The Obscure Drug With a Growing Medicare Tab

by Charles Ornstein ProPublica, Aug. 4, 2014, 11 a.m.

This story was co-published with The New York Times’ The Upshot.

An obscure injectable medication made from pigs’ pituitary glands has surged up the list of drugs that cost Medicare the most money, taking a growing bite out of the program’s resources.

Medicare’s tab for the medication, H.P. Acthar Gel, jumped twentyfold from 2008 to 2012, reaching $141.5 million, according to Medicare prescribing data requested by ProPublica. The bill for 2013 is likely to be even higher, exceeding $220 million.

Acthar’s explosive growth illustrates how Medicare’s prescription drug program 2014 perhaps more than private health insurers and even other public health programs 2014 is struggling to contain the taxpayer burden of expensive therapies aimed at rare conditions.

Many outside experts say there’s insufficient evidence that the drug works better than much cheaper options for treating multiple sclerosis relapses and a rare kidney disease, conditions for which it is often prescribed. In the absence of such scientific studies, some private health insurance companies, as well as Tricare, the military’s health care program, have curtailed or eliminated spending on Acthar. Proponents of the drug say it is a worthy option for patients who have failed on other therapies.

But Medicare has imposed no limits, leaving such decisions to the private insurers paid to administer its drug program on the government’s behalf. Medicare accounted for around a quarter of Questcor Pharmaceuticals’s sales of Acthar in 2012 2014 and that proportion is growing.

Medicare cannot bar access to medications like Acthar, even in the face of rising expense and questions about efficacy, Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said in a written statement. The law mandates that Medicare’s drug program, known as Part D, cover drugs for the uses authorized by the Food and Drug Administration, he said.

Since Acthar came on the market in 1952, the rules about F.D.A. approval have changed. At the time, drug companies simply had to demonstrate that a drug was safe, rather than that it was effective. Acthar was initially authorized as a treatment for more than 50 diseases and conditions. (The list has since been cut to 19.)

Acthar isn’t prescribed often, just 3,387 times in Medicare in 2012. But Part D spent an average of $41,763 per prescription, making it one of the most expensive drugs around.

The drug ranked 139th that year, in terms of total cost, out of more than 3,000 drugs prescribed in Medicare. In 2008, it ranked around 660th.

Several of the top prescribers of Acthar have financial ties to the drug’s maker, Questcor. These doctors typically receive research grants, payments for delivering speeches on behalf of the company or compensation for serving on advisory boards.

But some in the medical community say the program’s soaring bill for Acthar shows Medicare needs to do more to safeguard taxpayer dollars.

Dr. Lily Jung Henson, medical director of neurology at Swedish Medical Center’s Ballard campus in Seattle, said she rarely prescribes Acthar for her multiple sclerosis patients. Medicare, she said, should at least push for more studies to determine whether Acthar works.

She said of her patients, “I certainly prescribe enough expensive drugs to them that I think are worthwhile, that I can’t afford to waste their money by giving them a drug that I can’t convince myself has been effective.”

Questcor Buys In, Increasing the Drug Price

Until the mid-2000s, Acthar didn’t rate as a concern for Medicare, a program for those 65 and over and for the disabled, because it was prescribed primarily for a rare infant seizure disorder and it wasn’t expensive.

That changed after Questcor bought the drug in 2001. The company has increased the drug’s price sharply since 2007, and it began marketing it for a broad menu of uses. It even funded a charity to help cover patient co-pays, taking the sting out of the drug’s out-of-pocket cost to consumers, Barron’s and The New York Times have reported.

The company has disclosed in filings with the Securities and Exchange Commission that two United States attorney’s offices and the S.E.C. are investigating its promotional practices.

Questcor declined to answer questions for this article, issuing a statement saying that it adheres to federal rules and that its promotional activities are “in line with industry best practices.” The company has suggested that investors shorting its stock may be trying to plant negative stories in the news media.

Questcor is about to be purchased by Mallinckrodt, another drug company, for about $5.7 billion in cash and stock. At a June conference, Mark Trudeau, Mallinckrodt’s president and chief executive, defended Acthar’s price to analysts, saying “it’s actually pretty, pretty inexpensive” relative to the cost of other treatments for patients who need it.

In 2008, Acthar accounted for only 202 prescriptions in Medicare, costing around $7 million. But the tally more than doubled from 2010 to 2011 2014 and doubled again from 2011 to 2012.

Acthar is still used rarely relative to more mainstream medications, but each five-dose vial costs about $32,000. (The average Medicare prescription price is higher because some prescriptions are for more than one vial.) Although it long ago lost patent protection, the drug is a complex biologic agent, and the manufacturing process is a trade secret.

Medicare covers drugs that are even more expensive. A new drug called Sovaldi, which cures the liver disease hepatitis C, costs $84,000 for a 12-week course of treatment. Experts estimate that Medicare could spend between $2 billion and $6.5 billion on Sovaldi this year alone.

What differentiates Acthar from other specialty drugs isn’t cost, but rather its age and the dearth of studies proving its efficacy, said Ronny Gal, a senior research analyst at Sanford C. Bernstein.

“They had to prove nothing,” Gal said. “Essentially, it got grandfathered indications from a day that preceded the way we look at drugs now.”

A handful of practitioners 2014 several of whom have ties to Questcor 2014 have helped to drive the increase in Acthar prescriptions in Medicare.

The top 15 prescribers of Acthar accounted for 10 percent of Medicare prescriptions, an unusually high proportion, ProPublica’s analysis showed. The top four were paid by Questcor either as promotional speakers, researchers or both.

The No. 1 prescriber, William Shaffer, a neurologist in Greeley, Colo., gives promotional talks for the company. He wrote 78 prescriptions for Acthar in 2012, costing Medicare more than $4 million.

Shaffer, who has multiple sclerosis himself, said he was introduced to Acthar by a Questcor sales representative whose pitch he initially rejected. Then one day, the representative came in when Shaffer was seeing a multiple sclerosis patient grappling with a relapse that other drugs hadn’t helped. “What the hell, let’s try it,” Shaffer recalled saying, writing his first Acthar prescription.

When the patient came back six weeks later and said he felt better than he had in 20 years, Shaffer was a convert. “I’ve started using it more and more and I’ve had amazing results with it, without the side effects of steroids,” he said. “I had one woman ask me if Jesus made it. Another guy calls it liquid gold.”

Shaffer has used the drug himself, too, and said it worked for him.

Other specialists who treat multiple sclerosis patients are more skeptical about Acthar’s value.

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