Price gouging by drug manufacturers

State questions rise in overdose drug price

By Brian MacQuarrie
The Boston Globe, April 20, 2015

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, MD

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.