There’s been a lot in the news lately about Mallinckrodt plc raising the price of Acthar, a life-saving drug that's used as a treatment for infantile spasms, by 85,000% — and as a result, violating antitrust laws.
Acthar is not a new drug. It was first made back in the 1940s from pig pituitary glands by Armour meatpacking company as a way to get money for unwanted pig parts. Who knew it would go on to be the most expensive part of the pig!
H.P. Acthar Gel is an adrenocorticotropic hormone (ACTH). In 1952, it was FDA-approved to treat numerous conditions such as nephrotic syndrome, collagen diseases, sarcoidosis, Steven-Johnson Syndrome, rheumatic diseases, serum sickness, ophthalmic diseases, and more. This was before the FDA required clinical trials to prove drug effectiveness for a particular condition. In 1978, the FDA approved its use in treating MS and in 2010, the treatment of infantile spasms.
Originally owned by Sanofi Aventis, Questcor Pharmaceuticals bought rights to Acthar in 2001 for $100,000; the cost then was about $40 per 5ml vial. After acquiring the drug, Questcor applied for FDA approval for treatment of infantile spasms (which was still off label at the time despite widespread useº, but won approval for this indication in 2010.
This is important because it came with an orphan-drug designation and seven years of market exclusivity, allowing Questcor to charge a premium for the drug. In 2007, I remember getting a heads up from a case manager friend advising me of the drastic overnight increase in cost for this drug from $1,500 per vial to $23,000, and thinking that seemed truly unbelievable. By 2012, it was at $28,000 and today we are seeing Mallinckrodt ARD (formerly Questcor), charge $35,000 per vial.
Insurers generally pay for Acthar if cheaper drugs have been tried first. If patients cannot pay, the company offers a patient assistance program and may be given the drug for free. This program also helps with co-pays to make sure that a patient’s financial inability to make the co-pay doesn’t stand in the way of the drug being used and the insurer paying the $35,000 per vial.
Questcor did almost no research or development to bring Acthar to market and has reaped the profits. Today Mallinckrodt has agreed to pay $100 million to settle Federal Trade Commission and state charges that in order to maintain its monopoly pricing, it acquired the rights to its greatest competitive threat, Synacthen (a synthetic version of Acthar), to forestall future competition.
In addition to the $100 million monetary payment, the proposed stipulated court order requires that Questcor grant a license to develop Synacthen Depot to treat infantile spasms and nephrotic syndrome to a licensee approved by the commission.
Most in our industry are well aware of the obscene prices the pharmaceutical industry is charging for drugs and Acthar is only one example. Our recent exposure to Acthar was for treatment of infantile spasm in a newborn, with Acthar costs reaching $108,000 for a 30-day supply.
Is Big Pharma to blame for rising health care costs? We will have to see if the efforts are successful to stop the profiteering that may force drug makers to reveal their true costs, actual R & D expenditure, and block incentives for doctors to prescribe the newer more expensive drugs.
In the meantime, click on this Consumer Affairs article for more information.