Say you’re trekking through the desert in Mexico, minding your own business, when all of a sudden a scorpion scrambles up your boot and stings your leg. You hobble over to a nearby clinic, where you’re given a dose of anti-venom that brings you fast relief. The charge for the serum is about $100.
Photo by midwinter via Flickr
Now imagine instead that you happen to be hiking in Arizona, and the same type of scorpion stings you. You make it to the emergency room, where the charge for a dose of the same anti-venom costs can cost as much as $12,000, according to a survey by The Arizona Republic. Since patients need three to five doses, the cost can reach about $50,000.
The vast difference in cost is causing some consternation among doctors and hospitals in Arizona, where about 11,000 people are stung by scorpions each year. But the large markup is common for drugs that are used for rare conditions, also called “orphan drugs.”
The drug, called Anascorp, has been available for years in Mexico, but was just given FDA approval in August for the U.S. market. Anascorp is designed to treat the sting of the Bark Scorpion, a particularly poisonous species. The sting is rarely fatal but often extremely painful. Some victims may just require ice packs, but the sting can also cause loss of muscle control and difficulty breathing, particularly for infants and young children. Some patients may require heavy sedation and several days in the intensive care unit; in these severe cases, the anti-venom can offer relief quickly.
“This drug ranks up there in the most satisfying to give,” says Dr. Dan Quan, an emergency physician at Maricopa Medical Center in Phoenix, Ariz., who often sees two stings a day during scorpion season. “In an hour and a half, you can send a patient home that couldn’t breathe, swallow or talk.”
Dr. Quan tries not to think about costs when determining whether a patient requires the anti-venom, but he says that the “cost has really clouded everyone’s use” of the drug. “You don’t want to break the back of a patient that doesn’t make a whole lot of money. It could be an entire year’s salary.”
Milton Ellis, president of Rare Disease Therapeutics, a Tennessee-based company that has the rights to Anascorp in the U.S., told The Arizona Republic that the cost of the drug is based on a number of factors, including the expensive clinical trial the company sponsored to get FDA approval and the expected demand for the serum. The company sells the drug for $3,500 to another firm that provides it to Arizona hospitals for about $3,780, The Republic found.
Hospitals mark up the drug to cover other costs, including the expenses of patients who are uninsured and the heavy discounts it gives to insurers. Rodney Phillips, a health care consultant for hospitals, says the hospital markup for Anascorp is not unusual and each hospital sets its own markup based on its finances.
Dr. Leslie Boyer, director of the Venom Immunochemistry, Pharmacology and Emergency Response (VIPER) Institute and the principal investigator of the Anascorp study published in the New England Journal of Medicine, says she was surprised and “a little saddened” by the high cost of the drug. “It’s priced at a level where we can only use it for the very sickest patients, when I know that people with more moderate symptom would also benefit but might not be able to afford it,” she explains.
If the drug were “priced for the walking miserable,” instead of only those patients with the most severe symptoms, more of the drug would be sold and the price could be lower, she explains. As it is, she worries that rural Arizona hospitals, which tend to be the least wealthy, will not be able to stock the anti-venom and will still have to send critically-ill patients on a long helicopter or ambulance ride instead.
The high prices, she says, are “a public health problem.”
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This example is emblematic what happens when drug companies lack any regulation. While it is true there is “research” involved before a drug is marketed, one has to wonder how the cost of that research is built into the drug. What mathmatical calculation is used to determine final market price? When drug companies can charge at will or can decide to halt production of a drug because there is little profit in its production, it is time for the government to institute regulations to forestall health care being held hostage by the strong lobbying for which these companies are known. The government talks about controlling health care by controlling insurance companies, physician reimbursement and “rationing” and yet we allow the drug companies to run rampant. Where is the logic? Is it because politicians are in the pockets of the likes of Merck, Phizer etc?
Sherrill:
Does it really matter what the drug companies formula is? They did the research, they spent their own money. They didn’t do it to be humanitarian, and wouldn’t do it if the government controlled their ROI. Drug companies are businesses. They sell a product. If you don’t want the product, go without it. We are already living without the wonderfull solutions they have yet to come up with, just as years past for drugs we now have. Just because a product is available, does not give anyone, except the seller, the right to mandate the price of the product.
I’m dying of thirst. I come across the only lemonade stand for hundreds of miles. The little girl wants $25 per glass. Does the government need to step in and say it is too much?
Let the market decide. If you don’t buy the drug, the price will go down until people start buying it. If people don’t buy it, then the product isn’t needed/wanted or is unprofitable to make.
But it appears that the company did not develop the product; it had been available in Mexico for years, according to the news reports. So the question is, other than running the clinical trials for approval and manufacturing, what other costs were incurred?
Results of a quick Internet search:
Study posted yesterday at ClinicalTrials.gov:
http://clinicaltrials.gov/ct2/show/study/NCT00624078?term=Anascorp&rank=1
Sponsor: Instituto Bioclon S.A. de C.V. (Mexico
Collaborator: University of Arizona
R&D at Instituto Bioclon:
http://www.bioclon.com.mx/bioclon/html/investigaciond_en.html
“The Bioclon Institute’s technology plan has been implemented through a financing strategy that combines the Institute’s own investments with resources from governmental institutions through agreements with: The National Science and Technology Board (El Consejo Nacional de Ciencia y Tecnología) (México), The Commerce Secretary (La Secretaría de Economía) (México), and The Food and Drug Administration (United States).”
Comment: The fact that government supported research (United States and Mexico) can result in a product that sells for $100 in Mexico and $12,000 in the United States, says much more about how health care is financed in the United States than it does about government and private roles in research.
All other wealthy nations have controlled health care spending much more effectively, while covering everyone, by using financing systems that require considerable government oversight. We rely on a fragmented system of private plans, public programs (and no programs at all for far too many), that has allowed runaway spending without a commensurate improvement in quality and outcomes.
It really is time to dump the administratively wasteful but expensive private insurers which have been ineffective in slowing cost escalation. We should improve Medicare, and then provide it for everyone. We might not be able to get the price of Anascorp down to $100, but negotiations through our own public Medicare administrators would set pricing based on legitimate costs and fair profits – a price that would undoubtedly be a small fraction of the $12,000 being charged.
That’s correct, Janet. And that’s the case with many “orphan drugs”.
Remember thalidomide – the drug that was used in the 1950′s for morning sickness and then turned out to cause birth defects (thousands in the few years it was on the market)? Well it’s back, being used as a cancer therapy. The company didn’t put a single dime into inventing the compound, but it can now cost as much as $20,000 for a month of therapy. Sure the company had to do clinical trials to get it approved, but they’ve made up that cost, and then some, in the 5 years since it was approved for cancer treatment, and 10+ years since it was back on the US market. And yet it still costs that much.
Even if you argue that no one except the seller should be able to determine the cost of a product, surely there is a point when the cost can’t with a straight face be called anything less than predatory. The Food and Drug Administration has its origins in protecting the general public from snake oil salesmen who were passing off ineffective (ineffective at best – and sometimes downright harmful) tonics to cure whatever ailed you. In my opinion, this isn’t much different. The snake oil salesmen have just gotten more powerful and invested a lot of money in lobbyists. If there has been drug company lobbyists then, it wouldn’t surprise me if we wouldn’t have the protections we have now, and it would be up to the consumer to determine if that drug you’re purchasing really works or not.
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