VISA and colchicine: maybe the banks and Pharma really ARE in it for the money!

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This is a guest posting by R. Stephen Griffith, MD, Chair of the Department of Family and Community Medicine at the University of Missouri-Kansas City.

A recent article explains in some detail one of the devious ways the banking industry, and the recently spun-off companies of VISA and MasterCard, make the money it takes to support the executive salaries and bonuses. (“How Visa, Using Card Fees, Dominates a Market”, Andrew Martin, NY Times, Jan 4, 2010)

Each time one of us swipes a debit card at a retail outlet, the retail outlet pays a banking institution a fee. That seems like an honest way to make a living, but the plot thickens. If we punch in the secret code associated with the card, the bank gets a few cents. If instead of using the code we sign the receipt the bank gets a bigger fee. Apparently there is no more expense associated with the latter method, but the fees negotiated by VISA et. al with the retailers provides for the higher fees. The individual banks then receive the fees, which encourages them to “push” more of the VISA’s (or which ever company is offering them the best deal). The credit card companies expand their reach, the banks make more money, and everyone involved in the deal is happy. In fact, the higher the cost per transaction the credit card company can negotiate makes more money for the bank, and so a bidding war develops in which the higher the fee, the more the banks gravitate to that company. The fee can be up to 75 cents per transactions—many multiples of the fee for a swipe and use of the code. This is transparent to the consumer, who willingly signs or puts in his/her code as requested by the retail outlet. Of course, the unwitting consumer eventually pays the extra expense (passed on from the retailer as part of the cost of doing business). Just another way for the banks to make a living.

There are those of us who would suggest that this is “gouging” the customer and there should be some repercussion to the perpetrators. I was among the inflamed and insulted when I read the article. But then this horrible thought crossed my mind: as a well meaning and cost conscious family physician, how many times have I committed the same offense?

The relationship between physicians and Pharma has been a topic of discussion since I was in medical school, although until relatively recently I have seen very little response from the medical community. The representatives of Pharma host our meetings and visit our offices, give us food, pens, pads, tickets to games, sometimes even trips to nice places. Associated with the gifts is also free “education” about why the product about which they are educating the physician is better than generic or “me, too” drugs made by another company. The docs are given samples which they can provide their patients to try the new drug out and “help save money for the patients.” Of course, if the medication works, a prescription for the drug will be given. The extra expense (sometimes an extraordinary amount of extra expense!) of the newer drug is borne by the patient or the patient’s insurance after a co-pay (which results in higher premiums the patient pays.)

So the medical community’s “scam” is we get lots of benefits and the expense of those benefits is borne by someone else—our patients.

To be fair, not all physicians accept gifts from Pharma. And in the last few years or so, the value of the gifts has been more restrained. And a growing number of physicians are refusing to even meet with representatives from Pharma, refusing the samples and the false economy of providing them, refusing the gifts and “education”. Creating distance from Pharma is a good thing—they are as fun to hate as the banking industry. And if you doubt the amount of greed in Pharma, please read this: “An Old Gout Drug Gets New Life and a New Price, Riling Patients”, Jonathan D. Rockoff, Wall St. Journal (and below, as it may not be completely available on the WSJ site.)

The article is about colchicine, a drug for the treatment of acute gout (and a few other things) that has been around for more than a century—long before the advent of the FDA. The FDA has encouraged pharmaceutical companies to study some of the older drugs for true effectiveness, and the company can then apply for a three year patent on the medication. URL Pharma, Inc. did the clinical trials on less than 1,000 patients, and proved that a drug everyone already knew worked, worked. Amazing! They received a three year patent, and now a pill that was $4 per month long before the $4 per month plans existed, is $5 per pill! Since it is usually given twice a day, the drug will now cost patients $10 per day when it formerly cost about a quarter.

Stories like this and the one about banks makes it easy to feel distaste for the banking industry and Pharma. Where is the justice in banking executives making millions and then being bailed out by taxpayers? Where is the justice of Pharma making huge (I would argue inappropriately huge) profits from the ills of our patients? I just wish the profession of medicine (and I) hadn’t played a part.


