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A Spoonful Of Kids’ Medicine Makes The Profits Go Up

Green medicine pouring into spoon

When prescribing medications, caring for children poses a particular challenge. They’re not just little adults. Their still-developing brains and bodies metabolize drugs differently, and what works for grown-ups can yield radically different — and sometimes dangerous — results in kids.

And now, even as high drug prices make headlines, the challenge of getting sick children the kind of medication they can take and tolerate — often by creating liquid formulations of drugs that are already on the market — is seen by some companies as a lucrative opportunity.

It is part of a pattern in which patent laws and government incentives — meant to encourage development of less-profitable drugs — enable some companies to get a leg up in the market and set high prices. The Best Pharmaceuticals for Children Act, for instance, allows for delaying the approval of competing generics if companies test their drugs in children. And the Pediatric Research Equity Act requires more companies to have pediatric-focused drugs clinically assessed in kids. These laws have spurred companies to do more in terms of testing and developing pediatric medicines. The companies can market the drugs without facing competition for a longer period of time. And as a result, the treatments cost exponentially more.

Critics say the higher price tags are out of line with the cost of developing kid-friendly remedies.

“The only R&D, if you will, that went into making these liquids is finding a solution to dissolve them in, and making sure it was stable and well-absorbed,” said Thomas Welch, who leads the pediatrics department at Upstate Medical University in Syracuse, N.Y. He co-authored a letter in the New England Journal of Medicine assessing the price increase for two of these drugs, which treat hypertension and heart conditions in children.

For Carissa Baker-Smith, a pediatric cardiologist at the University of Maryland, those drugs — Qbrelis, approved last July, and Epaned, approved in 2013 — could have been a godsend. They presented an alternative to their long-available generic adult versions, which, because of their strength, meant she usually referred her young patients to compounding pharmacies for liquid formulations, a step, she said, that requires “a bit of blind trust.”

At these pharmacies, licensed specialists use approved medications to create formulations for people whose needs are not met commercially.

On the plus side, these two drugs not only meet medical needs of Baker-Smith’s patients, but they went through the Food and Drug Administration’s rigorous approval process and are produced under the agency’s manufacturing-practice regulations, which do not apply to compounding pharmacies.

But their cost yields a different kind of angst.

Liquids pose “a financial burden to families,” Baker-Smith said. She added that parents frequently ask when their child is finally ready for the less pricey tablet.

“My patients need heart transplants, or have other issues,” she said. “That’s a huge cost.”

Seizing An Opportunity

How so? Qbrelis costs 775 times as much as the generic tablet, while Epaned is 21 times costlier than the off-brand, according to Welch’s letter.

Here’s another real-world comparison. If a compound pharmacy filled a prescription for a liquid formulation using the generic liquid Lisinopril — the active ingredient in Qbrelis — it would cost up to $20 a month. The patented liquid, though, could yield a monthly bill of $500 to $1,000, depending on how large a dose the child needs, estimated Erin Fox, an adjunct associate professor of pharmacotherapy at the University of Utah. For Epaned, a monthly regimen could cost $500 to $2,000; a compound pharmacy’s formulation of a comparable generic liquid would cost $20 to $80, she said.

The two drugs are both manufactured by Colorado-based Silvergate Pharmaceuticals. By creating liquid solutions of these drugs that can be dispensed in smaller doses, Silvergate was able to obtain patents for each. It controls the market on them until at least 2030, according to the FDA’s Orange Book, a comprehensive roster of drug approvals.

The company filed legal complaints when a rival — Bionpharma — sought to introduce a generic competitor to Epaned, saying it would infringe upon its patent. Representatives from Silvergate did not respond to multiple requests for comment.

In other circumstances, drugmakers could pursue even more market protections from the FDA. For instance, if the process of reformulating the drug involved clinical trials with children, manufacturers can win an additional six months of market exclusivity.

Additionally, two FDA guides are in the works recommending that doctors default to agency-approved drugs over similar compounded medicines, unless there is a particular chemical difference that makes the compound more effective. Cost isn’t a factor.

Together, experts say, those regulations can make it easier for companies looking to profit from limited investment or innovation.

“There’s . . . an increasing list of companies where it was only about gaming the rules, and not about anything that can be recognized as real pharmaceutical research,” said Jerry Avorn, a professor of medicine at Harvard Medical School who studies prescription drug policy. Silvergate, he added, appears to fit that mold.

A Safer Drug, But At A Price

Getting a compound drug can be logistically difficult for patients — not all pharmacies are certified to make them — and it assumes some trust, because the pharmacists involved aren’t held to the same manufacturing standards as for commercially available drugs. A 2012 fungal meningitis outbreak linked to the New England Compounding Center left 64 patients dead and raised consumer and regulatory concerns. Ultimately, the outbreak triggered heightened federal oversight of compounding.

Fox suggested that the value added by the new drugs — while meaningful — is counteracted when the price climbs.

“It’s better for patients if we’re using FDA-approved drugs,” Fox said. “But if no one can afford them, or if they raise prices so much other things are being impacted, then all the FDA approval in the world won’t improve access.”

These liquids do serve an important purpose, though — they’re lower-risk than compounds, and reformulating these drugs certainly requires work. But critics say the creativity involved in developing the drugs doesn’t justify its expense. And the generic enzyme inhibitors they use cost pennies.
At stake for Baker-Smith’s patients is getting needed medical care, or going without.

“There are plenty of kids who can’t take a pill. For them,” she said, getting liquid drugs “is lifesaving.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

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