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Klobuchar Challenges Drug Company for Price-Gouging on Drug for Premature Babies

U.S. cost of infant heart drug rose 18-fold, while price remains low in Canada

March 8, 2008

Minneapolis, MN – Today U.S. Senator Amy Klobuchar challenged a pharmaceutical company to explain why the price of an important medication for premature babies has shot up 18-fold since the company acquired the rights to the drug in 2006.

At a news conference at Minneapolis Children’s Hospital, Klobuchar was joined by Dr. Alan Goldbloom and Dr. Phillip Kibort, respectively president and chief medical officer of Children’s Hospitals and Clinics of Minnesota, and by Dr. Ellen Bendel-Stenzel, a neonatologist with Minnesota Neonatal Physicians.

Also participating was the Jesse and Lisa Benson family of Minneapolis.  Lisa gave birth prematurely to twin girls, and one of them required the medication.  The twins are now 15 months olds.

“This company is exploiting a life-saving drug to engage in price-gouging at the expense of vulnerable, premature babies,” said Klobuchar.  “Even though it’s an American company, the price they charge in the U.S. is actually 44 times higher than what they sell it for in Canada.  Nothing can justify that kind of huge price disparity.”

Klobuchar added:  “It is crucial that medicines used to treat rare diseases remain affordable to those who need them the most.”

The pricing issue came to Klobuchar’s attention recently when pediatric hospitals in Minnesota alerted her to it. 

Two years ago, Ovation Pharmaceuticals Inc. bought from Merck the rights to intravenous indomethacin, which has been on the market for 30 years and is sold under the name Indocin I.V.  Ovation then increased the price of the drug more than 18-fold – from $100 to $1,875 for three one-milligram units of the drug.

The medication is used to treat “patent ductus arteriosus,” or PDA, a condition that prevents holes from healing in the hearts of premature infants.

Ovation is also the sole source in the U.S. for the only other drug approved by the Food and Drug Administration for this infant heart condition.  The price the company charges for that medicine is nearly identical to what it charges for Indocin I.V.

In a letter to the president of Ovation, headquartered in suburban Chicago, Klobuchar wrote:

“There seems to be no justification for this price increase to intravenous indomethacin, since costs related to marketing, physician education and research have been stable since Ovation began distributing the drug.  …  Since your company is the only drugmaker with the rights to sell these drugs, it is crucial that these products, and other drugs used to treat rare diseases, remain affordable to those who need them the most.’’

In an article last year in the medical journal Pediatrics, Dr. Alan H. Jobe of Cincinnati Children’s Hospital wrote that “the pricing of these two useful agents that are standard of care is quite extraordinary.  Words such as ‘unconscionable,’ ‘unethical’ and ‘socially irresponsible’ come to mind.”

In her letter to Ovation, Klobuchar pointed out that the company has also raised prices sharply for other important medications, including Mustargen, a cancer drug, after acquiring distribution rights from other firms.

Klobuchar is demanding that Ovation provide details on its pricing of these medications.  She said follow-up actions could include an investigation of the company by the Federal Trade Commission for anti-competitive practices; action by the U.S. Departments of Justice and Health and Human Services either to negotiate a change in the company’s pricing or to investigate the propriety of the company’s drug bills to the federal government; and fast-track approval by the FDA of a lower-cost generic equivalent.

“We have a serious problem in America with runaway health care costs,” Klobuchar said.  “It’s no wonder when we have a pharmaceutical company like Ovation that jacks up its prices to astronomical levels because they have no competition and they can exploit a captive market that is extremely vulnerable.  It has to stop.”

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