Undercutting a $1,500 drug with a $20 equivalent

by Walter Olson on March 16, 2011

A competitor drug company warns “compounding” pharmacies of “FDA action” if they persist in any such mischief [L.A. Times]

{ 12 comments }

1 Ted Frank 03.16.11 at 10:54 am

Alex Tabarrok had a good Marginal Revolution post on the unique law involved, and why this isn’t such a bad thing in the aggregate.

2 Bob Lipton 03.16.11 at 11:17 am

Especially for the warning company.

Bob

3 gitarcarver 03.16.11 at 1:40 pm

I believe the link goes to the Chicago Tribune site, and not the LA Times.

4 DensityDuck 03.16.11 at 1:47 pm

These people’s ire should be directed at the FDA, who required such an expensive (and extensive) certification program that the manufacturer NEEDS to charge $1500 to recoup their research investment.

And yes, that NEEDS is for real. The company is seeing very little profit from that number; most of it is going to the investors who financed the development program.

Every doctor who prescribed progesterone to a woman was using it off-label, in a non-tested, non-approved manner. EVERY ONE. If you think that FDA approval means anything, then you should be horrified that this was taking place.

5 BL1Y 03.16.11 at 2:05 pm

Same jump in price happened when states stopped allowing holographic wills.

6 VMS 03.16.11 at 4:50 pm

Since the drug apparently can’t be patented, this is a regulatory shake-down. A state-licensed pharmacist should be allowed to compound pharmaceuticals without FDA involvement.

7 VMS 03.16.11 at 5:32 pm

There is a full in depth article in this Week’s New England Journal of Medicine here: http://healthpolicyandreform.nejm.org/?p=13971&query=TOC

8 ras 03.16.11 at 7:21 pm

“Every doctor who prescribed progesterone to a woman was using it off-label, in a non-tested, non-approved manner.”

Non-tested and non-approved by the FDA, that is; the docs, the pharmacists and the women themselves seemed happy w/it.

And that’s the nub of the problem, isn’t it? What right does the FDA have to force people to forgo the medical treatment they desire? Let’s return to the FDA stamp of approval instead, which individuals can then accord precisely as much or as little weight as they choose.

Failing that, expect yet another increase in medical tourism and/or a new drug for the gangs to smuggle.

P.S. Would anyone have a link to a good, concise article on just what it is about FDA procedures that they cost so much to comply with?

9 Scott 03.16.11 at 9:35 pm

How much of this is an on vs off label issue? How does the liability of the drug company change when the off label use changes to on label.

10 gitarcarver 03.17.11 at 7:47 am

Density Duck,

These people’s ire should be directed at the FDA, who required such an expensive (and extensive) certification program that the manufacturer NEEDS to charge $1500 to recoup their research investment.

I don’t mean to be offensive, but what testing are you referring to?

KV Pharmaceuticals did no testing. They only provided the test results of another study done by another group. What adds insult to injury is that the ODA (the Orphan Drug Act) allowed the FDA to pay KV for just doing the paperwork on this thing.

KV is taking advantage of a “loophole” in the law. The ODA gives them a 7 year monopoly on the trademarked drug. Because most women that need the drug are lower income, the drug will be paid, in most cases, by Medicaid.

So not only did the taxpayers pay for the paperwork, the fasttrack approval, but we are stuck with the 10,000% increase in the cost.

On this one, the idea that KV Pharmaceuticals has to pay for the testing doesn’t seem to be the reason for the price. I have a feeling it is to help build a warchest for the inevitable lawsuits that follow the use of any drug.

11 The Curmudgeonly Ex-Clerk 03.18.11 at 6:39 pm

Density Duck:

I think you’re confused about what the FDA does and does not do. No one should be horrified by the notion of off-label precription drug use, which is frequent and in this case apparently was the recognized standard of medical care. While the FDA polices the marketing of drugs for unapproved indications, the federal Food, Drug, and Cosmetic Act does not regulate the practice of medicine or otherwise condemn off-label usage. 21 U.S.C. 396.

12 Walter Olson 03.18.11 at 11:07 pm

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