The most respected medical journal in the US just eviscerated a drug that's cost taxpayers over $1 billion

A new study published by JAMA Internal Medicine — poses a really important question to lawmakers and taxpayers alike.

Over the last five years, why has the US government spent $US1 billion dollars for a drug that is no more effective than alternatives that are tens of thousands of dollars cheaper?

The drug is called Acthar, and for the past year it has been the focus of a study by the Oregon Health and Science University School of Medicine and Oregon State, that has been trying to understand why doctors keep prescribing it for ailments that it has never been proven to treat effectively.

“I was shocked for my profession,” said Dr. Dennis Bourdette, one of the authors and a professor and chair of neurology at OHSU, told Business Insider following the publication of the findings in JAMA. There’s an accompanying — and scathing — editorial, written by a doctor at the UCSF School of Medicine. You can read it here.

“I hold physicians to a higher standard,” Bourdette said, noting that some alternatives to Acthar cost 1/50th of the drug’s price. “It’s a mystery to me why someone would be prescribing the drug.”

Acthar was grandfathered into FDA approval in the 1960s. Its primary use is to treat rare infantile spasms, but the company that makes it — called Mallinckrodt Pharmaceuticals — is promoting its use for 18 other treatments too. Oh, and the price of the drug has gone from $US748 a vial in 2001 to almost $US40,000 today. Also, that billion dollars that the government is spending is from Medicare Part D, a program for elderly Americans (just to be really clear, not infants), which spent more than $US500 million on it in 2015 alone.

Business Insider has written about a lot of this before, including the fact that Achtar, and its importance to Mallinckrodt, has become a serious concern among its shareholders — and made the drugmaker a target for short sellers who profit from the stock’s decline.

But JAMA Internal Medicine notes that this goes well beyond Mallinckrodt’s intentions and the impact on its shareholders. This is from the editorial, (referring to Acthar as rACTH):

The lack of high-quality evidence supporting Acthar gel’s benefit in a variety of conditions, along with the unconscionable price increase by the manufacturer should give pause to all practitioners. Not only should clinicians consider the lack of evidence supporting the efficacy of rACTH, but its story should cause us to reexamine and strengthen our standards for FDA approval, Medicare and private insurance coverage and professional use patterns.

No good studies

Hp achtar spending vs patients v3Andy Kiersz/Business InsiderMedicare spending on Acthar

Bourdette’s paper focused on Acthar as a treatment for Multiple Sclerosis. Recently, the disease has caught the attention of Democrats in Washington because treating it is so expensive.

In a statement, Mallinckrodt reiterated that Acthar is approved by the FDA for MS relapses, and that MS relapses can vary between patients. Acthar is used to patients who don’t respond to first line treatments, the company said.

“Both the American Academy of Neurology and the National Multiple Sclerosis Society have said

that alternative treatment options are needed for patients with MS relapse who cannot tolerate steroids, do not respond to steroids or do not want to take steroids. Accordingly, H.P. Acthar Gel may provide an option for patients who need an alternative treatment option.”

Bourdette agreed that patients need alternatives, but told Business Insider that “there are no well-designed studies demonstrating that Acthar is an effective alternative treatment MS patients.”

What’s more, Bourdette pointed out, Mallinckrodt’s defence of Acthar’s treatment for MS says nothing about the non-MS uses Medicare is paying for. Those make up 60% of the drug’s cost to taxpayers. Beyond neurologists, the paper also focused on rheumatologist prescribing the drug.

Acthar has gotten attention for its cost and efficacy before. In Washington D.C. Senator Tim Scott (R-SC) demanded to know why Medicare was paying so much for the drug in an angry letter back in 2015. Medicare’s responded by telling him that Acthar was being paid for legally — it would be up to Congress to change that.

When the city of Rockford Illinois realised Acthar was taking up 2.5% of its medical budget for just two infants, it filed a lawsuit against Mallinckrodt saying the expensive drug is part of the company’s “an anticompetitive, unfair and deceptive scheme.”

On top of that, a former Mallinckrodt employee and shareholder is also suing the company for failing to disclose that 60% of its revenue comes from Acthar. His shares were bought as part of the company’s stock purchase plan, so he’s also suing on behalf of the plan.

Mallinckrodt claims that as a company, it’s also concerned with the high cost of drugs. Acthar, it argued, is worth it when you “look at the total cost of managing MS relapse, which includes inpatient, outpatient and pharmacy costs.”

In his interview with Business Insider, Bourdette could not have been more emphatic that that is not the case.

“When we looked at it we realised it was so egregious we felt ethically obligated to say something.”

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