Jawboning Won't Fix This

Wednesday, February 15, 2017

Over at In the Pipeline, Pharma blogger Derek Lowe has a short post about Marathon Pharmaceuticals, the latest company to get money -- as opposed to earning it -- thanks to the perverse incentives of the regulatory state:

[W]hat's not to like? Well, this drug has been around since the early 1990s. Marathon most certainly did not invent it. Nor did they think of applying it to [Duchenne Muscular Dystrophy] patients -- the biggest clinical trial of the drug for that indication was done over twenty years ago, by someone else. DMD patients in the US were already taking the (unapproved) drug by importing it from Canada. Marathon just dug through the data again and ran a trial in 29 patients themselves, from what I can see. I should note that this is not any sort of cure, nor does it address the underlying pathology of the disease. The steroid treatment makes muscle strength in DMD patients stronger -- barely. But even for that benefit, US patients will now have to get it from Marathon at something like 50 to 100 times the former price. This is exactly the same business plan as Catalyst Pharmaceuticals and several others, and the only reason that it's viable is because perverse incentives by the FDA make it completely legal. [emphasis added, links omitted]
So the same agency that routinely keeps desperate patients from trying new treatments for their diseases also makes it easy for companies to charge gouging prices for old drugs of dubious value that had been on the market for a reasonable price. Lowe shares a belief held by many that some regulation is necessary, but I differ from him there: Increased consumer vigilance, aided by watchdog organizations like the Consumers Union or UL could perform the legitimate activities of the FDA.

That said, I find this tale ironic, given that I have also heard that Donald Trump wants to jawbone drug companies into offering medicine at lower prices. First, the solution to the economic distortions caused by government control is less of it, not more. Second, it behoves any potential reformer to consider how else the government is ruining the drug market, be it through the FDA or other agencies that abuse government power. Finally, notice that "capitalism" is once again implicitly getting the blame for a government-created problem, first of all from the President himself, in the form of his immediate scapegoating/threatening of the companies.

-- CAV


Anonymous said...

Hi Gus,

This has been going on for at least 15 years. I wonder if it was an off the books quid pro quo from the Medicare Part D fiasco of the Bush II years. I saw my 3 medications, all of which were off of patent, increase by 3, 5, and 10 fold due to an FDA grant of 'market exclusivity'. I guess the term, 'government granted monopoly' offended their delicate sensibilities not to mention actually pointing out the essentials of the crony arrangement. The drug importation ban - which did not just cover patented pharmaceuticals as claimed - was also part of this crony arrangement.

Here's a specific example from a number of years back.


Read the msnbc story first.

Note particularly the irony of granting a drug 'orphan status' and then having to send out 'cease and desist orders' to the other makers of the drug.

And notice the puffery involved with the CEO of the the company making a pitch that "an FDA-approved treatment" blah blah blah.

And then the 'public spirited altruism hook' that reminds me of Adam Smith's quote about business men never getting together without it devolving into a conspiracy against the public.

(It's evil bastards like this that give businessmen a bad name. I really hate them.)

Then read the rest of the comment.

So here you see what happens when one crony group privilege runs into the American Standard of Motherhood...

(The links are expired so I'll paste the text)

And now, the walk-back...

After numerous reports that KV Pharmaceuticals was planning a drastic price increase now that it had obtained sole rights to a drug designed to stop women from going into labor early, the Food and Drug Administration has announced it will not intervene if other companies make cheaper versions of the medicine.

From the Wall Street Journal:

On Wednesday the FDA said a letter sent by K-V Pharmaceuticals to pharmacists suggesting the agency was going to take action against them for making, or compounding, hydroxyprogesterone caproate “is not correct.”

Typically, whenever a drug is approved, pharmacy compounding isn’t allowed and the FDA acts to remove any unapproved drugs that might on be the U.S. market.

But, an FDA spokeswoman said Wednesday the situation with Makena is “unique” and done to make sure women have access to needed therapy. Also unusual in the Makena situation, is that the research submitted to FDA in support of Makena was paid for by the National Institutes of Health. Typically companies fund most research into new drugs and medical devices.

I guess the Duchenne Muscular Dystrophy folks just need to get their problem added to the list of Motherhood and Apple Pie. Then they might just stand a chance in our crony 'crat economy.

c andrew

Gus Van Horn said...


"[T]he Food and Drug Administration has announced it will not intervene if other companies make cheaper versions of the medicine."

What great guys...