Pricing maelstrom threatens to suck in another drugmaker

Print 05 October 2015
Mari Serebrov / BioWorld

Hear that sucking sound? It's getting louder as the maelstrom Turing Pharmaceuticals LLC recently churned up over drug prices threatens to engulf another biopharma company.

Valeant Pharmaceuticals International Inc. is swirling ever closer to the brink as the 18 Democratic members of the House Committee on Oversight and Government Reform seek a subpoena compelling the Canadian company to turn over documents relating to massive price increases for two heart drugs.

Ranking Member Elijah Cummings (D-Md.) and Sen. Bernie Sanders (I-Vt.) had requested the documents earlier this month, but Valeant refused to turn them over, saying they were "highly proprietary and confidential," according to a letter Monday from the minority members of the House committee.

In addition to asking Committee Chairman Jason Chaffetz (R-Utah) to subpoena the documents, the letter requested that Valeant CEO Michael Pearson be invited to testify at a hearing next week along with Turing CEO Martin Shkreli, since Valeant is using the same business model that caused the Turing vortex.

The model involves acquiring older drugs and then immediately hiking their prices. Valeant, of Laval, Quebec, did just that in February when it purchased the rights to Nitropress (nitroprusside) and Isuprel (isoproterenol) from Marathon Pharmaceuticals and raised their prices to $805.61 and $1,346.62 respectively, reflecting increases of 212 percent and 525 percent.

It wasn't the first hike for the two drugs. A year earlier, Marathon had raised the prices 400 percent after acquiring the drugs from Hospira Inc., which has continued to manufacture the products despite the shifts in ownership.

Cummings and Sanders had called for an investigation into the Valeant price hikes in August. "We want to know why Valeant significantly raised the prices of these two vitally important drugs when the only thing that has changed about the drugs is the company that owns them," Cummings said in announcing the investigation. (See BioWorld Today, Aug. 18, 2015.)

Despite the congressional concerns stirred by Valeant, New York-based Turing plunged deeper into the acquire-and-hike model when it purchased Daraprim (pyrimethamine) last month from Impax Laboratories and raised the price of the 62-year-old drug used to treat a life-threatening parasitic infection from $13.50 per tablet to $750 – nearly a 5,500 percent increase. About to sink in the turbulent whirlpool its action caused, Turing has since pulled back on the drug's pricing. (See BioWorld Today, Sept. 23, 2015.)

That hasn't calmed the congressional waters, as lawmakers still want the why behind Valeant's "exorbitant price increases," the letter said, noting the negative impact the increases are having on hospitals and other providers. For instance, the Valeant price hike has added $8.6 million to Cleveland Clinic's budget this year, and Ascension Health System is expecting a threefold increase in its cost for the two drugs.

When asked about the price increases in April, a Valeant spokeswoman reportedly said that the company's duty was to its shareholders and to maximize the value of its products, according to the lawmakers' letter.

"The American people . . . are fed up with drug companies putting profits before people, and this issue affects the constituents of every member of Congress," the committee members said as they pushed Chaffetz to investigate Valeant's pricing tactics.

SEEKING SAVINGS

Meanwhile, other members of Congress continue to look for ways to reduce the nation's drug bill. Citing the recent drastic increases in prescription drug prices and their detrimental impact on patients, Sen. David Vitter (R-La.) wrote to FDA Acting Commissioner Stephen Ostroff Monday, urging the agency to cut through its backlog of generic drug applications.

A major reason for the spiraling drug costs "is that there is no market-based, competitive response to manufacturers who choose to run up prices on prescription drugs," Vitter said. "There is a simple fix to help offset those unnecessary costs – the FDA needs to prioritize the needs of Americans and fast-track the approval process for the 3,000 generic drug applications currently gathering dust."

Another senator is seeking savings in biosimilars. Sen. Ron Wyden (D-Ore.) wrote to the Centers for Medicare & Medicaid Services (CMS) this week to voice support for the agency's Part B biosimilar pricing proposal that would place the reference biologic under one code and lump all the biosimilars referencing that biologic under a separate payment code. Each biosimilar would be reimbursed based on the average sales price for all the biosimilars under the code plus a 6 percent reference biologic add-on to incentivize doctors to use the follow-ons. (See BioWorld Today, July 21, 2015.)

Having separate codes for each biosimilar, as some in industry want, would lead to higher prices, Wyden said. Under the CMS proposal, "biosimilar manufacturers that produce lower-cost products will be more successful in securing greater market share than manufacturers that produce higher-priced drugs, as they directly compete against each other," the senator added.

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