices by 525% and 212%, respectively, resulting in increased profits of $351 million. According to a report by Elsevier, out of 4,421 drug groups, 222 had increased in price by 100% or more between November 2013 and November 2014 and 17 had increased by 1,000%.

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Further, this isn’t even Mr. Shkreli’s first-go around at this. How about for our own patients? In a urology-related move in 2014, as CEO of a company named Retrophin, Shkreli purchased the marketing rights to a drug named tiopronin (Thiola) from the FDA and promptly increased the price from $1.50 per pill to $30 per pill. Starting to hit a little closer to home, isn’t it?

Next: Personal experience

 

On a more personal level, as most readers of this blog know, my wife delivered two beautiful twin baby girls last fall. As they were less than 32 weeks gestation and required oxygen for many months, our pediatrician recommended that they receive a course of palivizumab (Synagis). Synagis is a monoclonal antibody that has been shown to significantly reduce the risk of hospitalization associated with respiratory syncytial virus (RSV). It has few side effects and is simply a shot given once a month for 5 months.

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This seemed like a no-brainer given that my girls are at high risk of contracting RSV (we have two other girls who go to school) and are certainly at high risk of complications from RSV given their prematurity. The surprise came when the specialty pharmacy called to arrange delivery and asked how we wanted to pay our portion of the bill; the $2,615.99 pershotperchild bill. That’s right, this shot costs more per shot per child than I charge for a robotic prostate removal.

How do we properly incentivize pharmaceutical companies and investors to do the hard and risky work of drug development while preventing cases such as the Turing Daraprim case, which can best be described as price gouging? I don’t claim to have an answer for this problem, but I’m confident that smarter people than me are working on it.

The best article I read that actually proposed a solution appeared in Forbes. The writer, Matthew Herper, suggests that increasing transparency, allowing Medicare to negotiate prices, and giving the FDA the right to treat a significant price increase for off-patent drugs as a shortage (which allows foreign drugs to be imported and increases competition) are among the steps that would help control costs while not eliminating the incentive to pursue new drugs.

I'm open to your ideas for solutions, and I welcome any money-making ideas as well. I have lots of Synagis to pay for.

More from Dr. Rosevear:

Maintenance of certification: Working to understand why

Practice ‘efficiency’ is not a dirty word but a noble goal

After the patient fall: How to save your back

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