Tornado Alley (PROG)

[Alex G]

How to turn a $10 drug into a $1,500 drug

2:53 pm March 14, 2011, by Jay

For decades, special pharmacies have been making and selling a synthetic form of progesterone, a female hormone, to help prevent premature childbirths. However, because of the informal nature of the drug, different pharmacies sometimes made it in differing strengths.

So the Food and Drug Administration, attempting to standardize production and use of the compound, classified the compound as an orphan drug and granted KV Pharmaceutical the exclusive right to produce and market it for the next seven years. The compound went on sale today under the brand name Makena.

However, the FDA is empowered to monitor only the safety and effectiveness of drugs; it does not have the power to control how much KV Pharmaceutical charges for the compound. And KV Pharmaceutical has now announced that a drug compound that has typically cost $10 to $20 an injection will now cost $1,500 an injection. Over the course of a pregnancy, treatment that once cost as much as $400 will now cost $30,000.

As Associated Press reports:

“That’s a huge increase for something that can’t be costing them that much to make. For crying out loud, this is about making money,” said Dr. Roger Snow, deputy medical director for Massachusetts’ Medicaid program.

“I’ve never seen anything as outrageous as this,” said Dr. Arnold Cohen, an obstetrician at Albert Einstein Medical Center in Philadelphia.

Doctors say the price hike may deter low-income women from getting the drug, leading to more premature births. And it will certainly be a huge financial burden for health insurance companies and government programs that have been paying for it.

The cost is justified to avoid the mental and physical disabilities that can come with very premature births, said KV Pharmaceutical chief executive Gregory J. Divis Jr. The cost of care for a preemie is estimated at $51,000 in the first year alone.

If you ever wonder why the United States spends a much larger share of its GDP on health-care costs than any other developed country, that’s part of the answer. In most other countries, KV Pharmaceutical would never be allowed to get away with such a thing.

– Jay Bookman

http://blogs.ajc.com/jay-bookman-blog/2011/03/14/how-to-turn-a-10-drug-into-a-1500-drug/?cxntfid=blogs_jay_bookman_blog