One of the reasons cited for our expensive health care system is that drugs cost more in America (part of our capitalistic system). In June of 2003, a study was published in the New England Journal of Medicine about the use of a form of progesterone to delay the birth of certain preterm infants. This particular hormone is found in the human body, but the formulation studied was a shot that was given weekly. The study itself was paid for by the federal government through the National Institute of Child Health.So you, the taxpayer, paid for this discovery.
As with any study, this one had some limitations. Over 50% of the people who received the placebo had a premature infant as opposed to only 30% of those who received the active treatment. In other words, although the treatment seemed to work, it was nowhere near 100% effective. As most of these premature infants eventually end up on Medicaid you had a vested interest…money well spent.
Many physicians were convinced that the drug worked well enough, was safe (being a hormone found in the body), and could be found for a reasonable price (between $10 and $20 per shot) at compounding pharmacies. At most someone had to pay $200 to reduce the risk of a preterm birth from 50% to 33%—a reasonable price for either the patient or you the taxpayer to pay to reduce (but not eliminate) a certain portion of preterm births.
In 2006, Adeza Pharmaceutical filed a “new drug” application for this formulation of progesterone. They argued that while God made progesterone, they could make it in a more controlled environment. Probably true. You the taxpayer, however, should have cut a deal up front.
Even if you would have cut a deal, I suspect you would have lost in the end anyway but it’s complicated:
The development of Gestiva [now known as Makena], was originally begun by Adeza Biomedical Corporation, which was acquired by Cytyc Corporation on April 2, 2007. On October 22, 2007, Hologic completed its business combination transaction with Cytyc and as a result acquired all rights to Gestiva.
The purchase price to be paid to Hologic as a result of the transaction is $82 million in cash, $7.5 million of which is payable at the closing of the transaction and the balance of which is payable upon final approval by the FDA of the Gestiva NDA and the production of a quantity of Gestiva suitable to enable the commercial launch of the product. The closing of the transaction is expected to occur within 30 days after the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976).
Jack Cumming, CEO of Hologic, said, “We are pleased to complete this transaction to sell the Gestiva product line to KV Pharmaceutical. We believe women worldwide will better realize the benefits of Gestiva coming from a dedicated pharmaceutical firm. This will also allow Hologic to remain focused in our primary fields of medical devices and cancer diagnostics for women.”
So, to make a long story short, the drug was flipped. The price of preventing a preterm pregnancy in selected woman is going up from about $200 to about $30,000. So you not only get to pay for the development of the drug and the studies to determine what the drug does, you get to pay for the mergers and acquisitions as well. Again, and again, and again.
Allen Perkins is Professor and Chair, Department of Family Medicine, University of South Alabama. He blogs at Training Family Doctors.
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