Spiking Drug Prices in Spotlight at Senate Hearing

Regulation, expedited review for competitors suggested

WASHINGTON -- Outrage was in the air Wednesday afternoon as the Senate Special Committee on Aging discussed the problem of price spikes for some off-patent prescription drugs.

Committee leaders were furious that the problem even existed. "I find it so disturbing and unconscionable that a company would buy up a decades-old drug that it had no role in developing ... and then would hike up the price to such egregious levels that it's having an impact on patient care," said committee chair Sen. Susan Collins (R-Maine).

Collins was referring to companies such as Turing Pharmaceuticals, which bought the rights to Daraprim, an antiparasitic drug, in August and hiked the price from $13.50 to $750 per pill. "That is just plain wrong and that's why we've begun this investigation."

Sen. Claire McCaskill (D-Mo.), the committee's ranking member, said, "These price increases come at a time when Americans are more worried than ever about affordability of prescription drugs. These drugs were ripe for companies ... to swoop in and charge whatever they want regardless of the people who desperately rely on these medications every day."

Several witnesses at the hearing described the impact the price spikes were having on their ability to provide healthcare. David Kimberlin, MD, co-director of pediatric infectious diseases at the University of Alabama at Birmingham, described the odyssey he went through to get Daraprim for a baby with toxoplasmosis.

"The barriers we were facing were twofold: one, the massively increased cost of the drug following Turing's purchase, and two, the fact that a liquid compounded [form] could not be acquired in the outpatient setting through Turing's distribution system using a specialty pharmacy," Kimberlin explained, noting that the drug is normally available only as a tablet and so must be compounded into a liquid for pediatric use.

Prior to Turing's purchase of the drug, Kimberlin and his colleagues could get Daraprim directly from the manufacturer, but Turing's distribution system did not allow that and laws restrict sale of drugs from one pharmacy to another.

In terms of cost, the price had gone from $1,200 for a 1-year treatment regimen to at least $69,000 after Turing purchased the drug, he noted. In the end, a pharmacist was able to find a supply of the drug that had been purchased before the price hike, allowing the medical team to treat the baby with Daraprim.

Erin Fox, PharmD, director of the drug information service for University of Utah Health Care, in Salt Lake City, explained that her hospital had to make some changes in treating critically ill patients as a result of the price spike. "In 2013, the University of Utah Health Care paid approximately $50 for a dose of nitroprusside and $50 for a dose of isoproterenol," which were both sold by Hospira, she said. "Marathon purchased those products from Hospira in 2014 and raised the price of a vial of nitroprusside to about $215 and [a dose of] isoproterenol to about $440."

"In 2015, Valeant purchased these drugs from Marathon and prices again increased," she continued. "Nitroprusside went from about $215 to $650 and isoproterenol ... went from about $440 to about $2,700."

To try to reduce costs, "one of the key strategies we used was to remove isoproterenol from our crash carts," said Fox, adding that the hospital physicians agreed it would be okay to store the drug in pharmacy backup boxes instead. However, "we have not found a way to drastically reduce the use of [nitroprusside]. For now we are working on educating physicians on potential alternatives when available, but in many cases, [nitroprusside] use is very clinically appropriate."

Hearing witness Gerard Anderson, PhD, professor of health policy and management, medicine, and international health at Johns Hopkins University, in Baltimore, told committee members that one possible way to prevent these price hikes is to increase competition for the drugs. "Empirical studies suggest that every time a new drug company enters a particular market, the price goes down by about 20% or 25%."

Perhaps the Department of Health and Human Services could establish priority reviews for situations in which there is no competition, Anderson suggested. "You could also make it much easier to do compounding ... and finally, as a last resort, we could look at going to Canada and other places to import these drugs."

Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, a trade organization here for pharmacy benefit managers, suggested that Congress "might want to consider creating a 'watch list' of off-patent drugs that face no competition in [their] class. Let owners of products and hedge fund operators know we're watching. Hedge funds have these lists; the government might as well too."

Sen. Sheldon Whitehouse (D-R.I.) had a different idea. "It seems to me ... there are some old and established techniques that worked when railroads were trying to crush American farmers, or when Ma Bell had you by the wire and you couldn't have competition over phones -- you had simple price regulation."

"The company came in... and it proved its costs, and made an argument about the risk it took, and you'd get your cost back and a return for your shareholders," he said. "It seems to me that's an easier way to get at the problem than trying to create competition against a powerful, focused, relentless, clever incumbent who has all the strategies of price manipulation to discourage somebody from taking that chance."

McCaskill had a special request for physicians. "I hope this committee will hear from doctors who are faced with life-threatening disease and are not able to get this drug at a price within reach of these patients. We need to know the real, life-threatening consequences for these patients."

Representatives of Turing and Valeant were not included on the hearing's witness list.

This article was first published on MedPage Today and reprinted with permission from UBM Medica. Free registration is required.