qotd: Price gouging by drug manufacturers

The Boston Globe
April 20, 2015
State questions rise in overdose drug price
By Brian MacQuarrie

Attorney General Maura Healey is demanding that companies selling
naloxone in Massachusetts explain why the cost of the drug, which is
used to reverse heroin overdoses, has skyrocketed since former governor
Deval Patrick declared a public health emergency a year ago.

The drug, often marketed under the brand name Narcan, has become a
critical tool for emergency workers who use it to revive overdose
victims. Without Narcan, thousands of overdoses during the past few
years would have resulted in deaths, authorities have said.

To help ensure that distributors are not taking advantage of a sudden
surge in demand, Healey's office last week asked the distributors to
provide detailed records of all naloxone sales to public entities in
Massachusetts since April 1, 2014, less than a week after Patrick's
declaration made the drug available to all first responders.

Since then, price increases "have strained access to this life-saving
medication at exactly the moment when it is most needed," the companies
were told in certified letters. "Our office has heard regularly from
local law enforcement and public health workers worried about their
ability to maintain supplies."

Healey's office sent certified letters requesting answers by April 30 to
Moore Medical of Farmington, Conn.; Bound Tree Medical of Dublin, Ohio;
McKesson Corp. of San Francisco; and Southeastern Emergency Equipment of
Wake Forest, N.C.

Kristin Hunter, a spokeswoman for McKesson Corp., told the Globe that
the company "does not set wholesale prices or the retail drug prices
paid by consumers or health plans."

Those prices often are set by the manufacturer. Staff from Healey's
office identified Amphastar Pharmaceuticals of Rancho Cucamonga, Calif.,
as the producer of much of the naloxone used in Massachusetts, and said
they have been in discussions with the company about pricing since February.

Amphastar officials did not return repeated phone calls from the Globe
requesting comment.

http://www.bostonglobe.com/metro/2015/04/19/healey-investigates-rising-price-for-drug-that-reverses-overdoses/Wav71qeW4gbMAwb9bcx2tI/story.html

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Comment by Don McCanne

Drug manufacturers recently have been engaged in outrageous pricing
practices for essential drugs that they produce - the hepatitis C drugs
being an egregious example.

Narcan - a crucial life saving drug that reverses narcotic overdoses -
now has much wider distribution since it has become available to first
responders. The manufacturer - Amphastar Pharmaceuticals - in what has
to be more than a mere coincidence, chose this time to sharply increase
the price of this drug.

When the market is dysfunctional, it is the responsibility of government
to intervene. The United States has shirked its responsibility. We need
to revise our approach.

A single payer national health program functions as a monopsony - a
single purchaser of products and services. In private markets,
monopsonistic pricing can be as evil as monopolistic pricing like the
example of Narcan. The difference with a government monopsony is that it
gets pricing right - an adequate price to be sure that products and
services remain available, yet at a price that does not gouge the
taxpayers who fund the system.