Joint House/Senate Inquiry Into Pricing of URL Pharma?s Colcrys, Avanir?s Nuedexta Begins

WASHINGTON, May 24, 2011 - Senator Herb Kohl, Chariman of the Special Committee on Aging, and three senior Members of Congress have sent the following letters of inquiry to URL Pharma and Avanir Pharmaceuticals to examine pricing of two popular prescription drugs.

Full text of both letters are copied below.

May 23, 2011

Keith Katkin
President and CEO
Avanir Pharmaceuticals
101 Enterprise, Suite 300
Aliso Viejo, CA 92656

Dear Mr. Katkin:

As Members of Congress with leadership positions on Committees of jurisdiction over health care issues, we take very seriously our responsibility to protect the interests of our nation’s health consumers and taxpayers, and the public and private health care systems that they pay and rely on for affordable drugs.

As such, we continue to be concerned about high drug prices generally, and specifically with reports that your company is charging high prices for Nuedexta, a medication used to treat involuntary emotional outbursts known as pseudobulbar affect. Neudexta is a combination of quinidine and dextromethorphane, generic drugs that have been available for decades and cost a fraction of Neudexta. In October 2010, Avanir obtained FDA approval for this combination and received a three year term of exclusive marketing. Although we recognize that we all benefit when FDA approves a new, safe and effective formulation, it is not clear that the significantly higher prices charged for this drug are justified given that it is merely a combination of long-used and inexpensive generic medications.

Doctors and patients were understandably upset at the news that this drug, once available for about $20, was now going to be $600. In order to address these concerns, we request that Avanir Pharmaceuticals submit written documentation in response to the following questions and requests for information. The Attachment of this letter will specify in full detail what materials are to be included in response to this request.

1. What was the total cost of the clinical trials that led to the approval of Nuedexta? Please detail all expenditures. Has the company committed to post-market studies, and if so, what is the cost of those studies?

2. Please provide copies of all correspondence with FDA related to Nuedexta, including emails and formal letters.

3. How was the initial list price of Nuedexta established? Please provide all internal documentation relating to the determination of the price, including but not limited to emails, correspondence with shareholders, and internal memos.

4. How much has Avanir Pharmaceuticals spent on marketing Nuedexta since its approval? How much does Avanir Pharmaceuticals plan to spend on marketing this drug in the next year? What percentage of the marketing budget will be directed to Nuedexta over the next year?

5. Some analysts project revenue from Nuedexta to be approximately $4,365/patient after stocking fees and discounts are subtracted from Nuedexta’s stated annual wholesale cost of $5,868. Is this accurate? What is the total cost, and estimated unit costs, to manufacture Nuedexta, and the components of such costs? What are the expected revenues and profits from sales of Nuedexta? What are the anticipated revenues and profits from sales of Nuedexta to Medicare, Medicaid, and other federal or state health care programs?

6. Is Nuedexta available outside the United States? If so, what is the list price and profit margin in all other countries?

7. How many people have taken advantage of “co-pay cards” made available by Avanir to reduce the out-of-pocket cost of Nuedexta?

8. How much is Avanir Pharmaceuticals projecting in Nuedexta sales and profits for fiscal year 2011?

Please furnish this documentation by electronic mail, fax, or hand delivery, no later than close of business on June 10, 2011. Any questions concerning this request may be directed to Jack Mitchell or Sarah Molinoff of the Senate Special Committee on Aging staff at (202) 224-5364. Thank you.

Sincerely,

Senator Herb Kohl Congressman Henry Waxman

Congressman Frank Pallone Congresswoman Diana DeGette

_______________________________________

 

May 23, 2011

Richard H. Roberts, MD, PhD
President, CEO and Chairman
URL Pharma, Inc.
1100 Orthodox Street
Philadelphia, PA 19124


Dear Dr. Roberts:

As Members of Congress with leadership positions on Committees of jurisdiction over health care issues, we take very seriously our responsibility to protect the interests of our nation’s health care consumers and the health care system on which they rely.

As such, we have recently become increasingly concerned with the price of drugs in this country, and read with great interest the reports that your company is charging unreasonable prices for Colcrys, a medication used to treat gout flares and Familial Mediterranean Fever (FMF). Although colchicine, the active ingredient in Colcrys, has been widely available for years, it had never received FDA approval. In July 2009, URL Pharma obtained FDA approval for Colcrys and as a result was awarded three years of exclusive marketing for the treatment of gout flares. URL Pharma also received a term of seven years of Orphan Drug exclusivity for the use of Colcrys in the treatment of Familial Mediterranean Fever (FMF). Upon receiving this marketing exclusivity, it was reported that URL Pharma began charging prices that were fifty times higher than the price for colchicine—the price rose from $0.09 per pill to $4.85 per pill.

Colchicine plays an important role in preventing pain for elderly American gout patients. Charging prices for newly-patented drugs fifty times higher than for the price of the same drugs that have been used for decades greatly increases costs for our nation’s health care system.

Doctors and patients were understandably upset at the news that a vital drug, once available for pennies per pill, was now going to be almost $5.00 per pill. High prices lead to tough choices for patients. Further, the higher price of this treatment will be borne by private health plans and the federal government, and will contribute to the continued overall growth in health spending. We were pleased to hear that the company is establishing an extensive patient access program. Still, questions remain over how the original price was calculated.

Therefore, we request that URL Pharma submit written documentation in response to the following questions and requests for information. The Attachment of this letter will specify in full detail what materials are to be included in response to this request.

1. What was the total cost of the clinical trials that led to the approval of Colcrys? Please detail all expenditures. What is the estimated cost of the post-market studies to which the company has committed?

2. Please provide copies of all correspondence with FDA related to Colcrys, including emails and formal letters.

3. How was the initial list price of Colcrys established? Please provide all internal documentation relating to the determination of the price, including but not limited to emails, correspondence with shareholders, and internal memos.

4. How much has URL Pharma spent on marketing Colcrys since its approval? How much does URL Pharma plan to spend on marketing this drug in the next year? What percentage of the marketing budget will be directed to Colcrys over the next year?

5. What is the total cost, and estimated unit costs, to manufacture Colcrys, and the components of such costs? What are the expected revenues and profits from sales of Colcrys? What are the anticipated revenues and profits from sales of Colcrys to Medicare, Medicaid, and other federal or state health care programs?

6. Is Colcrys available outside the United States? If so, what is the list price and profit margin in all other countries?

7. How many people have joined your newly-established patient access program for Colcrys? What percentage of those enrollees are gout patients, and what percentage are patients with Familial Mediterranean Fever?

8. How much is URL Pharma projecting in sales for fiscal year 2011?

Please furnish this documentation by electronic mail, fax, or hand delivery, no later than close of business on June 10, 2011. Any questions concerning this request may be directed to Jack Mitchell or Sarah Molinoff of the Senate Special Committee on Aging staff at (202) 224-5364. Thank you.


Sincerely,

Senator Herb Kohl Congressman Henry Waxman

Congressman Frank Pallone Congresswoman Diana DeGette

Posted: May 2011


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