A recent Chicago Tribune editorial said, “The federal Food and Drug Administration's announcement that it had approved a drug that helps prevent premature births sounded like cause for celebration. The March of Dimes applauded. So did Wall Street: The drug's manufacturer, St. Louis-based KV Pharmaceutical, saw its stock jump 30 percent. That was before women and their doctors learned that an injection that used to cost $10 to $20 now would cost $1,500.” I understand why KV raised the price and, before I am picketed with pitchforks and torches, will explain.
When a pharmaceutical company starts to develop a new drug, usually 5,000 to 10,000 different chemical compounds are considered. Approximately 250 of those will be considered for further evaluation with laboratory and animal testing. (Stratmann, Dr. H.G.,September 2010,-- Analog Science Fiction and Fact)
New Chemical Entities (NCEs) or New Molecular Entities (NMEs) are the compounds which are created during the drug discovery process. While one of the NCEs might produce a positive reaction against a certain disease or biological target, there has to be further research into the safety, toxicity, pharmacokenetics and metabolism of the NCE in human beings.
The development of a new drug also requires establishing the physicochemical properties of the NCE: its chemical makeup, stability, solubility. Testing has to be done to see if the drug should be produced in capsule, tablet, aerosol, intramuscular injectable, subcutaneous injectable, or intravenous form. This part of the process is known as Chemistry, Manufacturing and Control (CMC).
Pretty complicated! Costs a lot of money to do this research.
Also the pharmaceutical company has to focus on regulatory requirements. These include testing for any major organ toxicity (e.g. any side effects on the heart and lungs, brain, kidney, liver or digestive system) and whether any other part of the body might be affected. An example would be if the skin itself were affected if the drug is to be injected.
Only after all the statutory drug-testing regulations have been met and all the laboratory and animal testing has taken place can a decision be made whether there will be human clinical trials known as FIM (First in Man) or FHD (First Human Dose.)
In addition to the human clinical trials, a determination has to be made that there will be no long-term or chronic toxicity as well as any effect on body systems not previously tested such as fertility, immune system, etc. and the drugs possible potential to cause cancer (carcinogenicity testing).
The cost of bringing a drug created by a NCE to market ranges from $500 million to $2 billion. (DiMasi J, Hansen R, Grabowski H (2003). "The price of innovation: new estimates of drug development costs". J Health Econ and Adams C, Brantner V (2006). "Estimating the cost of new drug development: is it really 802 million dollars?")
Drug companies can spends billions on development and have the drug fail at any stage of the process. Actually, only about 26 new drugs created by NCEs actually go on the market yearly.
So if KV Pharmaceuticals has the opportunity to recover their research costs because the FDA has approved one of their drugs for a different use -- it was originally approved to treat problems with adrenal glands and ovaries—bravo that they continued their research and discovered another application. Praise them, don’t bury them.
Computer Gigolo writes:
ReplyDeleteKathy:
I've been watching the controversy surround this but I have to strong disagree with you in this case. USA today had a nice point/counterpoint article on just this subject.
Here's the URL: http://www.usatoday.com/news/opinion/editorials/2011-04-07-editorial07_ST_N.htm
One of the things that wasn't mentioned is that WE, i.e. the people of the United States of America PAID for the 2003 study that the company used to get FDA approval.
It's estimated that the new price tag will add $4 billion dollars to our deficit because medicare can't negotiate drug prices and they would be one of the biggest customers.
The drug company KV was making a hefty profit at $15, then raised it to $1500. Also, when was the last time you've seen a pharmaceutical company actually lose money?
I have a big problem with a drug being developed here where the company gets financial aid from the government, big tax breaks for the R&D, then takes the opportunity to gouge the American people and then sells it outside the company under the previous $15 price that it sold for here.
Partly I blame the FDA since it seems to ignore safety studies done in other countries and has to have its own. Also, if a company makes the exact same drug and I can buy it in Canada for a couple cents per pill as opposed to a couple dollars per pill, where's the economy in that.
KV says it spent $250 million to make a drug that can be and has been mixed up in any pharmacy for years for $10 or so (even today), and it can make $4 billion on it, I like those odds and I'd make that bet in any casino....
We may make fun of Canadians but at least they can add up the cost and not listen to the money grubbing drug companies.
The USA Today article also talks about the Polio vaccine and Jonas Salk.
To quote the article:
When Jonas Salk developed the most famous vaccine in American history, one that ended the recurring epidemics of polio that terrified parents through the 1950s, he refused to take a dime. He had worked on it at a university using foundation money, and he thought the public should own it.
Shame on KV and shame on us for letting them profit at the expense of peoples suffering. Some profit is good, excessive profit is greed.
@Computer Gigolo, like it or not the reason the health care industry in the US is the most advanced in the world, developing cutting edge drugs, treatments, procedures, etc is the ability to make an obscene amount of money if you have a breakthrough. Rightly or wrongly, not many people are Jonas Salk. But, hey, if you don't want money grubbing companies to profit from drugs they develop or hospitals to profit from new treatments and procedures, then we can all have life expectancies of 60 years and worry about dying from common illnesses. Also, don’t forget about the ridiculous class action suits a company may face down the road if their product has the least possibility of a negative side-effect.
