Price Gouging With FDA Approval
by Franklin Graham, July 3, 2013
Anyone using colchicine, one of the best treatments for gout, is in for a nasty surprise, compliments of the FDA and the rapacious actions of URL Pharmaceuticals and Takeda Pharmaceuticals. Until recently, I used the generic drug colchicine. A prescription of 100 tablets typically cost about $10, actually 9¢ a pill. Best of all, it really worked. However, now one must use something called Colcrys (a recently branded version of colchicine) which costs $5 per pill. Colcrys is simply colchicine with a new label stuck on it. You might think that the much respected FDA (Food and Drug Administration) would have had more good sense than to allow any drug manufacturer to corner the market on the generic drug colchicine and then charge 50 times the former cost. You would be wrong. They allowed this sham to play out with not so much as a howdy-do — and at the expense of unsuspecting patients, doctors, medical insurance providers, Medicaid, and Medicare. Is there indeed a new climate of regulation unfolding in the halls of the FDA? Is the new initiative one that insures that no good generic medicine can go unpunished?
Like five to six million other Americans (the estimate given by the FDA Arthritis Advisory Committee, June 21, 2010), I have gout. Gout can be an excruciatingly painful condition when uric acid builds up in one’s blood, and needle-like crystals (tophi) settle into the joints and soft tissues, especially the big toe, ankles, or knees. It can be so painful that one cannot sleep even with only a light sheet covering oneself. The disease is related to rheumatoid arthritis conditions and, if left untreated, can be very debilitating. As you might guess, a sufferer will pay almost anything to make the pain go away, if one must.
For thousands of years there has indeed been an effective treatment for gout, namely colchicine, which is derived from autumn crocus (also called meadow saffron). As far back as 1550 B.C., it was mentioned in the Eber Papyrus, an Egyptian Document. What was good enough for Amhose I (1445 B.C.) should be good enough for me, and without a government agency (the FDA) withholding relief unless and until the piratical sum of nearly $5 a pill is coughed up. In ancient Greece, Dioscorides prescribed it. Again, what worked for the Greeks should work for me. Benjamin Franklin, one of our founding fathers and a fellow gout sufferer, brought it to America on his return from the French Court of King Louis. During the Great Depression in 1939, the FDA did approve colchicine in combination with another drug. I believe it was probenecid. In combination, probenecid/colchicine is an effective treatment for most sufferers.
To make a long history short, colchicine has worked for thousands of years and was readily available until 2009, having been produced by up to 21 pharmaceuticals for as little as 4 cents a pill. Until then, the millions suffering from gout had not counted on the murky machinations of the FDA to ruin a good thing for everyone concerned — patients, health care providers, and the American taxpayer. Even the costs to the health insurance industry would have been minimized. But none of the beneficiaries counted on a single company somehow being selected to be the sole provider of colchicine, provided that it changed the name to Colcrys and conducted what the FDA calls clinical studies to prove efficacy and safety.
How did all this come about? How can a 4 cent pill turn into a $5 pill overnight? How does a generic drug (colchicine), widely available for over 100 years, turn into an exclusive, proprietary drug with nothing changed but the name, now Colcrys? In the process, a company that was for many years on shaky financial ground, as recently as 1997, finds itself the sole distributor of colchicine under the new name Colcrys. Although the new commissioner of the FDA, in 2009, Dr. Margaret Hamburg, was in place, her focus was on the threat of foreign online pharmacies, of which she said “If the costs are really low, if it seems too good to be true, it is too good to be true. (June 27, 2013). Her words somehow ring hollow when applied to colchicine and other generic drugs that have proven their worth beyond doubt.
A brief review of the timeline involved with this slight-of-hand serves to put it in some perspective. I am indebted to an article by Michael Armstrong, posted April 12, 2012 (Philly.com) for the background on URL/Mutual Pharmaceutical.
• 1946 United Research Laboratories (URL)founded by Chemist, Mr. Albert Roberts. The first product was a hormone treatment for arthritis. From the beginning, the focus was not on research but on formulating drug preparations available as generic prescriptions. Perhaps Mr. Roberts’ insight was to call his company a research laboratory, when in fact it was focused on manufacturing of drugs and not the basic research that may ultimately lead to a new treatment of disease.
• In 1962, the FDA defined (in part) its mission as insuring that “all new drugs be proven safe and efficacious.” Drugs in use before 1962, and proven “efficacious” were grandfathered in. Both colchicine and a combination of colchicine/probenecid were permitted under the ruling.
• By the 1980s, URL had morphed into URL/Mutual Pharmaceutical, focused on generic drugs.
• By 1988, URL/Mutual Pharmaceutical had zeroed in on drugs about to lose their patent exclusivity.
• 1996, the FDA launches its Unapproved Drugs Initiative. This in an era when Republican lawmakers, with the assistance of ALEC (American Legislative Exchange Council) strives to privatize every element of the American economy, especially those regulated by government agencies.
