Healthy Skepticism Library item: 14060

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Publication type: news

US Senate slams orphan drug “price-gouging”
PharmaTimes 2008 Jul 26
http://www.pharmatimes.com/WorldNews/article.aspx?id=14005&src=EWorldNews

Full text:

US federal agencies have been asked to investigate “price-gouging” by pharmaceutical companies which have been increasing the prices of long-established drugs “to the very highest levels the market will bear,” Senators have claimed.

Such practices “look uncomfortably like an abuse of the pricing power we give to drug companies,” said Democratic Senator Charles Schumer, chairman of the Senate Joint Economic Committee, which held a hearing late last week to investigate the alleged practices.

Specifically, the hearing sought to examine the price increases which have been imposed on orphan drugs. Democratic Senator Amy Klobuchar, who chaired the hearing, stated that “at least a handful of drug companies” have used the status assigned to these products by the 1983 Orphan Drug Act to keep on increasing their prices, at levels well beyond the costs of their research, development and manufacturing.

Because of limited market or other factors, these drugs’ prices are more likely to remain at these “astronomical” levels, she added. Moreover, not only do these “staggeringly high costs” threaten the stability of the families who rely on them, but also a “dramatic unforeseeable increase in price for one of these drugs has a significant impact on the federal government. If the wholesale cost of a drug goes up, Medicaid or Medicare has to pay for the increase,” said Sen Klobuchar, who added: “this seems like simple price-gouging to me.”

Madeline Carpinelli, research fellow with the PRIME Institute at the University of Minnesota, told the hearing that the Institute has found over one hundred cases since 2002 of the price of a single-source drug more than doubling due to a single price increase. About one in every twenty brand single-source drug products (5.3%) has had one or more price increases which are “extraordinary” – defined as changes of more than 100% at a single point in time – and with some increases of more than 10,000%, she said. “These enormous price increases certainly affect the individual patients who are using the medication and in aggregate these large price increases expand the ever-growing expenditures of private and public drug programmes,” she told the hearing.

Sen Schumer pointed out that the total number of American families touched by rare diseases is “quite high,” with the National Institutes of Health (NIH) estimating that 9%- 10% of the population, or nearly 30 million people, are affected. Approximately half of these people are children, and many of these rare diseases are present at birth, he added.

Senators Klobuchar and Schumer said they have asked the Federal Trade Commission (FTC) and General Accountability Office (GAO) to look at the issues raised, and Sen Klobuchar added that the federal government ought to be able to track these pricing trends. “It’s disturbing that our providers, hospitals and patient are being blindsided by these exorbitant price increases,” she said. “If we start to monitor this data, there is more of a paper trail, giving use enhanced ability to do something about these companies’ practices. When provided with the right information on drug prices, especially in smaller markets, doctors can be alerted of big price increasing, potentially spurring generic alternatives to expensive drugs.”

Commenting on the hearing, the Pharmaceutical Research and Manufacturers of America (PhRMA) said it recognised that “innovative medicines do no good if they sit on pharmacy shelves and out of reach of patients who need them the most.”

PhRMA chief executive Billy Tauzin also pointed out that fewer than 10 medicines had bee approved to treat rare diseases during the 1970s, but the passage in 1983 of the Orphan Drug Act has led to 325 orphan medicines being approved by the Food and Drug Administration (FDA) to treat rare diseases. He added that more than 300 new orphan medicines are currently in the pipeline to treat diseases such as rare cancers, muscular dystrophy and cystic fibrosis.