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DRUG MONEY
A CONGRESSIONAL HEARING ON THURSDAY WILL FOCUS ON COMPANIES THAT CHARGE
TENS OF THOUSANDS OF DOLLARS FOR TREATMENT FOR CHILDREN
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Trevor Foltz was six months
old last fall, fresh off a visit to Disney World in Orlando, when the
spasms first began.
Healthy until that point in his life, he began thrusting backward in his
car seat, repeatedly and forcefully, as he rode with his parents north
toward home in Rhode Island. "I thought it was temper tantrums," says
his mother, Danielle. The next day, at home, Trevor was hit with a
series of 40 convulsions and rushed to the hospital, where he was
diagnosed with infantile spasms, a rare form of epilepsy. Treatment
would cost $1,600 per vial of steroid drug H.P. Acthar Gel, and Trevor
would need three of them.
As if the idea of a $4,800 tab wasn't bad enough, when the Foltzes
submitted their claim, they found out the company that made the drug,
Questcor Pharmaceuticals, had just recently jacked up the price—to
$23,000 per vial, or $69,000 for a three-vial treatment—and the
insurance company wasn't going to pay. And all the while, unbeknownst to
anyone at that time, an alternative, for $15, existed.
On Thursday, the Joint Economic Committee will open hearings in Congress
on dramatic price hikes for drugs used to treat children, with a focus
on companies such as Questcor and Ovation Pharmaceuticals, which in 2006
bought rights to a drug that treats heart problems in premature infants,
and increased the price 1,800 percent to $1,875 per three-vial
treatment.
"We need answers to why a company would increase the price of a drug
18-fold when costs related to marketing, physician education, and
research appear stable," says hearing chair Amy Klobuchar, a Democratic
senator from Minnesota.
Politicians say they are not opposed to drug companies earning strong
returns on the costs of researching innovative drugs, and understand the
high prices of many medications. But they are investigating whether some
companies are price-gouging, concerned more about executive stock
options than about running innovative companies.
Some of those drugs, like Questcor's, are decades-old drugs that were
bought on the cheap and redesignated under the federal government's
Orphan Drug Act, which marks its 25th anniversary this year. Not
infrequently, the drugs' new owners pass on big price hikes to
consumers.
At Questcor, the increase is explained as the cost of doing business
with an orphan drug.
"The company was heading toward bankruptcy," says Steve Cartt, executive
vice president for business development at Questcor, which is based in
Union City, California, an industrial enclave on the San Francisco Bay.
"The whole rationale for the price increase was to ensure availability
of the product," says Cartt. "We talked to physicians. They wanted the
drug to be available. The choice was risk of availability or a price
increase."
Originally approved for multiple sclerosis in 1952, Acthar Gel had been
owned by pharma giant Aventis, which was losing money on it, when the
11-year-old Questcor acquired it in 2001. Questcor too failed to gain
traction with M.S. patients, so it sought a new track. .
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