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U.S. Senator Calls for CMS Probe of 12,400% Drug Price Hike

 |  By John Commins  
   June 08, 2011

A U.S. Senator is accusing URL Pharma Inc. of price gouging after the pharmaceutical company raised the price of its exclusive gout treatment drug from 4 cents per pill to $5 per pill, an increase of 12,400%.

Sen. Sherrod Brown (D-OH) has asked Philadelphia-based URL Pharma to reconsider it price hike for the drug colchicine, sold under the brand name Colcrys. Brown has also asked Centers for Medicare & Medicaid Services Acting Administrator Donald Berwick, MD, to investigate the impact of the price hike on the 3 million Americans – many of them senior citizens – who use colchicine to treat their gout, and the potential financial hit for Medicare. 

Brown said in a media release that 21 drug companies – including URL Pharma – were manufacturing oral colchicines for gout and selling it for as little as four cents per pill. However, after URL Pharma received Food and Drug Administration approval for exclusive rights to produce and sell colchicine under the Colcrys brand, "the price spiked to $5 a pill."

According to Brown, physicians at the American College of Rheumatology report that the standard dosage for a person with gout is two colchicines tablets per day when a patient is not suffering a gout attack. The dosage may increase to treat flare-ups. With three million gout sufferers averaging two pills each day Brown said URL Pharma would sell nearly $11 billion worth of the medication in one year.

In a statement issued Tuesday, URL Pharma disputed Brown’s projected earnings for Colcrys, saying the senator's figures are " more than 20 times larger than our most optimistic sales projections for this year."

"Yet again, a pharmaceutical company is taking advantage of FDA approval to price-gouge their customers and pad their profits," Brown said in a media release. "Because most Americans living with gout are seniors—and the average Social Security recipient receives just around $14,000 per year—a price hike to more than $3,500 per year will break the budgets of so many who depend on this drug. URL Pharma should do the right thing and put patients over their profits—particularly since their patients are those who can least afford a colossal price increase."

URL Pharma asserted that its earnings are "well below our sales numbers with about $23MM budgeted for further research on Colcrys…Please note that URL Pharma funded, and continues to fund, all Colcrys research, not NIH."

Brown noted that this is second time in the span of a few months that a major pharmaceutical company has exploited the FDA approval process. He pointed to the decision by KV Pharmaceuticals Co. to raise the price of its prenatal drug Makena from about $15 a shot to $1,500 a shot. The Bridgeton, MO-based company backed away from the decision amid intense public criticism, threats of a government investigation, and the potential challenges of getting government and insurance companies to pay.

"My overarching concern with this price increase is that this seems to be a new model for drug companies," Brown said in his letter to Berwick. "As we saw recently with the drug Makena, companies are cherry-picking medications and treatments that have been widely used but have not gone through the FDA approval process. URL Pharma, KV Pharmaceutical, and others are taking these medications through the approval process with minimal investment and are reaping disproportionate rewards for their work."

A Feb. 9, 2011 media release from the drug maker boasted of the company's "Colcrys Co-Pay Assistance Program," which it described as "an initiative designed to help patients save money on their health insurance co-payment for Colcrys." The program provided a reusable coupon that allowed reduced co-pays from $15 a month, to $25 a month.

"We are committed to making Colcrys accessible to everyone who can benefit from it," Richard H. Roberts, MD, president/CEO of URL Pharma said in the February statement. "In response to feedback from patients and healthcare providers, we enhanced our Co-Pay Program to facilitate access to Colcrys."

URL Pharma reiterated its "very generous patient assistance efforts" in Tuesday's statement.

The pharmaceutical firm describes Colcrys as "the only single-ingredient colchicine product approved by the FDA, and is indicated for the prevention and treatment of gout flares and for the treatment of Familial Mediterranean Fever."

Brown's letters to URL Pharma and CMS can be viewed here and here, respectively. URL Pharma's statement may be viewed here.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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