Medicare spending over $1B on drug with less efficacy

In 2015 alone, Medicare spending topped $500 million on the drug repository adrenocorticotropin, the cost of which soared to $36,000 per course of therapy.
By Amy Wallace  |  Sept. 11, 2017 at 1:40 PM
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Sept. 11 (UPI) -- Researchers at Oregon State University found an expensive drug is driving up Medicare expenditures without evidence of greater effectiveness.

The study showed that Medicare spent more than $1 billion over a five-year period on the drug, repository adrenocorticotropin, or ACTH, which has not been proven more effective for a number of inflammatory conditions than less expensive corticosteroids.

The ACTH, known by the trade name H.P. Acthar Gel, is primarily used to treat rare epileptic spasms in children under 2.

Researchers from Oregon State University College of Pharmacy showed that a comparatively small group of frequent prescribers combine to write prescriptions that lead to the majority of Medicare's expenditures on ACTH, and that in 2015 alone, Medicare spending was more than $500 million on the drug and the cost has since soared to $36,000 per course of therapy.

"The drug has an interesting back story," Dan Hartung, lead author on a research letter that was published today in JAMA Internal Medicine. "It's a fairly old drug, first approved in 1952, prior to many of the FDA rules about clinical efficacy. The bar for what constitutes approved indications was much different then, much lower; it has many indications that came before the current rules were set in stone in the 1960s."

ACTH is classified as a biologic and was initially approved for a broad range of corticosteroid-responsive inflammatory conditions.

"It's a hormone produced in the human body that signals the release of steroids," Hartung said. "It does the same job as low-cost corticosteroids. And it really wasn't much on anyone's radar until 2007."

Researchers found that Medicare spending on ACTH increased 10 times and totaled $1.3 billion from 2011 to 2015. In 2014, a total of 1,621 prescribers were responsible for $391.2 million in Acthar spending, which was divided among 203 frequent prescribers -- 94 rheumatologists, 55 neurologists and 54 nephrologists, each with more than 10 prescriptions -- accounted for $165 million of the total.

Questcor Pharmaceuticals purchased the rights to Acthar in 2001 for $100,000 and steadily raised its price. In once instance, the company raised the price of Acthar in 2007 from $1,650 to $23,000 overnight.

"There are a variety of FDA-approved indications that lack a lot of evidence that Acthar is even effective, let alone better than inexpensive corticosteroids," Hartung said. "And what allows for this kind of pricing is that it's a fairly complex molecule and no competitors can exactly duplicate it; they have a monopoly on this particular molecule."

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