The Baffling Pricing of Prescription Drugs
This blog post was written by Amy Ritter.
Drug maker KV Pharmaceuticals has been in the news concerning pricing of its newly approved drug, Makena. Makena, while newly approved, is a version of a very old drug, synthetic progesterone, which had previously been available to consumers for as little $10-$15 a treatment through specialty pharmacies that compounded the drug on site. On Feb 3, 2011, KV received approval for Makena, an injectable form of synthetic progesterone, under FDA’s Orphan Drug Act, as a treatment for women who are at risk of preterm labor. Under the Act, KV was awarded seven years of exclusive patent protection. When Makena hit the market, KV set the price at $1500 a treatment and informed compounding pharmacies that they would be in violation of their patent if they continued to supply the generic form of the drug.
Progesterone is given as a weekly shot to women who are at risk of preterm labor, so, at KV’s proposed price, the cost of treatment for the average full-term pregnancy could run as high as $30,000. An outcry among physicians, patient advocacy groups, and public health officials ensued, which resulted last week in KV dropping the price by more than half and instituting a series of rebates and assistance programs to ensure that consumers would have access to more affordable treatment. In addition, in response to the public outcry, FDA clarified that in this particular instance, it would not prevent compounding pharmacies from making a generic version available.
Unlike the pricing of consumer goods, drug pricing is completely opaque. In addition to the direct cost of goods, drug companies factor in the large but murky costs of development, which include the costs associated with drugs that don’t make it to market. To make it even less transparent, price for the same product fluctuates depending on regional markets and negotiated pricing. The Makena story might easily be viewed as a story of corporate greed, but I’d rather view it as a story of the power of the marketplace. KV was perhaps overly optimistic in setting the price of their product, but was brought back in line by the realities of the market.
Doctors are comfortable with the compounded version because its cheap and easy and they have never had a problem with it. So goes the normalcy bias of most markets. The FDA version of the drug comes with peace of mind, consistency, FDA approved manufacturing, and of course, expense! How is it that people want to spend $500 dollars on a stroller, but balk at an expensive drug that helps mothers? Yes, its expensive, but apparently their patient assistance programs reduce the cost to something near the compounded price. If I was sitting in the doctors office, with my pregnant wife, and the doctor presents the two options, we are going with the higher cost, FDA approved drug. Here is an analogy question: if you are going to climb a mountain, do you want to buy a cheap rope from an unfamiliar local manufacturer, or an expensive one from a large company that makes the rope under the scrutiny of regulators?
It is suggested to be careful with the prescription drugs – vicodin or oxycodone – because their side effects may be hazardous to our health. Mentioned online that they should buy these medicines without a prescription because of the danger of abusing them without control.
Lilly Abbott
Findrxonline