Dive Brief:
- A group of senators wrote a letter to the CEO of Tri-Source Pharma and its subsidiary NextSource Biotechnology LLC demanding details about why Gleostine, also known as lomustine, has seen a price increase of 1,400% over the past four years.
- To understand the factors contributing to the price increase of lomustine, the lawmakers are asking Robert DiCrisci to provide financial details about the drug's sales and the cost of manufacturing from the beginning of 2011 to present, with a deadline of April 6, 2018. Lomustine first gained approval in 1976, and is used to treat brain tumors, Hodgkin lymphoma and other off-label indications
- The move is the Senate Special Committee on Aging's latest attack on companies that raise drug prices to sky-high levels. Previously, the committee made similar requests to companies such as Turing Pharmaceuticals LLC, Marathon Pharmaceuticals, Ariad Pharmaceuticals Inc., Valeant Pharmaceuticals International Inc., and Mylan NV.
Dive Insight:
The Special Committee on Aging is now routinely calling out drug companies that hike up prices on older medications. Latest on the agency's hit list is NextSource Holdings Inc. Sens. Susan Collins, R-ME, Claire McCaskill, D-MO, and Catherine Cortez Masto, D-NV, penned the letter to the CEO.
Lomustine is just one of the more than 300 sole-source generics identified by the Food and Drug Administration. The drugs are not under patent protection, meaning they are fair game for competition from other generic manufacturers.
NextSource Biotechnology responded to the media coverage surrounding the letter with a post on its website. It cited the oft-disputed figure from Tufts University researchers that drug development costs nearly $3 billion as a reason for how it prices its drugs. Some doubt the figure and note Tufts gets some pharma funding.
And, in fact, NextSource didn't actually develop Gleostine. Bristol-Myers Squibb Co. sold its CeeNu brand of lomustine to CordenPharma in 2013, which began marketing it as Gleostine through NextSource.
Though NextSource attributed lomustine's rebranding in 2014 to the company's concern surrounding the risk to providers and patients of "the continued use of unregulated compounded products or any other unapproved versions of Gleostine," pharmaceutical consultant Ben Locwin told BioPharma Dive he thinks the move was really to give the mature product a new life on the market.
Rebranding, he added, "also increases visibility in some of the payer lists and keeps an older product at top-of-mind for physicians."
According to The Wall Street Journal, at the time of the sale, BMS charged $50 a capsule. Now that it is in the hands of NextSource, the company is charging approximately $768 a capsule.
In addition, NextSource blamed a variety of other factors to justify the drug's price increases. It said the cost to obtain starting raw materials for the drug has increased substantially, and because the company keeps an inventory of 12 months' safety stock in the U.S. market "to ensure adequate product distribution and availability."
The company's letter added that FDA and health authority annual licensing fees have quadrupled over the past three years, contributing to Gleostine's costs. And it says providing the drug to the federal government on the cheap, through programs like Medicaid and the 340B program, costs the company millions each year. The effect of this loss is compounded by the amount of product it gives to patient groups for free, it argued.
Lastly, NextSource argued that, in comparison to other FDA-approved glioblastoma brain tumor drugs on the market, lomustine is priced competitively. But the compound lomustine, itself, is only made by NextSource.
Rena Conti, an assistant professor at the University of Chicago who studies health policy, didn't buy these justifications.
"Basically, what they are saying is that they set the price of the drug to maximize their profit because they face no competition (they are monopolists) and buyers have limited/no ability to negotiate price or shop elsewhere."
She added that as a result of this monopoly position, the company has the ability to recoup the money it says is lost to price concessions. "Any discounts or free drug they give to patients in need they pass off in full to the price of the drug all payers and patients pay; any increased costs related to production and regulation they also pass along in full to payers and patients," she said.