Something shocking happened recently in the city of Rockford, Illinois, on the outskirts of Chicago. For decades, the town has paid the healthcare costs of its 1,000 or so employees and their dependents.
Then the city was hit with a drug bill so large that it nearly crippled the local economy, 2Paragraphs notes.
And that bill was for one drug, and one drug alone: Acthar (officially Acthar® Gel). The life-saving drug, injected under the skin or into the muscle, is used to treat a rare and potentially fatal condition called infantile spasm. It’s a condition that afflicts about 2,000 babies each year.
So former mayor Larry Morrissey sat down and talked to 60 Minutes Correspondent Lesley Stahl, who wanted to know why the price of this drug had risen so drastically — from $40 per vial in 2011 to $40,000 a vial. That’s a hike of 100,000 percent.
“Because the fix is in, that’s why,” he told her. “That’s the short answer.”
And that means the city, which was providing healthcare for 3,000 people, was paying $500,000 for the two infants who needed this life-saving treatment.
It forced him to slash the budget for other important city services.
“Hiring police and firefighters. Keeping firetrucks and other equipment on the streets,” Morrissey told Stahl. “We started realizing pharmaceutical costs were skyrocketing.”
So the city slapped Acthar’s manufacturer, Mallinkrodt, with a class action lawsuit in 2017. In the complaint, the city claims:
“By establishing and maintaining a monopoly, exercising monopoly power, and engaging in other unlawful acts and practices, the Defendants [Mallinkrodt] were able to extract exorbitant revenue from consumers that had nowhere else to turn for treatment.”
The city has asked a federal judge to force the company to set a fair price and is seeking $5 million “to recover inflated payments, interests, damages and punitive damages.”
Perhaps attempting a little damage control, Mallinckrodt Pharmaceuticals posted a “setting the record straight” video on its website two days before the interview was aired. On the video, company President and CEO Mark C. Trudeau can be heard addressing “one of our most important therapies.” Executive Vice President Hugh O’Neill, who’s also the company’s president of Autoimmune and Rare Diseases department has this to say:
“When we acquired the drug (Acthar) we knew that both of its previous owners had under-invested in Acthar.”
The company acquired the company Questor Pharmaceuticals for $5.6 billion in 2011, and that acquisition included Acthar Gel. Mallinckrodt’s net sales were listed at $2 billion. That number rose to $3.35 billion in 2016.
O’Neill went on to say that since taking ownership of the product, the company has sunk hundreds of millions of dollars into it to “take the product to the next level and ensure increased patient access.”
Yeah, sure, hijacking the price to $40,000 an injection sure ought to do that.
While Acthar is very effective, Morrissey wanted to find out why the price was so high. But it took him two years to find out why. Stahl asked him why it was so hard to find out.
“It’s absolute secrecy,” he said. “There’s an absolute opaque system for pricing drugs in our country. That’s part of the problem.”
And he continued to get nowhere until the Federal Trade Commission charged Mallinckrodt with violating antitrust laws in order to keep Acthar’s prices high.
“And that was the big a-ha!”
“That’s the only way you learned? Otherwise, you wouldn’t know.”
“We very well may not have known,” he said.
But now that the city does know what’s going on, let’s hope that judge is successful in forcing this company to back down. No one, not even a city, should be forced to pay $40,000 for life-saving treatments for its citizens. That’s just corporate greed at its absolute worst.
If there is such a thing as evil, perhaps this is it.
The video below offers a sample of the interview between Stahl and Morrissey.
Featured image courtesy of 60 Minutes via YouTube video