FDA seizes control of three J&J factories
In response to the long list of Johnson & Johnson recalls this past year, which includes Tylenol, the Food and Drug Administration (FDA) took control of three J&J production plants.
The J&J plants, located in Las Piedras, Puerto Rico, Lancaster, Pa., and Fort Washington, Pa., were connected to the recall of multiple drugs in 2010 and to the Children’s Tylenol three months ago, according to a McNeil Consumer Healthcare press release.
The FDA took control of the plants through the “consent decree” of McNeil Consumer Healthcare in order to bring the plants up to manufacturing standards.
The plants in Las Piedras and Lancaster will continue to operate, while the Fort Washington plant will be closed, McNeil Consumer Healthcare spokeswoman Bonnie Jacobs said to CNN Money.
“There is the potential for some impact [in production] initially as we implement the additional steps,” Jacobs told CNN Money.
Jacobs declined to comment on the subject.
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The two functioning plants will work with an independent expert who will present a report to the FDA about the manufacturing standards of the plants, after which the FDA will decide on how to move forward, according to a McNeil Consumer Healthcare press release.
J&J is trying to address all concerns of its consumers, said J&J Vice President of Corporate Media Relations Bill Price.
“We’re moving ahead with organizational changes as well as the manufacturing changes at the McNeil plants,” he said.
Price added that J&J CEO William Weldon,addressed concerns over the company’s management team which some believe are responsible for the recalls.
“Clearly the McNeil Healthcare recalls have been a major issue and working with the FDA we can get products back on the shelves,” he said.
Michael Santoro, professor of management and global business at the Rutgers Business School, believes the blame on the vast amount of recalls lies in how the problem was handled at the corporate level.
“It took Johnson & Johnson a long time to address the problems with the recalls. That is why the FDA is involved,” he said. “It’s clearly a management problem especially with the CEO and J&J’s Board of Directors.”
Santoro believes these past recalls have been handled poorly compared to how they were handled in the past. The Tylenol recall in the 1980s was handled cleaner by then CEO James Burke, he said.
“The way that situation was handled is why J&J continues to have good reputation,” he said.
He added that J&J also has more of a reason to care about their public image than most other pharmaceutical companies because of the line of products they sell.
“Johnson & Johnson is distinctively diversified more than other companies,” Santoro said. “They sell baby shampoo and baby medication, which is why if a recall is handled poorly it could hurt the public’s opinion of the company.”
Other problems, such as the loss of business due to recalls, have lasting effects, said Maaz Enver, an Ernest Mario School of Pharmacy graduate student.
“You can’t forget that there is nearly always a generic drug with the same active ingredient as the name brands,” he said. “People have this idea of a name brand drug to be better.”
But the danger for drug companies is that generic versions of drugs are cheaper than the name brands, Enver said.
“If your product is off the shelf, it’s easier for people to try the generic version and never buy the name brand again because the generic worked for them just as well,” he said.
Another incentive for J&J to allow a consent decree at the McNeil Consumer Healthcare plants are the reprimands they could have faced otherwise, Santoro said.
“This is a terrible blow to J&J and it shows that by allowing to be supervised by a third party, there could have been major action and penalties forthcoming from the FDA,” he said.
Another voice: Old drug, new price
The federal Food and Drug Administration’s announcement that it had approved a drug that helps prevent premature births sounded like cause for celebration. The March of Dimes applauded. So did Wall Street: The drug’s manufacturer, St. Louis-based KV Pharmaceutical, saw its stock jump 30 per cent. That was before women and their doctors learned that an injection that used to cost $10 to $20 now would cost $1,500.
That’s right: A drug already in wide use suddenly costs 100 times as much because it carries the FDA stamp of approval. KV is gaming the regulatory system to gouge patients, insurance companies and Medicaid for potentially billions of dollars per year.
FDA approval gives KV exclusive rights to market the drug for seven years — at whatever price it can get. That arrangement is meant to encourage pharmaceutical companies to invest in the lengthy, expensive and risky business of bringing a new drug to market.
But in this case, most of that work had already been done — and paid for largely by taxpayers. The drug, approved in 1956 to treat problems with adrenal glands and ovaries, had long been prescribed off-label to guard against premature birth. When its manufacturer stopped making it in 2000, doctors turned to compounding pharmacists, who essentially make it to order.
