WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) will participate in a special Senate Aging Committee hearing today on prescription drug price-gouging and the resulting impact on patients—especially senior citizens—and the Medicare and Medicaid systems. Serving on the first panel of witnesses will be Jonathan Blum, Deputy Administrator and Director at Center for Medicare at the Centers for Medicare and Medicaid Services (CMS).

“Too often, we have seen pharmaceutical companies take advantage of FDA approval to price-gouge customers and pad their profits,” Brown said. “While FDA-approved medications should be a goal and innovation should be rewarded, this new trend in the industry is alarming and will be costly to the federal government—and all Americans. For many senior citizens living on a fixed income, prescription drugs constitute a large portion of their weekly or monthly budget.

“CMS currently does not have the authority to negotiate drugs prices, leaving the Medicare program at the mercy of pharmaceutical companies and their outrageous prices,” Brown continued.

Brown has been an outspoken critic of companies that exploit the FDA approval process to price-gouge consumers. Though Brown does not serve on the Aging Committee, he was invited to participate in today’s hearing as a result of his work on two recent cases involving widely-used prescription drugs. Following an egregious case involving a drug used to prevent pre-term labor—known as 17P and branded as Makena—Brown intervened by contacting the company and the FDA. Following Brown’s intervention, the company decreased the price and the FDA agreed to allow safe and more affordable versions of the medicine to be manufactured.

Brown also recently wrote to URL Pharma, the manufacturer of a gout treatment drug known as colchicine, or Colcrys—after the company hiked the drug’s price by 12,400 percent. Brown’s letter urged the company to rethink its decision to increase the price from as little as four cents per pill to $5 per pill. Brown also sent a letter to Dr. Donald Berwick, acting director of the Centers for Medicare and Medicaid Services (CMS), asking him to investigate the ramifications of URL Pharma’s massive price increase of the drug. Three million Americans—primarily senior citizens—use colchicine to treat their gout. 

“My overarching concern with this price increase is that this seems to be a new model for drug companies,” Brown wrote in the letter to CMS. “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.”  

Brown’s opening statement, as prepared for delivery, is below.

Chairman Kohl, thank you for inviting me here today to discuss rising drug cost and the burden this places on patients and the federal government.  Thank you also for your work on Avastin and Lucentis.  I have also been hard at work on this issue and would like to take a few minutes to discuss my efforts with regard to Makena and Colcrys.   

You’ve probably heard of a progesterone compound called 17P.  It’s a drug that’s been produced for years by compounding pharmacists to help prevent preterm labor and it’s pretty cheap - $10-$20 a dose.  In March of this year, I learned that KV Pharmaceutical was awarded FDA approval for their version of 17P, called Makena, and that the price of the treatment skyrocketed to $1,500 a dose. 

Unlike other pharmaceutical companies that invest substantial resources in drug development, KV Pharmaceutical relied on $20.8 million in 17P research done by the taxpayer-funded National Institutes of Health (NIH). 

According to the American College of Obstetricians and Gynecologists (ACOG), Medicaid finances 42 percent of the nation’s more than 4 million annual births.  And, as approximately 12 percent of all live births involve a preterm baby, I am deeply concerned that the expense of Makena will further burden fragile state Medicaid budgets.

After writing a letter to KV Pharmaceutical regarding their $1500/dose pricing, KV lowered the cost to $690.  While certainly an improvement, a full course of treatment is still over $10,000.  More outrageous still is KV Pharmaceutical’s justification for this price.  It is not KV’s past investment or future investment in Makena.  Instead, KV argues that the cost of Makena is less than the cost of raising a child with complications due to preterm birth.

Essentially, KV Pharmaceuticals is trying holding pregnant women and children hostage.

Fortunately for pregnant women, children, and some state Medicaid budgets, the FDA – in an unprecedented decision – issued a statement informing compounding pharmacists that the agency will not go after anyone who compounds the vastly cheaper and equally effective 17P.

Following the action by the FDA, CMS informed State Medicaid Directors that states could cover either 17P or Makena.  In this budget environment, one would think that all states would simply cover the compounded 17P rather than Makena.

However, working with ACOG, my office discovered that only 3 states are solely covering 17P, five are covering only Makena, and 29 are covering both.  The remaining states either did not provide information or are not covering either version.

For those with private insurance - and those on Medicaid living in the at least 34 states covering Makena - the high cost of Makena will increase costs and drain state Medicaid budgets. 

In a similar situation, URL Pharma won FDA-approval for colchicine, brand name, Colcrys. 

According to the American College of Rheumatology, prior to FDA-approval colchicine had been used for over 200 years to treat gout.  Colchicine was available for as little as $0.04 a pill.  

In 2010, 21 pharmaceutical companies – including URL Pharma - produced colchicine.   After URL won approval for Colcrys, URL became the only authorized manufacture of this gout treatment and increased the price per pill to $5.00.

Similar to KV, URL cherry-picked a drug that was already known to be safe and effective and that they were already producing.  Without significant investment, URL is looking to cash in.

Three million Americans – primarily seniors on Medicare – suffer from gout.  According to the ACR, this painful affliction is best relieved by colchicine.

And the cost to the average senior for annual treatment is now one-fourth of their Social Security benefit.

And Medicare has no ability to negotiate the price of Colcrys. 

While FDA-approved medications should be a goal and innovation should be rewarded, this new trend in the industry is alarming and will be costly to the federal government – and all Americans.