The free market once again showed its limitations, or rather its power of abuse, after a Canadian pharmaceutical company price gauged a drug critical for a rare form of epilepsy that affects infants. Questcor Pharmaceuticals hiked the price from $35.66 to $801.19 per vial. "Luckily", Toronto’s Hospital for Sick Children and the Ontario Drug Benefit (ODB) program negotiated the price down to $680 per vial, bringing the total cost of treatment to $14,280.
Infantile spasms, the so-called West syndrome, is a rare and devastating form of epilepsy that affects infants usually no older than eight months. Typically, doctors start off treatment with other drugs, but these don't work half of the time. This is when they turn to Synacthen Depot (Cosyntropin), a synthetic form of the pituitary hormone known as adrenocorticotropic hormone (ACTH), which is proven to work 90% of the time.
Questcor was acquired by global pharma corporation Mallinckrodt in 2014. According to a Mallinckrodt spokesman speaking to CNBnews.ca, "Synacthen Depot was losing money then and still is. Moreover, in the spring of 2014, Mallinckrodt was told by the existing supplier of the product that they would cease production in early 2016". Eventually, the company decided that it didn't make sense for them to continue shipping at that price. A hike was in order, worth 2,000%. Not too long after, the Canadian medical professionals were stupefied.
"This was just dropped like a bombshell," said pediatric neurologist Dr. Carter Snead, who regularly works with West syndrome cases.
"They just bought it and jacked up the price," he continued.
“They (Questcor) have done absolutely nothing to justify this huge price increase,” Snead says. “There has been no investment in research (and) no investment in drug development. This is completely ugly pricing behaviour.”
Previously, the same Mallinckrod acquired distribution rights in the U.S. for a natural ACTH product, H.P. Acthar Gel, and raised the price of the medication from about $50 per vial to $28,000 per vial. And how can we forget the now famous case of Turing Pharma, headed by Martin Shkreli, which upped the price for a drugs aimed at AIDS patients by 500-fold, similarly after acquiring rights. Or KV Pharmaceuticals, which turned a $15-per-dose, centuries-old treatment for preterm labor into a $1,500 product
Mallinckrod is citing basic free market dichotomy, since the drug itself (cosyntropin) is no longer protected by patents. Any company could make it, but few would venture considering the low number of customers (it is a rare disease). If you start from scratch, you need new production lines, new suppliers, new distribution. Not worth it for a couple thousand cases a year. Mallinckrod is losing money, so what they're basically saying is either buy it at 200-fold the price it used to cost, or you won't have it at all. At the same time, the state can't possibly force a company to keep it prices down. I mean, it can actually but then the company can simply say "hey, i'm out!", so the consumers are left to suffer. This makes perfect economic sense if you're selling a premium good addressed to a very narrow demographic, but less so when lives are at stake. When pharma companies use these sort of price gauging, they're indistinguishable from predatory behaviour, exploiting the weak. It's extortion in this rawest form, disguised in corporate interest.
“My concern is that this is a harbinger of things that will come in the near future,” Snead told Epilepsy Ontario. “This is predatory behaviour on the part of drug companies – period.
“This won’t be the last time this happens. Canada, the United States and Europe need to put some kind of system in place so manufacturers of drugs … have to follow strict regulations following price increases, and the increases cannot exceed the consumer price index.