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Saturday, October 15, 2016
Pharmaceutical Price Gouging at Valeant by Ed Silverman
“A drug used to treat lead poisoning is causing a toxic reaction among hospitals and poison control centers after Valeant Pharmaceuticals jacked up the price more than 2,700 percent in a single year. [Now think about the children in Flint, Michigan].
“At issue is a decades-old, intravenous treatment for severe and life-threatening cases of lead poisoning, which occur infrequently, but generally require supplies to be on hand. Known as Calcium EDTA, Valeant acquired the drug in 2013 as part of a $2.6 billion deal to buy another company called Medicis.
“After resolving manufacturing problems that caused shortages, Valeant pursued the hallmark strategy that made it infamous — taking sky-high price hikes. Before Valeant took control, the list price for a package of vials had been stable at $950. But in January 2014, Valeant boosted the price to $7,116. By December 2014, several more increases took the price to $26,927, according to Truven Health Analytics.
“Ever since, poison control specialists have been angry, especially since there are few viable options and a French company sells its version for less. Their reaction is a case study in the exasperation doctors and hospitals feel at the multitude of price hikes of all sizes that they see month after month, the vast majority of which never make headlines but create frustration and squeeze budgets behind the scenes.
“‘This is a drug that has long been a standard of care, and until recently it was widely accessible at an affordable price,’ said Dr. Michael Kosnett, an associate clinical professor in the division of clinical pharmacology and toxicology at the University of Colorado’s School of Medicine and a consultant to the California Poison Control System, who has contacted Congress. ‘There’s no justification for the astronomical price increases by Valeant, which limit availability of the drug to children with life-threatening lead poisoning.’
“If this sounds like a familiar complaint, it is. For nearly two years, Valeant has been a poster child for pharmaceutical greed. Before a series of congressional hearings and an accounting scandal altered its playbook, the drug maker regularly bought companies and then boosted prices on some medicines to new heights. The plan, which largely eschewed investment in R&D, made the company a Wall Street darling…
“A Valeant spokesman maintains the current pricing is justified. ‘The list price increases over the past several years have enabled us to provide to the market consistent availability of a product with high carrying costs and very limited purchase volume of 200 to 300 units per year,’ he wrote us. Each unit contains a pack of five vials.
“He added that Valeant must purchase sufficient supplies of needed ingredients in advance and this can amount to three to five times more than recent annual sales, which were between $3 million and $5 million last year. ‘Given [the drug’s] relatively limited shelf life, the company takes substantial carrying cost risk and has written down at its own expense approximately half of purchased quantities in the past few years,’ he wrote, adding that list price does not reflect any rebates or discounts that Valeant pays.
“And so poison control specialists fear they are stuck with the current pricing. Prior to a congressional hearing held earlier this year on drug pricing, the California Poison Control System and the American Association of Poison Control Centers wrote to the House Committee on Oversight and Government Reform to investigate the price hikes, but nothing came of their efforts…”