A 2003 study financed by the National Institutes of Health showed that off-label use had in fact reduced preterm births. Since then, the American Congress of Obstetricians and Gynecologists has recommended it for high-risk women.
But getting it from compounders involved more than a simple trip to the drugstore. Doctors were happy to hear that KV was seeking FDA approval because it meant the drug would be easier to get and reliably uniform. But they were shocked to learn that a single dose would now cost $1,500. And since the typical patient requires 20 doses, the cost of treatment was suddenly $30,000.
“We had been so delighted and cheering for them, but when we heard the price, it felt like Satan had just purchased your favorite sports team,” Jay Iams, a doctor at Ohio State University Medical Center, told The Columbus Dispatch.
KV fired off cease-and-desist letters to compounding pharmacists while insisting that the drug, which it will market as Makena, will still be affordable thanks to its patient assistance program. That’s a nice way of saying the cost increase will be passed on to the rest of us, through higher insurance premiums or government health care programs.
The company says the price is justified because the drug prevents a far costlier problem. Ongoing care for babies born prematurely can cost hundreds of thousands of dollars, so $30,000 is a bargain, right? Not if you used to get the same result for $300.
Doctors, insurers and patient groups are complaining loudly. Some compounding pharmacists say they’ll keep mixing the drug, getting around the FDA rules by adding ingredients, such as Vitamin D, to their product. There’s a “Shame on you, KV Pharmaceutical” page on Facebook.
In a joint letter, three physicians groups asked KV to reconsider its price. Up to 140,000 women are candidates for treatment each year, says the letter from the American Academy of Pediatrics, the American College of Obstetricians and Gynecologists and the Society for Maternal and Fetal Medicine. That translates into $4.2 billion in health-care costs.
“It is unclear whether state Medicaid programs, which cover the majority of these high-risk pregnancies, will be willing or able to pay for the cost of treatment,” the letter says.
A better question is whether they should. The answer is no.
U.S. Sen. Sherrod Brown, D-Ohio, sent a letter, too — and followed it up with the threat of congressional action. The FDA could be empowered to shorten the monopoly period, he suggested. Or Washington could involve itself in the process of setting drug prices — a move we oppose. Or, he pointed out, KV could do the right thing and set a reasonable price.
There are a lot of reasons health-care costs in this country are out of control. This is a particularly egregious example. If Congress fires the big guns, KV will have no one to blame but itself.
The company is entitled to a fair profit. But it shouldn’t be able to write itself a blank check with the public’s money and the blessing of the FDA.
Backlash builds over KV’s ‘outlandish’ price for prenatal drug
In a securities filing on Tuesday, KV Pharmacuetical Co. acknowledged that it had received a torrent of criticism over the high price of its newly approved prenatal drug, Makena, and that it could face challenges in getting the government and insurance companies to pay.
The disclosure amounts to the Bridgeton-based drugmaker’s first public admission that public pressure and politics threaten to derail its plan to charge $1,500 a shot for an FDA-approved version of a drug that now costs about $15.
The company’s growing list of critics includes some heavyweights, among them two U.S. senators — who have called for a Federal Trade Commission investigation into the drug company’s pricing — several members of Congress, the March of Dimes Foundation, the New England Journal of Medicine, the American College of Obstetricians and Gynecologists, and the American Academy of Pediatrics.
An official at the March of Dimes — which effusively praised the Food and Drug Administration’s decision last month to approve Makena — called KV’s price “outlandish” on Tuesday.
“No one dreamt it would be $1,500 a dose,” said Dr. Alan Fleischman, the organization’s medical director. “We’re outraged.”
The drugmaker’s list price for Makena — a drug it did not invent, but will sell under an exclusive marketing agreement — has shocked medical professionals. In recent years, an identical drug, 17P, has been available at low cost through compounding pharmacies and prescribed by physicians to help prevent preterm births.
KV’s future success is “largely dependent” on its negotiations with third-party payers including health insurance companies, pharmacy benefit managers and Medicaid management companies as well as its ability to respond to media and political pressure, the company said in a Securities and Exchange Commission filing.
