NY TIMES: Enormous Price Increases of Some Drugs
- From: "Robert Cohen" <robtcohen@xxxxxxx>
- Date: 12 Mar 2006 14:03:51 -0800
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A Cancer Drug's Big Price Rise Is Cause for Concern
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By ALEX BERENSON
Published: March 12, 2006
On Feb. 3, Joyce Elkins filled a prescription for a two-week supply of
nitrogen mustard, a decades-old cancer drug used to treat a rare form
of lymphoma. The cost was $77.50.
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Chris Pietsch for The New York Times
Jeffrey Malavasic, 58, says that now that his cancer ointment is more
expensive, he will use less of it.
On Feb. 17, Ms. Elkins, a 64-year-old retiree who lives in Georgetown,
Tex., returned to her pharmacy for a refill. This time, following a
huge increase in the wholesale price of the drug, the cost was $548.01.
Ms. Elkins's insurance does not cover nitrogen mustard, which she must
take for at least the next six months at a cost that will now total
nearly $7,000. She and her husband, who works for the Texas Department
of Transportation, are paying for the medicine by spending less on
utilities and food, she said.
The medicine, also known as Mustargen, was developed more than 60 years
ago and is among the oldest chemotherapy drugs. For decades, it has
been blended into an ointment by pharmacists and used as a topical
treatment for a cancer called cutaneous T-cell lymphoma, a form of
cancer that mainly affects the skin.
Last August, Merck, which makes Mustargen, sold the rights to
manufacture and market it and Cosmegen, another cancer drug, to Ovation
Pharmaceuticals, a six-year-old company in Deerfield, Ill., that buys
slow-selling medicines from big pharmaceutical companies.
The two drugs are used by fewer than 5,000 patients a year and had
combined sales of about $1 million in 2004.
Now Ovation has raised the wholesale price of Mustargen roughly tenfold
and that of Cosmegen even more, according to several pharmacists and
patients.
Sean Nolan, vice president of commercial development for Ovation, said
that the price increases were needed to invest in manufacturing
facilities for the drugs. He said the company was petitioning insurers
to obtain coverage for patients.
The increase has stunned doctors, who say it starkly illustrates two
trends in the pharmaceutical industry: the soaring price of cancer
medicines and the tendency for those prices to have little relation to
the cost of developing or making the drugs.
Genentech, for example, has indicated it will effectively double the
price of its colon cancer drug Avastin, to about $100,000, when
Avastin's use is expanded to breast and lung cancer patients. As with
Avastin, nothing about nitrogen mustard is changing but the price.
The increases have caused doctors to question Ovation's motive - and
left lymphoma patients wondering how they will afford Mustargen, which
is sometimes not covered by insurance, because the drug's label does
not indicate that it can be used as an ointment. When given
intravenously to treat Hodgkin's disease, its other primary use, the
drug is generally covered by insurance.
"Nitrogen mustard has been around forever," said Dr. Len Lichtenfeld,
the deputy chief medical officer of the American Cancer Society.
"There's nothing that I am aware of in the treatment environment that
would explain an increase in the cost of the drug."
Dr. David H. Johnson, a Vanderbilt University oncologist who is a
former president of the American Society of Clinical Oncology, said he
had contacted Ovation to ask its reasons for raising Mustargen's price.
"I'd like to have some evidence from them that it actually costs them X
amount, so that the pricing makes sense," Dr. Johnson said.
"It's unfortunate that a price adjustment had to occur," Mr. Nolan
said. "Investment had not been made in these products for years."
Ovation, a privately held company, also needs the money to conduct
research on several new drugs for rare diseases, Mr. Nolan said.
He acknowledged that Merck still made Mustargen and Cosmegen, an
antibiotic that is used to treat a rare childhood kidney cancer, for
Ovation. He said he was not sure when Ovation would begin producing the
drugs, and a Merck spokesman said that Merck would continue to provide
the drugs to Ovation as long as necessary.
But people who analyze drug pricing say they see the Mustargen
situation as emblematic of an industry trend of basing drug prices on
something other than the underlying costs. After years of defending
high prices as necessary to cover the cost of research or production,
industry executives increasingly point to the intrinsic value of their
medicines as justification for prices.
Last year, in his book "A Call to Action," Henry A. McKinnell, the
chairman of Pfizer, the world's largest drug company, wrote that drug
prices were not driven by research spending or production costs.
"A number of factors go into the mix" of pricing, he wrote. "Those
factors consider cost of business, competition, patent status,
anticipated volume, and, most important, our estimation of the income
generated by sales of the product."
In some drug categories, such as cholesterol-lowering treatments, many
drugs compete, keeping prices relatively low. But when a medicine does
not have a good substitute, its maker can charge almost any price. In
2003, Abbott Laboratories raised the price of Norvir, an AIDS drug
introduced in 1996, from $54 to $265 a month. AIDS groups protested,
but Abbott refused to rescind the increase.
And once a company sets a price, government agencies, private insurers
and patients have little choice but to pay it. The Food & Drug
Administration does not regulate prices, and Medicare is banned from
considering price in deciding whether to cover treatments.
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