FDA Bid To Improve Safety Led To Higher Prices
16 CommentsBy Ed Silverman // April 12th, 2010 // 7:43 am
Talk about unintended consequences. Nearly four years ago, the FDA moved to tighten regulation on unapproved drugs, which were sold well before the agency was created. There were about 70 drugs that were grandfathered and considered safe to use, although there were never any proven studies. So the FDA began offering exclusive marketing rights in exchange for conducting clinical trials.
So what happened? One company called URL Pharma ran studies on colchicine, a centuries-old salve for gout, and received a three-year deal from the FDA. URL then raised the price - what used to cost a few pennies per tablet now fetches about $5. Meanwhile, URL has sued other companies for allegedly marketing their long-standing versions illegally, The Wall Street Journal writes.
URL notes there was no standard dosage guidance for colchcine previously and that side effects, such as severe diarrhea, can be fatal. “We took bad guidance, even guesswork, and made this evidence-based medicine,” URL ceo Richard Roberts tells the paper. But URL’s contribution was “not any new therapeutic tool, not new science; they just added cost,” Eileen Wood, CDPHP vp of pharmacy and health-quality programs, tells the paper, adding that insurers will have to pay much of the higher cost.
In this instance, an effort to improve safety led to higher patient costs - URL acknowledges the issue by saying it provides various patient assistance programs. Of course, this is just one example of the FDA effort, and the agency encourages more competition. In this case, another company could seek approval for general use, instead of the acute use for which URL received approval. But was it worth it?
Is the FDA effort yielding the right outcome?
- No (68%, 48 Votes)
- Yes (34%, 24 Votes)
Total Voters: 71
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pharmavet
I was Associate Director for Thyroid Clinical Development at a major Pharma company when FDA issued it’s Federal Register Notice in 1997 designating all Levothyroxine drugs as New Drugs, and requiring approved NDA’s within three years or be forced to be removed from the market. Like colchicine, LT4 drugs were pre-1962 and grandfathered from NDA’s. Our situation was not altogether that different from the colchicine story. However, we did not receive any sweethdeart deals from FDA, and since there were no promises of exclusivity, there were no changes in pricing pre and post NDA approval.
At the end of the three year period we were still completing work on the NDA, we were past deadline and were actually ordered by FDA to begin a phased withdrawal from the market. This was soon ameliorated with NDA approval in 2001. Threat of withdrawal is more effective than any inducement to do whatever work is necessary to keep the product on the market.
Justice in MI
A small side-bar.
I learned from someone “in a position to know” that the FDA announcement about unapproved brands of nitroglycerin was not accidentally coincident with Pfizer’s loss in the Kaiser Neurontin case.
Pfizer makes the only FDA-approved nitro.
Sounds hyper-conspiratorial, I know, but the source is a credible one. You be the judge….
Eric
A small increase in price seems a good trade for safety and dosage studies on drugs that haven’t been carefully studied before, but from pennies to $5 / pill is entirely drastic. This is an increase in price of several thousand percent. I really don’t think that a treatment that’s been accepted as safe for so long warrants that kind of increase because it was finally studied.
Nathan
And this is suprising? To who? Clinical trials don’t happen for free. The whole point was to “reward” the investment by giving a 3 year “monopoly”. The drug costs more (temporarily) but in the end we know more about the drug and can use it more safely in the future - long after the monopoly has expired.
I personally think that this was a great model. I think that they should do something similar with cold medications for children. Right now, no one has an incentive to study most cold medications (particularly on pediatrics) because they became generic long ago. Give a couple companies a “monopoly” on the cold medications in exchange for running clinical trials that unequivically establish a benefit/risk profile.
Salmon
I don’t often agree with Nathan however I agree you need financial incentives to do some things and in this case the tradeoff is appropriate for the reasons he states.
Salmon
Former Pharma Marketing Director
I don’t often agree with Nathan either, but I think this is the right thing to do. The more we know about the drug the safer we all are.
However, in general, I think we need to take a hard look at the costs of these drugs, including the costs added through the distribution and selling channels.