KV executives are banking on a successful launch of Makena to help steer the company back to profitability after two tough years that saw drug recalls, mass layoffs and guilty pleas to criminal charges by its wholly owned subsdiary, Ethex Corp., for shipping oversized morphine tablets.
The March of Dimes supported the FDA’s approval of Makena because it will help make the prenatal drug available at consistent, safe dosages — but now is actively working against the company’s pricing.
“We are working very diligently, consistently and aggressively to help the company understand that they need to change their list price,” Fleischman said.
He and other health leaders have scheduled a meeting next week in Washington with KV Pharmaceutical representatives.
Fleischman acknowledged that KV Pharmaceutical, which has produced other women’s drugs in the past, was a corporate sponsor of the March of Dimes. Since 2002, he said, the drugmaker has contributed about $1 million to the March of Dimes and its state chapters. But such donations do not influence the organization’s advocacy for or against any drug, he said.
KV officials did not respond to requests for comment. But it addressed the criticism on its website: “We appreciate the concerns expressed by multiple audiences, and are committed to working collaboratively with all interested parties to make this vital medication even more available and affordable to women across the country.”
In a letter March 14 to KV Pharmaceutical president Greg Divis, Fleischman and March of Dimes president Jennifer Howse voiced concerns about Makena’s pricing, saying: “We remain deeply concerned that the cost of this lifesaving treatment could be put out of reach to thousands of women at risk for preterm delivery. Therefore, we respectfully request that you reconsider the market price of Makena and commit your company to the promise that every eligible woman who is offered the drug will receive it without regard to ability to pay.”
Similarly, a joint letter to KV Pharmaceutical by the presidents of the American Academy of Pediatrics, the American College of Obstetricians and Gynecologists, and the Society of Maternal-Fetal Medicine described KV’s pricing of Makena as “extremely expensive” and asked the drugmaker to re-evaluate its price.
“Frankly, in our current climate of controlling health care costs in the United States, an added cost of $30,000 (per course of therapy) for as many as 140,000 pregnancies per year, or 4.2 billion dollars, is a staggering figure,” the March 11 letter said.
The joint letter also said that KV’s financial assistance program for patients “is not sufficient and does not extend to certain groups of women.” The company has stated that it would expand a program to help patients afford the drug, but hasn’t disclosed the amount of the planned subsidy.
The three organizations voiced concern that the Medicaid program for the poor would not be able to afford Makena injections for its patients.
“Medicaid programs are crumbling financially,” their letter said. “It is unclear whether state Medicaid programs, which cover the majority of these high-risk pregnancies, will be willing to or able to pay for the cost of treatment.”
The federal Centers for Medicare and Medicaid Services has declined through spokeswoman Mary Kahn to discuss Makena’s pricing.
Meanwhile, the Journal of New England Medicine published an article on March 16 that asked, “Can there be any justification for driving up the cost of an available medication from about $300 to $30,000 — about a 100-fold increase — with minimal added clinical benefit?”
The author, Dr. Joanne Armonstrong, concluded that Makena’s pricing “will force patients, physicians, and those responsible for financing care to make hard choices. … This tremendous cost increase and the likely decrease in access to an effective medicine are sizable unintended consequences of the FDA approval. … They demand reconsideration and corrective action.”
Two senators — Amy Klobuchar, D-Minn., and Sherrod Brown, D-Ohio, have asked the Federal Trade Commission to open an investigation into the drug company’s “potential anticompetitive conduct.”
“Price gouging is never acceptable, particularly not when it undermines public health and fleeces taxpayers,” Brown said in a written statement.
At a recent Senate hearing, Brown questioned FDA commissioner Dr. Margaret Hamburg about Makena’s price. “It looks a lot like blackmail to me,” the senator said.
Hamburg responded that she “was very surprised” to learn of the drug’s price increase but noted that current law did not allow the agency to get involved in drug pricing.
Rep. Allyson Schwartz, D-Pa., said in an interview Tuesday that she was working with several members of Congress in an effort to persuade KV Pharmaceutical to lower its price.
“My interest is making sure that it’s accessible — that insurance companies, families and state governments can pay the price,” she said. “Right now, there are families and pregnant women who want access to this. It needs to be affordable.”