This week celebrity blogger Perez Hilton and a handful of more traditional media outlets wrote about a 2,000 percent price hike for a drug used to treat infants with a rare form of epilepsy. Critics derided what they described as “price-gouging” and invoked the name of Martin Shkreli, the CEO of Turing Pharmaceuticals, which earlier this year dramatically increased the price of an anti-parasitic drug used by people with AIDS. How does the price increase for this drug, sold in many countries outside the United States, compare with other price hikes that have generated widespread outrage at the pharmaceutical industry lately? Here’s what you should know:
This price hike isn’t new, and it only applies in Canada.
Beginning in January, the global pharmaceutical company Mallinckrodt (MNK) started raising the price of the drug Synacthen Depot to $680 Canadian dollars per vial, up from $33.05, in provinces across Canada, according to company spokesman Daniel Yunger. Some provincial authorities went on to approve the price increase, while others delisted the drug, Yunger said.
This week, though, a sudden flurry of news coverage garnered attention on social media and elsewhere. That prompted the company to issue a press release defending the price increase. (The company blames a manufacturing change and an unprofitable pricing model.)
So why is a nearly year-old price hike in the news?
It has all the ingredients to generate an uproar.
The simple answer is that public outrage about rising drug prices is at a peak — and the climate is right for a story that seems to reveal another example of pharmaceutical industry greed to gain traction.
It doesn’t help Mallinckrodt’s case that Synacthen Depot is long off patent and is used to treat a particularly vulnerable population.
It’s one of several drugs used to treat a condition that causes dangerous seizures in infants that can delay childhood development and turn into other forms of epilepsy. Known as infantile spasms or West syndrome, the condition affects between 2.5 and 6 of every 10,000 babies born in the US. (The drug is also used to treat several other rare diseases.)
Mallinckrodt says it’s committed to finding ways to assist the “few hundred patients” who need the drug in Canada. But the unwillingness of some Canadian provincial authorities to approve the price hike for such a small patient base shows there’s real concern about the precedent such a price hike could set — and the ability of the system to bear those costs.
It’s the latest black eye for Mallinckrodt.
The company, which raked in more than $2.5 billion in revenue last year, was the target of plenty of criticism even before the latest price increases.
Much of that scrutiny revolves around its acquisition of the drug company Questcor Pharmaceuticals last year. That deal gave Mallinckrodt the rights to sell Synacthen Depot and another drug, H.P. Acthar Gel, used to treat lupus, multiple sclerosis, and infantile spasms, in the US. Questcor had been gradually raising the price of Acthar for years, and Mallinckrodt has continued to do so. It’s now up to $34,000 per vial, up several thousand dollars since the acquisition and up nearly thirtyfold in the past decade.
That drug is the target of criticism, most vocally from the short-selling firm Citron Research, which is betting against Mallinckrodt’s stock. Mallinckrodt also has to worry about ongoing investigations into Questcor’s pricing and promotional practices by the US Securities and Exchange Commission and attorneys general in multiple states.
But it probably won’t affect the drug price debate in the US.
Keep in mind that, at this point, this controversy has no bearing on patients and payers in the US because Synacthen Depot isn’t available here. (Mallinckrodt spokeswoman Nancy Stauder said the company wants to get approval from the Food and Drug Administration to sell the drug in the US.)
Although Canada has been unusually prominent in this cycle’s US presidential campaign, don’t expect American presidential candidates to take too many shots at Mallinckrodt for its actions in Canada — they have plenty of targets here in the US already.