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Price Gouging for Orphan Drugs
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Congressional Hearing Attacks Price Gouging |
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Why has the cost of some drugs skyrocketed? That’s the question
the Joint Economic Committee explored at a hearing yesterday in which some specialty pharma companies were skewered for raising
prices dramatically after buying meds from larger drugmakers. Among those cited were Ovation Pharmaceuticals, whose ceo, Jeff Aronin, is a PhRMA board member. In her opening remarks,
“When we have pharmaceutical companies like Ovation or Questcor
increasing prices to astronomical levels because of the lack of competition in the market, their actions are able to exploit
an extremely vulnerable and captive market,” she said. “These staggeringly high prices, in turn, threaten the
financial stability of middle class families relying on these drugs.” Alan Goldbloom, ceo of Minnesota Children’s Hospital, testified
that Ovation’s Indocin is an example. The drug is used to treat patent ductus arteriosus, or PDA, a condition that can
interfere with breathing in newborn and premature babies. Until January 2006, the drug cost about $108 per unit. A few months earlier, though, Ovation bought the med from Merck, gaining exclusive rights, and
the price jumped to $1,500 – a 1,278 percent increase. “Indocin is not the only drug Ovation has marked up in such a dramatic
fashion,” he continued. “Three other drugs that were purchased from Merck – Cosmegen, Diuril Sodium, and
Mustargen have seen price increases of 3,437 percent, 864 percent, and 979 percent, respectively. Cosmegen is an agent used to treat a variety of pediatric cancers, Diuril Sodium is a diuretic used to reduce fluid
overload in infants and neonates, and mustargen is used to treat brain tumors and certain lymphomas.” Congress decries drug price-gouging |
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Congress decries drug price-gouging Congress raked some specialty pharma companies over the coals on Friday, accusing them of gouging patients with "staggeringly
high prices." In a hearing, the Joint Economic Committee targeted companies that had bought orphan drugs--the only available
treatments for rare conditions--from larger drugmakers and then proceeded to raise their prices. For instance, Ovation Pharmaceuticals was said to have boosted the price of Indocin, a drug used to treat a condition that
interferes with breathing in newborn and premature infants, to $1,500 per unit from $108 soon after buying the product from
Merck. And according to testimony, Indocin wasn't the only drug Ovation marked up so substantially. It bought three other Merck
meds--Cosmegen, Diuril Sodium, and Mustargen--and boosted those prices by 3,437 percent, 864 percent, and 979 percent, respectively.
Nor was Ovation the only culprit, the committee said; members cited Questcor Pharmaceuticals as another that raised prices on an orphan drug. In fact, a researcher said that she had found more than 100 single-source drugs at least doubled
in price, with some increases amounting to more than 10,000 percent. That kind of sticker shock “look[s]
uncomfortably like an abuse of the pricing power we give to drug companies,” said Sen. Charles Schumer, who chairs the
committee. What's next? Congress asked the Federal Trade Commission and the General Accountability Office to investigate. |
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