Consider the following stories about the pharmaceutical industry that emerged in just the past week. Then decide how you would characterize an industry that makes this kind of news, week in and week out.
Last Friday the FDA's website posted notice of a violation it sent on September 8 to two pharma companies, Durect and Pain Therapeutics. The two companies are partners seeking registration for a new oxycodone product, Remoxy ER, which is currently awaiting FDA approval. The problem is that the companies posted information on their website about the product's attributes that the FDA has not yet approved for its label.
As examples, the agency noted that the websites described Remoxy ER as “long-acting” and “tamper-resistant.” That's a major no-no in the regulated pharma industry because companies can promote only features that the FDA has approved for a label. Yet the website statements imply that those features are “established facts” when the FDA has not decided whether they truly apply to Remoxy ER.
Was that just a careless oversight by the marketing team or a deliberate effort to jump the gun? In the large scheme of things it doesn't really matter because the culture at many pharma companies requires constant pushing to extend the limits of what is legal and ethical. Does it sometimes result in a hand slap from regulators? Most times the corporate culture considers that as no big deal.
Over the weekend, more sleazy details emerged about Mylan's schemes for its EpiPen injector. EpiPen is the emergency treatment for severe allergic reactions. Mylan has increased its wholesale price by nearly 500 percent since 2009, to the point where it now costs consumers $600 for a standard two-pack.
Mylan's multi-year price gouging created a firestorm of consumer protests, as well as strong criticism by the media and Congress. Then last Friday the New York Times reported that Mylan had done some backstage scheming to quell consumer outrage and protect its profits.
The company, whose CEO, Heather Bresch, is the daughter of U.S. Sen. Joe Manchin (D-West Virginia), proposed adding EpiPen to a federal list of preventive services. Such inclusion would require payers, such as private insurers, the government and employers, to pay for EpiPen without passing on the cost to consumers.
Then on Tuesday of this week, USA Today reported that Gayle Manchin, Bresch's mother and Sen. Manchin's wife, in her position as chairman of the National Association of State Boards of Education, lobbied the states by encouraging them to persuade or even require their respective schools to purchase EpiPens and keep them on hand.
Pharma's lobbying and payoffs at the state level have long been under-reported. So it came as news on Monday, when the Associated Press and Vice Media reported that the pharmaceutical industry has spent "more than $880 million over the past decade to fight laws that would limit the availability of powerful opioids ... in the United States." Pharma resents stricter controls on opioids, despite an epidemic in which 40 people a day die from overdoses of these prescribed pain medications. According to the report, pharma companies spent more than eight times what the gun lobby forked out during the same period to advance its agenda.
The reaction of individual pharma companies and the industry's lobby, PhRMA, to the exposure of astounding price increases consists mainly of trying to dissociate themselves from the more blatant price gougers. The tactic continues even as evidence emerges that the largest, most "responsible" pharmas have done more to pilfer the pockets of American consumers and taxpayers with annual price raises that seem smaller on a percentage basis.
Now it appears that not just a tiny handful of pharmas force exponential price increases.
On Wednesday several media outlets broke the story that last year, Novum Pharma in Indianapolis bought the rights to Aloquin acne cream, a product consisting of two cheap ingredients. Almost immediately they increased the price by 1,100 percent. Now, less than 18 months later, Novum has hiked the Aloquin price by a cumulative 3,900 percent. A single tube of the stuff costs nearly $10,000.
Novum's approach to the dermatology business seems fairly clear. During the same period the company also increased the price of another skin cream, Alcortin A, by the same amount, even as they pinched consumers on a third ointment, Novacort, going from $4,186 for a tube to $7,142.
Recently, a number of pharma companies have shown a renewed interest in the dermatology business. The cosmetic rationale for many products in that class means less involvement by third-party payers who can serve as a check on price gouging. Moreover, R&D expenses are typically low on derm products and a company can cover a large national market such as the U.S. with little more than 100 reps.
Alas, it remains an open question if this typical week for pharma means the industry is qualitatively worse than other sectors, such as banking, that also operate with amoral greed. The fact that Wells Fargo paid a $185 million fine for opening unauthorized accounts in the names of millions of depositors is unlikely to deter similar malfeasance by other financial service companies.
After all, these and many other sectors of the U.S. economy seek to emulate Wall Street and, as a former New York prosecutor once noted, Wall Street was inspired by the Mafia.
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