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Klobuchar Calls on Federal Trade Commission to Investigate Pharmaceutical Company for Price Gouging on Pediatric Drug

Wants FTC to examine anticompetitive behavior after price of infant heart drug rose 18-fold

April 25, 2008

Washington, D.C. – U.S. Senator Amy Klobuchar today called on the Federal Trade Commission (FTC) to investigate potentially anticompetitive behavior by OVATION Pharmaceuticals in connection with pricing of an important pediatric drug.  Klobuchar specifically asked the FTC to examine how the price of a medication for premature babies has shot up 18-fold since the company acquired the rights of the drug, intravenous indomethacin (Indocin I.V.), in 2006. 

“There are serious questions about the suggested justifications for this price increase, since costs related to marketing, physician education, and research would appear to have been stable since OVATION began distributing the drug,” said Klobuchar. “In a time when rising prices for prescription drugs stretch the budgets of middle class families and threaten the stability of our nation’s economy, we must be vigilant in stopping practices that would limit access to vital medicine.”

Indocin I.V. is the most frequently used, cost-effective medicine in treating patent ductus arteriosis (PDA), a condition that prevents holes within the chamber of an infant’s heart from sealing shortly after birth. The ailment is most common in premature babies.

OVATION also owns the rights to intravenous ibuprofen, the only other FDA approved treatment for the condition – raising questions whether the company’s purchase of Indocin I.V. and pricing structure is a move to corner the market for available drugs to treat PDA and will eventually lead to a monopolization of nonsurgical treatments for PDA.

Last month Klobuchar joined with Dr. Alan Goldbloom and Dr. Phillip Kibort, respectively president and chief medical officer of Children’s Hospitals and Clinics of Minnesota, and Dr. Ellen Bendel-Stenzel, a neonatologist with Minnesota Neonatal Physicians, in calling attention to the price increases for the drug.

Klobuchar said, “This company is exploiting a life-saving drug to engage in price-gouging at the expense of vulnerable, premature babies.  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.”

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Please find the text of the letter below:

April 25, 2008

The Honorable William E. Kovacic
Chairman
U.S. Federal Trade Commission
600 Pennsylvania Ave. N.W.
Washington, D.C. 20580

Dear Commissioner:

I am writing to request that the Federal Trade Commission initiate a formal investigation into any potential anticompetitive conduct or consequence arising out of OVATION Pharmaceuticals market actions and dominance in the area of nonsurgical treatments for PDA (a disorder impacting certain infants’ hearts shortly after birth), particularly regarding a dramatic 18-fold increase in price that the company has applied to the drug intravenous indomethacin since acquiring its rights in 2006. 

Intravenous indomethacin, sold by OVATION under the name Indocin I.V., is a drug used to treat patent ductus arteriosis (PDA), a rare cardiac disorder that can affect premature infants.  Since its approval in the 1970s, the drug has become the most frequently used, cost-effective method for treating this disorder, which prevents holes within the chamber of an infant’s heart from sealing shortly after birth.  OVATION Pharmaceuticals drastically raised the price after acquiring the distribution rights from Merck.  There are serious questions about, and the need for your Commission’s expertise, to review the suggested justifications for this price increase, since costs related to marketing, physician education, and research would appear to have been stable since OVATION began distributing the drug. 

I am also concerned that OVATION is the sole source of intravenous ibuprofen, the only other FDA-approved drug on the market for PDA.  Published studies have indicated that the drug may be as effective as indomethacin in treating the disease.  OVATION offers their intravenous ibuprofen product at a price that is comparable to Indocin I.V. 

I am concerned that the company’s purchase of Indocin drug may have resulted in OVATION becoming the sole source for non-surgical drug treatment for PDA, and may lead to a monopolization of nonsurgical treatments for PDA.

Unfortunately, Indocin I.V. is not the only pediatric drug treatment to see a dramatic price increase.  Recently, the cost of H.P. Acthar Gel, a drug used to treat children with epilepsy, rose from $1600 to $23,000 a vial.  This staggering price increase proves that drug manufacturers are putting profits before patients.  Further, an April 2008 New York Times article exposed the pricing activities of pharmacy benefit managers, who appear able to inflate prices for specialty drugs like H.P. Acthar Gel by entering into exclusive distribution arrangements with drug companies.   While Ovation has assured my staff that it has no such exclusive distribution agreements, the FTC may wish to consider the implications of these relationships, in restraining a competitive specialty drugs market.

In a time where rising prices for prescription drugs stretch the budgets of Medicare and Medicaid and threaten the stability of our nation’s economy, we must be vigilant in stopping any effort to prohibit access to vital medicine.  To minimize the exploitation of the market, I urge the FTC to investigate the pricing and potential monopolization of nonsurgical treatments of PDA by OVATION Pharmaceuticals.

Thank you for your attention to my request.  If you require additional information, please contact Ryan Crowley of my office at 202-224-3244.

                    Sincerely,

                    Amy Klobuchar
                    United States Senate