Were am I coming from? Recently someone sent me a copy of their bill for a one month supply of an oral cancer drug. Having a “friend” who works at the company, I know what price the drug leaves the pharmaceutical company. What the patient paid was marked up so that it increased the cost of the drug to the patient by over $2,000.00 I am “gobsmacked”!!!! The distributor has nothing to do with clinical trials, drug discovery, etc. How dare they rip off drug payment programs by this outrageous “money grabbing” tactic!
In this particular case there are not controls over markups and this has a serious detrimental effect on the drug/patient experience.
But again, my fellow colleagues in marketing are clearly not doing their jobs….
pharmavet
A friend of mine was born with congenital polycystic kidney disease, Now in his 40’s he is 20 years post kidney transplant. His anti-rejection medicines have hyperuricemia as a standard side effect, but in his case has produced such severe gouty arthritis that he is required to take heavy duty narcotic analgesics just to get out of bed in the morning. His medical expenses have led him to be on Medicaid, but he has up till now been able to afford his colchicine at pennies/day. He will not be able to afford Colcrys, and fears that it will not be covered by Medicaid.
His extreme pain from gout has sometimes led him to consider suicide. Therefore, would those who defend this “exclusivity” for Colcrys please explain how my friend will benefit from this action.
Josh
Really? People are surprised that a distributor marks up a drug that much?
I think one of our branded products has a markup of almost 300% from our price to what the distributor sells it for (we sell to distributor for ~$1, and they turn around and sell it for $3). Why do you think that Cardinal, ABC, and McKesson beat out some of the pharma companies for revenue? It is not just due to diversification. Everyone is quick to say that the pharma company is ripping them off when in reality the price increases also come from distributors and pharmacies.
Former Pharma Marketing Director
Josh,
The problem is that some of these pharmaceutical companies should sign contracts with distributions that limit the extent of mark ups. It is the job of the marketing department to protect the product. Although, the current breed of marketers, exploit the product like some inanimate object, plundering it and and desecrating it.
If distributors cannot adhere to these managed markups, then the companies should not do business with them. Ultimately this forces patients to reach their insurance caps sooner, which has serious repercussions on the drug and the company.
pharmavet
FPMD is correct. Another add-on cost is to the repackagers that many companies use. For example, many people don’t realize that many Pharma companies sell product in bulk to the repackagers, and then repackagers sell to the distributers. Every time the product changes hands a cost is added.
I’m sure that the repackagers and distributors are salivating at the prospect of a Value-Added Tax (VAT-TAX), which is under serious consideration in Congress. If a VAT tax becomes law, these entitities will have a legal backstop for inflating the cost of drugs even more than they do now.
Josh
That is pretty easy to say, but in reality you cut yourself out of some huge revenue. I know as a private company our company could get away with that, but do you think investors for a publicly traded company would go for that?
JaT
I’m a little surprised that patrons99 hasn’t chimed in on this- so in his place I’ll lay it out there:
Think Vitimins!
JaT
http://www.naturalnews.com/025606_vitamin_B6_pyridoxamine.html
patrons99
@ JaT,
Thanks for the link to the February 12, 2009, Natural News article, by Mike Adams. To quote Mr Adams,
“FDA approvals and bans have nothing to do with science and everything to do with protecting drug companies profits.”
How very true!
Another interesting read is an article titled “John McCain’s Bill S-3002 is an Overkill on Dietary Supplements” by Sott Tips, JD on March 10, 2010.
http://www.newswithviews.com/Tips/scott104.htm
Personally, I remain quite apprehensive that this misbegotten bill (S. 3002) may find new life, be resurrected, and passed by Congress, while we sleep, so to speak. We must remain vigilant. Our health freedoms are very much at risk.
Matthew Davis
My name is Matthew Davis, M.D. I am the Chief Medical Officer of URL Pharma. There is no such thing as “generic colchicine.” Generic products have been tested to ensure that they are exactly the same as branded pharmaceutical products and have been approved by the FDA as safe and effective. None of the colchicine products currently on the market have been by approved by the FDA, except for Colcrys. I personally ran the 17 clinical trials that lead to the FDA approval of Colcrys. Unapproved colchicine products have never undergone FDA review for safety or efficacy, so there is no assurance that these products conform to the same standards as FDA-approved products.
Lisa Van Syckel
Mr. Davis, Just because FDA has approved a particular drug, doesnt necessarily mean that, the drug is safe and effective. We also know that clinical trials can be manipulated, paxil comes to mind.