Mustargen: A Bad Case for a Nasty Old Drug

Every salesman knows that it’s a sin to "leave money on the table," to get an order too easily, to take $5 when the buyer would have paid $500. In this world, the price for something is what people are willing to pay for it — not what it costs to make, not for the good that it may do, not for the harm that it may cause.

Alex Berenson’s March 12 New York Times article "A Cancer Drug’s Big Price Rise is Cause for Concern" describes a standard Big Pharma free market horror story: Joyce Elkins of Georgetown, Texas saw her $77.50 cancer medication Mustargen jump to $548.01 within two weeks. Merck, the drug’s original manufacturer, sold the rights to Ovation Pharmaceuticals which promptly raised the wholesale price "roughly tenfold." The gist is that Big Pharma is screwing the most desperate sufferers of cutaneous lymphoma, and something must be done.

But it’s a bad case for discussing policy for a lot of reasons:

  1. It’s a nasty old drug. Mustargen or nitrogen mustard was
    developed 60 years ago as a chemical weapon. The patent has long
    expired, it’s simple to make, but you’d never get it — or a competing
    generic — approved today by the FDA.
  2. The cited usage is off-label. Ovation sells Mustargen in an
    injectable form, but then pharmacists formulate a topical ointment to
    treat cutaneous lymphoma. Insurance won’t pay for the unapproved use.
  3. The numbers are tiny. According to the Berenson story, Mustargen and a companion drug Cosmegen
    "are used by fewer than 5,000 patients a year and had combined sales of
    about $1 million in 2004."
  4. There are many alternatives. It may be that an off-label, unapproved toxic ointment is the best remedy, but the Cutaneous Lymphoma Foundation cites a bundle of less severe therapies.
  5. The black hats have a response. Ovation is trying to get insurance
    companies to approve Mustargen’s use (they should have done that before
    jacking up the price) and they now have an 800 number to help poor
    folks get the drug.

troubling is the notion that Ovation founder Jeffery S. Aronin (at
left), a thirty-something MBA, can start a multimillion dollar pharma
firm to make money off the inequities of the healthcare system. From the official bio:
"Prior to founding Ovation in 2000, Aronin led MedCare Technologies, a
publicly held healthcare company where he served as Chairman, Chief
Executive Officer, and President. Mr. Aronin’s experience also includes
various executive positions at American Health Products Corporation." MedCare lost millions during the boom and has twice changed its name, and AHPC makes gloves.

From a policy perspective, is the system so sclerotic that we need
pharma versions of the corporate raiders of the 1980s shaking things
up, "maximizing sales of niche pharmaceuticals"
by picking over under-hyped drugs to exploit hidden value? I understand
that the profit motive can drive competitors to re-invigorate stale
products, but do we really need ragpickers arbitraging dysfunctional
government regulations, insurance loopholes, specialized niches,
desperate patients and simple re-formulations to make a buck? It seems
like such a waste of talent.

For more on the Mustargen story, read the excellent Jim Hu’s Cutting the Mustard and Hold the Mustard at Blogs for Industry as well as Derek Lowe’s Price Gouging or Not? on Corante: In the Pipeline.
The comments to both blogs range from clueless Communists to
fire-breathing Libertarians but a few contributors are helpful in
advancing the discussion. {And thanks, JB.)