The $28,000 Drug

Posted by Pharmacist on February 05, 2013

H.P. Acthar Gel was created in the 1950s by Dr. Philip S. Hench, who was looking for a way to use hormones to help treat ailments such as gout, arthritis and even lupus. The main component, adrenocorticotropic hormone (ACTH), was and is taken from the pituitary glands of pigs as they’re prepared for processing. The meatpacking company Armour & Company had supplied Dr. Hench with ACTH to use in his research, and the company received a patent from the Food and Drug Administration (F.D.A.) in 1952; originally the drug was marketed to treat around 50 different diseases.


As research advanced science was able to synthesize steroids such as prednisone and use of H.P. Acthar Gel gradually declined, though the drug was still considered one of the best ways to treat infantile spasms. In 2001 the drug was sold to Questcor with a retail price per vial of approximately $40. Questcor immediately raised the price of Acthar to $700 per vial and raised prices steadily to today’s current rate of $28,400 per vial. This has skyrocketed profits and turned Questcor into a Wall Street favorite. It’s profitable for employees, as well – the company’s pharmaceutical reps can make bonuses up to $50,000 per quarter.


According to the New York Times, Questcor is running a savvy game. When insurance companies won’t pay for Acthar, it gives patients the drug for free; Questcor also helps families make their co-insurance payments so nothing will stand in the way of the insurance company paying for treatment. This means insurance companies are consistently left paying for high treatment costs and Questcor avoids scrutiny from angry patients who can’t afford the treatment. This strategy is so important to Questcor that it has 30 people on staff whose sole purpose is to handle insurance reimbursements – which equates to around one person for each of the 30 prescriptions the company receives on an average day.


Questcor CEO Don Bailey says the high price was set because the drug was originally marketed solely for infantile spasms. However, prescriptions continued to come in to treat periodic multiple sclerosis flare-ups. Questcor saw an opportunity and hired a sales team to help promote the drug for that use. After that they moved on to nephrotic syndrome (a kidney disease) and in June 2012 Questcor started promoting Acthar to rheumatologists. In every case there are less expensive treatments for these conditions, including oral prednisone for certain rheumatological diseases, which can cost as little as $10 per dose.


It’s important to note that there have been no large group trials of the drug since it was approved for all of these uses in the 1950s and any recent studies including Acthar have been sponsored by the company. Because the patent ran out long ago, other companies could attempt to replicate the drug, however they would have to go through trials and be approved for each disease on an individual basis.


Despite the recent scrutiny, Questcor will keep prices up and expand its marketing efforts to cover the other diseases listed on the label. And while some investors have turned away from the company, Questcor isn’t deterred – it’s buying back its own stock so it can continue to offer Acthar at the same price to consumers.


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