Questcor Pharmaceuticals has announced “a new strategy and business model for H.P. Acthar Gel(R).”
Translation: the company has obtained orphan drug status for a product that has been used for decades –including for the orphan indication of Infantile Spasms– and is raising the price 20-fold, from about $1000 per vial to $20,000 per vial (according to my source).
The Orphan drug law has benefits. It encourages companies to pursue treatments for diseases afflicting small numbers of patients. In my opinion it shouldn’t be used in situations like this for an existing drug with a widespread existing use.
The press release is very defensive, as it should be. It cites the fact that the company has been losing money and is incurring costs for the new indication and for manufacturing upgrades. It mentions a program to make the drug available for those who can’t afford it, and talks about Questcor’s participation with patient advocacy groups.
If insurance companies are smart they’ll read this paragraph and react accordingly:
August 30, 2007
Questcor’s implementation of this new pricing model creates risks and uncertainties for Questcor, including risks associated with the possibility of lower unit sales, the refusal of third-party payors to provide reimbursement for purchases of Acthar, and the financial impact of the return to Questcor or sale to third parties of previously sold product. Questcor could receive negative publicity as a result of its adoption of this new strategy, and responding to inquiries from the press or patient advocacy groups, or dealing with litigation against Questcor, could divert the attention of key employees from operating Questcor’s business.