• In 1997, Richard Roberts, more about him later, becomes chairman and CEO. A majority interest is acquired by the venture capital firm Elliott Associates L.P. and Momar Corporation. (Special Note: A brief search of home pages for the venture capital firm and Momar indicate that their focus is capital appreciation through asset management. To quote the Elliott Associates home page, “If you don’t profit at the ground level, you don’t profit at the owner level.”)
• June 2006, The FDA launches the Unapproved Drugs Initiative. The FDA website specified that the purpose is to “efficiently and rationally bring such drugs into the approval process.” And, in doing so insure that it is done “without imposing undue burdens on consumers, or necessarily disrupting the market.” This is accompanied by “risk based enforcement” to punish those who resist the exclusive right of URL/Mutual to patent colchicine.
• Renamed URL Pharma, Inc. in 2008 applies for an exclusive right to market colchicine under the new name, Colcrys.
• July 1, 2009, FDA approves URL Pharma’s application upon receiving a $45 million dollar fee.
• July 29, 2009, URL is granted 17 patents for Colcrys, that is for colchicine, as well as exclusivity.
By now, the reader may feel a bit dizzy following the almost light speed course of events leading up the granting of exclusive rights to URL Pharma for colchicine. You would not be alone. From every available source, it is clear that everyone outside of FDA and URL Pharma were unaware that “unintended consequences” were about to unfold. In a letter to President and CEO Chairman of URL Pharma, dated June 6, 2011, then candidate Sherrod Brown writing on behalf of his Ohio constituents, asserted that “Seniors living on Social Security receive on average $14,000 a year in benefits. Following your price increase, seniors with gout will now pay $3,500 more each year. Mr. Brown urged Mr. Roberts “to reevaluate this price increase.” Two weeks earlier, four members of the Congress of the United States sent Dr. Roberts their own letter (May 23, 2011) in which they, as members of committees with jurisdiction over health care issues, noted that the company was “charging unreasonable prices for Colcrys…” “Charging prices for newly-patented drugs fifty times higher than for the price of the same drugs that have been used for decades greatly increases costs for our nation’s health care system.” (The letter is signed by Senator Herb Kohl, Congresspersons Henry Waxman, Frank Pallone, and Diana DeGette — -all Democrats). The letter concludes with a request to furnish documentation relating to the pricing issues.
One could have expected that more pressure would be exerted upon Mr. Richard Roberts to explain how his company was able to acquire exclusive rights to colchicine (marketed as Colcrys) and why the price increased overnight by 50 times. In 2011 alone, Colcrys brought in $430 million to URL Laboratories, with overall income of $600 million. But Mr. Roberts and his investors appear to have sensed that it was time to get out while the going was good. On April 12, 2012, URL Pharma announced that it was being sold to Takeda Pharma of Osaka, Japan. Takeda, being the oldest and largest Pharmaceutical in Japan, structured the deal to be concluded within 60 days. Takeda, predictably, was interested in one thing, the rights to Colcrys. Five months later, Takeda announced that it was spinning off the other components of URL Pharma to Sun Pharma, based in India. Upon exiting the scene, Mr. Roberts’ response to questions about the entire affair, as quoted by David Sell (Inquirer Staff Reporter, March 4, 2013, I “make no apologies about the research or profits from the sale.” Further, “If we had discovered nothing of significance, we wouldn’t have gotten the patents or the approval from the FDA.” To date, neither the FDA nor any oversight committee of Congress has been forthcoming with just what research or discoveries entitled URL Pharma to become the exclusive right holder of colchicine. That story is yet to be written, if ever. In the meantime, until the patents expire on 2028, Takeda Pharma is in a position to reap billions in pure profit, dare one suggest 50 times its investment?
The current commissioner of the FDA, Margaret Hamburg, emphasizes on her home page that she is dedicated to transparency in decision making. She states that she wants “An FDA that the American public can count on.” The FDA is to promote, by her reckoning, initiatives to advance globalization, regulatory science, and transparency (May 19, 2009). In response, to the colchicines affair, Dr. John J. Cush at Baylor University, director of Clinical Rheumatology, and one time member of an FDA Drug Approval Panel was quoted, “This is a travesty, a joke that is not funny.” But take heart all you suffering millions who depend on the good old reliable colchicine to relieve your symptoms. Consider what is happening to tens of thousands of pregnant women who must rely upon 17OHP to prevent premature birth. They paid on average about $14 per treatment and needed up to 20 injections. In February 2011, Makena (trade name) produced by K-V Pharmaceutical Co. was omcreased to $1440 per treatment. A $280 regimen over 20 weeks became a $28,880 one.
With nearly 11% of the drugs available falling into the generic category, there is plenty of opportunity for Pharmas to turn generic drugs into an exclusive, patented drugs for 50 or 100 times the price. They can do so without having invented a thing or invested in research. The question must be asked, how many other generic drugs are under application to become exclusive properties of one or another drug companies that neither bear the risks or costs of developing them? In the meantime, Congress show little or no inclination to do anything about this “travesty.” ¥¥