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The Obscure Drug With a Growing Medicare Tab

Posted on Aug 5, 2014

By Charles Ornstein, ProPublica

(Page 2)

Questcor Buys In, Increasing the Drug Price

Until the mid-2000s, Acthar didn’t rate as a concern for Medicare, a program for those 65 and over and for the disabled, because it was prescribed primarily for a rare infant seizure disorder and it wasn’t expensive.

That changed after Questcor bought the drug in 2001. The company has increased the drug’s price sharply since 2007, and it began marketing it for a broad menu of uses. It even funded a charity to help cover patient co-pays, taking the sting out of the drug’s out-of-pocket cost to consumers, Barron’s and The New York Times have reported.

The company has disclosed in filings with the Securities and Exchange Commission that two United States attorney’s offices and the S.E.C. are investigating its promotional practices.

Questcor declined to answer questions for this article, issuing a statement saying that it adheres to federal rules and that its promotional activities are “in line with industry best practices.” The company has suggested that investors shorting its stock may be trying to plant negative stories in the news media.


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Questcor is about to be purchased by Mallinckrodt, another drug company, for about $5.7 billion in cash and stock. At a June conference, Mark Trudeau, Mallinckrodt’s president and chief executive, defended Acthar’s price to analysts, saying “it’s actually pretty, pretty inexpensive” relative to the cost of other treatments for patients who need it.

In 2008, Acthar accounted for only 202 prescriptions in Medicare, costing around $7 million. But the tally more than doubled from 2010 to 2011 — and doubled again from 2011 to 2012.

Acthar is still used rarely relative to more mainstream medications, but each five-dose vial costs about $32,000. (The average Medicare prescription price is higher because some prescriptions are for more than one vial.) Although it long ago lost patent protection, the drug is a complex biologic agent, and the manufacturing process is a trade secret.

Medicare covers drugs that are even more expensive. A new drug called Sovaldi, which cures the liver disease hepatitis C, costs $84,000 for a 12-week course of treatment. Experts estimate that Medicare could spend between $2 billion and $6.5 billion on Sovaldi this year alone.

What differentiates Acthar from other specialty drugs isn’t cost, but rather its age and the dearth of studies proving its efficacy, said Ronny Gal, a senior research analyst at Sanford C. Bernstein.

“They had to prove nothing,” Gal said. “Essentially, it got grandfathered indications from a day that preceded the way we look at drugs now.”

A handful of practitioners — several of whom have ties to Questcor — have helped to drive the increase in Acthar prescriptions in Medicare.

The top 15 prescribers of Acthar accounted for 10 percent of Medicare prescriptions, an unusually high proportion, ProPublica’s analysis showed. The top four were paid by Questcor either as promotional speakers, researchers or both.

The No. 1 prescriber, William Shaffer, a neurologist in Greeley, Colo., gives promotional talks for the company. He wrote 78 prescriptions for Acthar in 2012, costing Medicare more than $4 million.

Shaffer, who has multiple sclerosis himself, said he was introduced to Acthar by a Questcor sales representative whose pitch he initially rejected. Then one day, the representative came in when Shaffer was seeing a multiple sclerosis patient grappling with a relapse that other drugs hadn’t helped. “What the hell, let’s try it,” Shaffer recalled saying, writing his first Acthar prescription.

When the patient came back six weeks later and said he felt better than he had in 20 years, Shaffer was a convert. “I’ve started using it more and more and I’ve had amazing results with it, without the side effects of steroids,” he said. “I had one woman ask me if Jesus made it. Another guy calls it liquid gold.”

Shaffer has used the drug himself, too, and said it worked for him.

Other specialists who treat multiple sclerosis patients are more skeptical about Acthar’s value. Dr. Claire Riley, director of the Multiple Sclerosis Clinical Care & Research Center at Columbia University, said she uses Acthar infrequently and wants evidence that it works differently for multiple sclerosis relapses than a widely used, far less expensive medication called methylprednisolone or Solu-Medrol.

“I am absolutely appalled by how expensive it is, but I do think we need to have an open mind about whether it can help people,” she said. “And if it can’t, then we really shouldn’t use it much at all.”

Kidney specialists are similarly divided on Acthar’s cost-benefit equation.

Jerry Meng, a nephrologist in Meridian, Idaho, and one of Medicare’s top prescribers of the drug, said he began using it because the standard therapy for a rare kidney condition known as idiopathic nephrotic syndrome can be harmful for those with weak immune systems.

“From a side effect profile, it’s the lesser of all evils,” said Meng, who was trained by Questcor to give promotional talks about Acthar but has not been paid to deliver any.

Meng said he hasn’t hesitated to prescribe the drug because patients receive assistance on co-pays from the drugmaker, an outside charity or some other entity. “I haven’t had a patient tell me that they’ve had to stop the medication because they couldn’t afford it,” he said.

Other kidney doctors say Acthar is essentially a “hail mary” pass when all else fails.

“The major problem with this treatment as I see it is the cost of the vial, and quite honestly, let’s face it, let’s be candid, this got approved at a time when the approval process was nowhere near as rigorous as it is today, ” said Patrick Nachman, a nephrologist at the University of North Carolina.

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