ReplyDelete@Andy S
ReplyDeleteWe'd like to think we are the most advanced healthcare in the world, but the sad fact is that we aren't. We do however pay the most for our healthcare. It's a distinction I'd like to change.
Like I said, we pay for the development costs here in the US, the government give them tax breaks for R&D, we pay for research and then we get screwed.
So, again, explain to me my I can pay a couple cents for the same exact drug in Canada, Mexico, EU, etc and I can pay a couple dollars for it here? Is that a tax for living in the good ole' USA??????
Look around. Check out some studies.
Despite the wide gaps, higher spending on health care does not necessarily prolong lives. In 2000, the United States spent more on health care than any other country in the world: an average of $ 4,500 per person. Switzerland was second highest, at $3,300 or 71% of the US. Nevertheless, average US life expectancy ranks 27th in the world, at 77 years. Many countries achieve higher life expectancy rates with significantly lower spending.
To quote my favorite Wendys commercial "Where's the Beef?"
I noticed in the news that bowing to the public outcry KV has graciously "lowered" their price to $965. Bless their altruistic little hearts...
Fair profit is good, excessive profit is greed, outrageous profit is criminal. My take is that there should be a "windfall profits" tax when a company does something like this.
Computer Gigolo
"So, again, explain to me my I can pay a couple cents for the same exact drug in Canada, Mexico, EU, etc and I can pay a couple dollars for it here? Is that a tax for living in the good ole' USA??????"
ReplyDeleteYou are missing the point that if there weren't the opportunity to make the profit here in the US, then there would be no incentive to develop the drug. Likewise without many of the advancements that come out of our hospitals and institutions, there is a reason people come from Europe and Canada for advanced treatments.
The reasons for longer life expectancy in other countries isn’t entirely tied to health care. The US has become fat and dumb, much because of all the damn govt entitlement programs that allow people to be fat, dumb, and lazy; but that’s a different rant.
Or, let me put it a different way, God forbid if you were to be diagnosed with a life threatening illness; where would you seek treatment, here or Canada or Mexico?
Nothing is different here except that we don't allow the government to bargain and get the best price for drugs and services and we allow insurance companies to make medical decisions.
ReplyDeleteIn some cases, yes I would go to Canada or the EU for a lifesaving procedure when it hadn't been approved here in a heartbeat or if it was much cheaper. I recently had some surgery on my back for cancer. I asked for copies of the bills just to look over them and I was just appalled at some of the prices. If I had to pay out of pocket, you can be damn sure I'd go where I was getting the most value for the money, especially between the "list" price and the negotiated "insurance company" price. The insurance company can "negotiate" and say what it will pay, why can't the government...oh, wait, the drug companies and the medical groups think that would be "unfair" and so they spend BILLIONS of dollars every year on advertising and lobbying and "donations" to senators and representatives and other politicians....now if they just spent that on medical care......
Until recently we couldn't even have soft drinks with Stevia in them because the FDA (bought and sold by the big drug companies and medical groups and even the sweetener industry) wouldn't classify it as a food additive. Europe and Asia has used it for years and downright banned Aspartame (Nutri-sweet) as it has definite side affects because the companies who make sweeteners didn't want the natural competition.
The point is that we subsidize the rest of the world because companies can get away with charging high prices here and the rest of the world isn't as much of a tool of big business and as much of a rube as we are.
Again, it's not about making a fair profit, it's about making an outrageous, obscene profit.
The drugs would still get made and distributed if we stop giving out R&D credits and if we allowed the government the same fair market ability to negotiate a fair price since we are the biggest customer for some of these drugs (ala Medicare. I wonder how you would like it if you had to pay full prices for something all your neighbors are getting for pennies on the dollar.
Fat and dumb is all over the world and if we continue to be walked over by these "special interests" then we do deserve the title of "dumb".
How many people with life threatening illnesses can't afford the medication in the US?
If a cancer drug costs $100,000 a year at the jacked up prices, who could afford that? I can't. However, I could move to Laredo, TX or Albany, NY and make a monthly visit across the border without a problem to save $99,000.
Retirees move out of the US to Mexico and Canada specifically cause they don't want to choose between eating and taking their medication and they only have one choice.
Typical also assuming wrongly that the rest of the world is some third world county and can't do things better than the good old US of A. WRONG!
So, I suggest that you take off your Yankee Doodle hat and look at the rest of the world. Most other countries treat their sick much better than we do and do better at it with less money and with the same or better quality.
Computer Gigolo
Bob writes:
ReplyDelete" This was not a new drug in the sense that you describe and had been available, in a compoundable form, as I recall, at the lower price. I don’t know what KV did to it to get a new patent, etc."
@Bob
ReplyDeletethey applied to the FDA. Doctors liked it cause they had a stock prescription version that KV got permission and a sole source to sell and there's always a tiny chance of a mixing error.
The first thing KV did was raise the price 100 times and tell the pharmacists to stop competing with them at $15 instead of the $1500 they were charging. In my book, that's just criminal....
The pharmacies were making a profit doing it a dose at a time, KV used a federally funded study to get approval and then jacked up the price. They could have sold it at the same $15 price and made a better profit than the pharmacies because of economies of scale. They considered the FDA grant of approval as a license to steal I guess.
Computer Gigolo
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