Pigs and Drug Prices
Board: Value Hounds
Questcor is another overpriced "biotech" that is living large on high prices for a drug that is FDA approved for a very small population of patients. Questcor makes Intercept look saintly by comparison.
Questcor was the beneficiary of Armour & Company research that purified ACTH from hog pituitary glands Since they were in the meat packing business they had plenty of these laying around. ACTH is adrenocorticotropic hormone produced by your pituitary and is a polypeptide(meaning organic biologic) that stimulates the release of glucocorticoid steroids from the adrenals (we all need corticosteroids to function). It's made up of 39 amino acids. It's not all that easy to make and the initial gel was an animal product made from pig pituitary. The ACTH synthetics are available. Acthar gel is still porcine derived.
Questcor bought the rights to Acthar gel for $100,000 in 2001 from Aventis (now Sanofi-Aventis). The only approved FDA indication for it is infantile spasms and there are only about 800 cases per year. With prices initially at $50 ( raised to $700 shortly after acquisition) per vial, Questcor lost money for several years.
Because the drug was approved way back in 1952, it can be expanded beyond its tiny orphan status market for any indication Questcor wants to claim and do that without clinical trials. They now sell it for MS, nephrotic syndrome, dermatomyositis and infantile spasms. Other cheaper alternatives are available. Since it is essentially increasing steroid levels, prednisone or prednisolone can be given--mondo cheap generic alternatives. The diseases they claim effectiveness for are autoimmune disorders-- dermatomyositis, nephrotic syndrome (lupus) and MS. Infantile spasms do seem to do better with Acthar--a form of epilepsy not necessarily autoimmune.
Questcor has raised the price of Acthar gel from $700 to $28,000 per 5 ml vial (for injection.) Most of the hike came in just three short months with a change in management--CEO James Fares left and the great humanitarian Don Bailey in 2007.
“We could lower the price and make less money,” Mr. Bailey says, “and then we would be sued by our shareholders.”
Over the last two years, as the company’s share price mainly soared, Questcor insiders have sold more than $100 million of stock.
Novartis has an ACTH synthetic drug approved in Europe that they may get to market in the US. In response to competition Questcor says that the pig pituitary also contains other proteins that make Acthar gel more effective than simply injecting an ACTH synthetic.
Questcor is now arguing that its studies show that Acthar, despite the “highly purified” in its name, actually contains other substances from the pig pituitary glands that account for some of its effectiveness. The company does not intend to say what those other ingredients are, thus making it extremely hard for a generic company to copy Acthar.
“Coca-Cola is not going to tell you what Coke contains, either,” Mr. Bailey says.
Because the Novartis drug Synacthen is not grandfathered in, Novartis would have to do clinical trials for every indication they wanted to market the drug for and that will be expensive and costly. Even though Questcor is the king of pharma sleaze, their position may prove to be unassailable in the short term at least and insiders and lucky investors will continue to benefit from a drug costing $28,000 per dose that has no clinical evidence of efficacy.
--recently some insurance companies have begun to push back and not pay or authorize use and this is one instance where I am in their corner: