Monday, November 14, 2011

First stung, then gouged! Scorpion-sting antivenom has huge US price tag - Las Vegas Sun

An antivenom recently approved for fast treatment of severe reactions to scorpion stings comes with a high price tag.

Metro Phoenix hospitals are billing as much as $12,467 per vial of the antivenom, The Arizona Republic reported ( Since the typical dose is three to five vials, bills for patients and their insurance companies can exceed $62,000.

People may not be covered by their insurance company because insurers are still trying to figure out a reasonable price for a drug that has been used for years in Mexico at a fraction of the U.S. price.

The cost inflates when the serum is sold in the United States. Each link in the U.S. pharmaceutical supply chain from the Mexican factory to Arizona patients raises the price.

A Mexican biotechnology company produces more than 250,000 vials for Mexican residents, who are charged about $100 per vial.

The drug, Anascorp, is intended to help young children, the elderly and adults quickly recover after suffering complications or reactions from a scorpion sting.

The company that has the U.S. rights to the drug plans to sell it in desert regions with scorpion populations, such as Arizona, New Mexico and the Las Vegas area.

Hospitals say they are billing patients to cover their own costs, but they acknowledge that in many cases, they don't expect patients to pay the entire billed amount.

Drug-company representatives say the antivenom's price represents market reality when introducing a new drug for a rare disease or medical condition.

Traditional pharmaceutical development calls for creating and marketing a drug to a large segment of the population. The large group of potential users helps pharmaceutical companies recoup the money spent on research, discovery and testing.

But when a therapeutic medication is developed for a small number of people _ so-called "orphan drugs" for scorpion stings _ costs can skyrocket. Drug companies market orphan drugs to a limited population, but they still must pay research, development and regulatory costs.

Rare Disease Therapeutics, a Tennessee-based company, has the U.S. rights to Anascorp through an agreement with Instituto Bioclon, the Mexican firm that makes the drug.

Although Rare Disease Therapeutics did not pay for research and discovery of the drug already used in Mexico, it did fund the clinical trials needed to approve the drug for sale in the United States.

The company established the drug's price based on several factors, including its own costs and expected revenue from the drug, Rare Disease Therapeutics President Milton Ellis said.

Several Arizona hospitals said they are charged about $3,780 per dose of Anascorp. Hospitals then add their own markup to cover extra costs such as patients who don't pay their full bills.

Ellis said his company established the price for the drug with the expectation that it would sell only 300 to 400 doses each year in desert regions with scorpion populations.

Although Ellis would not reveal Rare Disease Therapeutics' expenses, he said the privately owned company paid for clinical trials at Arizona hospitals that tested the drugs. It also covered liability insurance and costs related to the Food and Drug Administration's inspections of the Mexican factory where the drug is made, he said.

In addition, the company may need to pay for FDA user fees if its total revenue surpasses $50 million. Ellis said such fees could cost the company $800,000 or more each year. So far, Rare Disease Therapeutics has not reached the $50 million revenue threshold.

Based on its expenses, Ellis said he believes his company charges a fair price that patients and insurance companies ultimately will be willing to pay because the drug is effective.

Infants, young children and the elderly who do not receive the antivenom may require breathing assistance and sedatives in a hospital's intensive-care unit, and those costs would likely exceed the price of the drug, he said.

Posted via email from Jack's posterous

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