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Pharma Companies Buying Old Drugs, Dramatically Increasing Prices

Worst Pills, Best Pills Newsletter article August, 2015

Many readers have no doubt experienced the impact of escalating prescription drug costs, which are driving up health care spending for patients, hospitals and insurers alike. The Wall Street Journal recently reported that since 2008, the prices of brand-name drugs have increased 127 percent, whereas the consumer price index — a marker of overall inflation — increased only 11 percent.[1] In a recent exposé on drug pricing, the Journal highlighted one scenario contributing to the...

Many readers have no doubt experienced the impact of escalating prescription drug costs, which are driving up health care spending for patients, hospitals and insurers alike. The Wall Street Journal recently reported that since 2008, the prices of brand-name drugs have increased 127 percent, whereas the consumer price index — a marker of overall inflation — increased only 11 percent.[1] In a recent exposé on drug pricing, the Journal highlighted one scenario contributing to the skyrocketing cost of prescription drugs: drug companies buying, from other companies, the rights to drugs that have been available for many years, then immediately jacking up the prices. The Journal cited the following recent examples of such industry behavior:

On Feb. 10, Valeant Pharmaceuticals purchased from Marathon Pharmaceuticals the rights to NITROPRESS, the only available form of nitroprusside, an injectable drug used for decades to quickly lower blood pressure. With no competition from any other company, Valeant raised the price for a single vial of this lifesaving drug from $258 to $806, a 212 percent increase.[2] On the same day, Valeant also bought a widely used heart drug called ISUPREL, the only available form of isoproterenol, and increased the price by more than 500 percent.[3]

In late 2013, Horizon Pharma bought from AstraZeneca the rights to the pain medication VIMOVO, which combines the pain reliever naproxen and the heartburn drug esomeprazole. On Jan. 1, 2014, Horizon increased the price for a one-month supply of VIMOVO from $138 to $959, a 597 percent increase. On Jan. 1 of this year, the company further increased the price to $1,678.[4]

Multiple companies used to sell generic versions of NITROPRESS and ISUPREL, but all have since stopped marketing these drugs, giving Valeant a monopoly for both. In the case of VIMOVO, low-cost generics fortunately are available for both naproxen and esomeprazole, and no doctor should be prescribing VIMOVO.

Reining in runaway drug costs will require aggressive action by the federal government. To avoid monopolies for older drugs, the government needs to effectively encourage generic companies to maintain or resume marketing of these drugs. Congress also must give Medicare the authority to negotiate drug prices on behalf of its beneficiaries. Currently, the departments of Veterans Affairs and Defense and state Medicaid programs are able to negotiate the prices they pay for drugs. But because of intense lobbying by pharma, Congress has explicitly prohibited such negotiations under Medicare. Ultimately, drug price controls — which are utilized by many other advanced nations to keep lifesaving medicines affordable for their citizens[5] — may be necessary.

References

[1] Rockoff JD, Silverman E. Pharmaceutical companies buy rivals' drugs, then jack up the prices: List prices soar on Valeant's heart medications and other firm's drugs, driving up costs. The Wall Street Journal. April 26, 2015. http://www.wsj.com/articles/pharmaceutical-companies-buy-rivals-drugs-then-jack-up-the-prices-1430096431?cb=logged0.30054992220727306. Accessed June 15, 2015.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] U.S. Department of Commerce. Pharmaceutical Price Controls in OECD Countries: Implications for U.S. Consumers, Pricing, Research, and Development and Innovation. December 2004. http://www.ita.doc.gov/td/chemicals/drugpricingstudy.pdf. Accessed June 19, 2015.