Amy in the News
Klobuchar Column: Pharmaceutical price gouging is not only wrong, it's illegal
January 29, 2009
By Amy Klobuchar
Two years ago, Jesse and Lisa Benson became the proud parents of twin girls, Anna and Sophia. However, Sophia was born with a rare heart condition called patent ductus arteriosis, known as PDA, a disorder that prevents holes from healing in the hearts of premature infants.
At Children's Hospitals and Clinics of Minnesota, Sophia's heart condition was treated successfully with intravenous indomethacin, a drug sold under the name Indocin IV. The drug has been around for several decades and is the standard nonsurgical treatment for this life-threatening condition.
What the Bensons did not know at the time, but the hospital did, was that the price for this drug had just increased by nearly 1,300 percent, from $108 to $1,500 per unit.
The sudden and dramatic price increase was not in response to new research, marketing or legal costs.
The only thing that had changed was the fact that an Illinois-based company, Ovation Pharmaceuticals, had cornered the market for drug treatments of PDA.
Ovation had acquired the rights to Indocin from Merck. A short time later, it bought from Abbott Pharmaceuticals the rights to NeoProfen, which had just been approved for treatment of PDA.
Because no other drugs are approved for PDA, Ovation was in a position to demand almost any price from those who needed this treatment. And it did.
I thought this was wrong. So last spring, I asked the Federal Trade Commission (FTC) to investigate Ovation for price-gouging and anti-competitive practices.
A few weeks ago, the FTC announced that it is charging Ovation with violations of federal antitrust laws. The FTC is seeking to force Ovation to divest itself of one of the drugs and return the ill-gotten profits from its monopolistic pricing of both drugs.
As it turns out, Ovation has made a specialty of acquiring the rights to drugs that are essential for treating serious medical conditions.
For example, Ovation acquired three other drugs from Merck and then quickly jacked up the prices:
• Cosmegen, used to treat pediatric cancers, went up 3,437 percent.
• Mustargen, used to treat brain tumors and certain lymphomas, increased 979 percent.
• Diuril Sodium, a diuretic used in infants and neonatals, increased 864 percent.
Ovation may be among the worst, but it is far from the only offender.
Researchers at the University of Minnesota College of Pharmacy have found many examples of "extraordinary" drug price increases, defined as cases where the price at least doubles overnight. The incidence of these price increases has also been rising sharply in recent years.
For example, there is a drug that is the gold standard for treating catastrophic seizures in babies. It is a natural hormone sold as Acthar Gel. A specialty pharmaceutical company, Questcor, bought the drug from Aventis and then almost immediately raised the price 14-fold, from $1,650 a vial to more than $23,000.
We can all be grateful for the wonders of modern medicine, including life-saving and life-enhancing pharmaceutical drugs. But our gratitude is no excuse for drug companies to engage in monopolistic and illegal price-gouging.
Fortunately, for Jesse and Lisa Benson, this story ends well. Their twin girls are now happy, healthy toddlers, thanks to access to Indocin.
However, the story does not end so well for Children's Hospital, which had to pick up the tab for the drug because many insurers refuse to pay these outrageous prices.
In the end, it is all of us who pay the price, either through higher insurance premiums or through higher taxes for uncompensated care.
That's why we should hope the FTC's action against Ovation is just the beginning of further efforts to rein in pharmaceutical companies that rig the market to charge extreme prices for our prescription drugs.
Amy Klobuchar represents Minnesota in the U.S. Senate.
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