(From the Wall St. Journal),
An Old Gout Drug Gets New Life and a New Price, Riling Patients
By JONATHAN D. ROCKOFF
A centuries-old drug used to treat excruciating gout pain had cost just pennies a tablet—until last year. Now, the retail price has skyrocketed to more than $5 and some of the manufacturers have ceased production amid a battle over marketing rights.
The tale of how this common gout drug, colchicine, became the costlier branded drug Colcrys offers a window into the Byzantine world of drug pricing. The price rise is a consequence of a Food and Drug Administration effort to improve the safety of long-used but unapproved drugs, with a trade-off often made between drug affordability and safety.
In July 2009, a Philadelphia drug maker received FDA approval to exclusively market colchicine for gout attacks for three years. The company, URL Pharma Inc., was taking advantage of a push to bring medicines predating the FDA, like colchicine, under the agency's regulatory umbrella. The FDA offers exclusive marketing rights if a drug maker conducts clinical trials.
URL Pharma had commissioned studies that confirmed its colchicine product's safety and efficacy, while demonstrating it should be taken at a lower dose than typical and not used with certain other medicines. The company is marketing its drug as Colcrys—and the retail cost averages $5 per pill, according to DestinationRx, a health-care data provider.
URL is also suing longtime manufacturers of unapproved colchicine, saying the companies are now illegally marketing their products. Some of the companies are fighting the lawsuits. Some themselves have raised prices—including one increase of just under a dollar per tablet to $1.17, according to DestinationRx. The higher price for Colcrys was first reported by Kaiser Health News.
There were 3.5 million prescriptions and $6.4 million in sales in 2008, according to the most recent data available from IMS Health, a drug-data firm.
"It's not a new product. It's been out for hundreds of years. To all of a sudden have to pay $125 or $150 a month, after it only cost $5 or $10 a month, is a real problem," said Stanley Cohen, a Dallas doctor who is the president of the American College of Rheumatology. He met with the FDA to express concern about the price increase.
The chief executive of URL Pharma, Richard Roberts, said that it priced Colcrys in line with other approved, branded drugs used to treat gout pain. To help patients afford Colcrys, Dr. Roberts said, the company is offering to pay a portion of co-pays, and it is providing a three-months' supply to low-income patients for $15.
Eileen Wood, vice president of pharmacy and health-quality programs at CDPHP, an insurer in New York state, said insurers will have to absorb much of the added expense. URL's contribution was "not any new therapeutic tool, not new science; they just added cost," she said.
Nancy Sparks Morrison, a retired schoolteacher who suffers from familial Mediterranean fever, an inflammatory disorder that's treated with colchicine, said she is buying colchicine from Canada because she can't afford Colcrys. Ms. Morrison said she plans to get help from URL Pharma to pay for Colcrys because the company has just expanded its assistance program. "I'm retired on Social Security, and I have a small pension," said Ms. Morrison, 71 years old, who lives outside Charleston, W.Va.
The price increase is an unintended consequence of the FDA's nearly four-year-old initiative to regulate unapproved drugs. These medicines were sold before the FDA was established, and therefore weren't required to undergo approval. After decades of use, the medicines are considered safe by doctors, but haven't been proven to satisfy the agency's standards. Colchicine's use has been traced back to the sixth century, according to the FDA.
Seventy drugs that were grandfathered have been approved since the FDA began its initiative, most notably pain reliever Vicodin, from Amneal Pharmaceuticals LLC, the FDA said.
The FDA had hoped a significant price increase wouldn't follow Colcrys's approval and regrets the increase, said Janet Woodcock, director of the agency's Center for Drug Evaluation and Research. Dr. Woodcock encouraged more competition, saying another company could seek approval for colchicine's regular use in gout, rather than the acute use that URL Pharma received approval for.
There had been no standard for dosage before FDA approval. Colchicine's excessive use can cause side-effects, such as severe diarrhea that is potentially fatal. The FDA said it receives reports of five deaths a year, on average, involving patients who took colchicine tablets.
"We took bad guidance, even guesswork, and made this evidence-based medicine," Dr. Roberts said.
Closely held URL Pharma, which is owned by a hedge fund, a private investor and employees, is a longtime seller of generic drugs, including colchicine. When the FDA launched its push, the company began searching for those with safety risks whose patients could benefit from clinical testing, Dr. Roberts said.
URL Pharma said its 17 clinical trials of colchicine involved a total of 988 patients. The trials showed that gout patients need take two tablets after an attack and one more an hour later, the FDA said. Trials also demonstrated side-effects from use with certain other medicines, including some antibiotics and antihypertensive medicines. Those are now flagged on the label of Colcrys.
After obtaining FDA approval of Colcrys, URL Pharma went to federal court to sue manufacturers of colchicine, including Excellium Pharmaceutical Inc., Vision Pharma LLC, Watson Pharmaceuticals Inc. and West-Ward Pharmaceutical Corp., saying they have been illegally marketing their colchicine products since Colcrys's approval. A fifth company, Qualitest Pharmaceuticals, settled and stopped production. The four companies are fighting the lawsuits.
"You have this product out for at least a hundred years and all of a sudden it's no good?" said Lou Dretchen, who oversees sales and marketing at Excellium of Fairfield, N.J. Mr. Dretchen said the small, closely held generic drug maker stopped colchicine production after URL Pharma sued. The other companies declined to comment.
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