One of 2015’s biggest medical stories focused on drug companies that drew criticism from doctors, hospitals, insurers and patients by buying the rights to critical generic medicines and hiking their prices. Last week, the Senate Special Committee on Aging held the first of several hearings as part of an investigation into the price increases.
One company in congressional cross-hairs is Turing Pharmaceuticals AG, which bought U.S. rights to the anti-parasite medication Daraprim and raised its price from $13.50 a pill to more than $750. Daraprim fights a parasitic infection called toxoplasmosis that afflicts HIV patients, pregnant women and others with weakened immunity. Although the infection is rare, treatment is expensive because the drug must be taken for weeks or months.
One company has taken an innovative step to break Turing’s monopoly on Daraprim. In December, the pharmacy-benefit manager Express Scripts Holding Co. announced a deal with San Diego-based Imprimis Pharmaceuticals Inc. to make a new version of the drug available to beneficiaries for just $1 a capsule. Imprimis is a compounding laboratory, a specialized drug firm that makes customized medications by combining ingredients. In the case of Daraprim, the components are Pyrimethamine and Leukovorin, both FDA approved generics.
Most compounders provide special medicines to patients who could not otherwise get them. But there have been mishaps, too. In 2014, a medicine created by the New England Compounding Center was linked to meningitis outbreak in 20 states that sickened 751 patients and killed 64. The Department of Justice has charged two pharmacists with 25 murders and others were charged with multiple criminal acts, because they allegedly “knew they were producing their medication in an unsafe manner” under “unsanitary conditions.”
Such episodes are rare in pharmaceutical manufacturing, however. U.S. News spoke to Imprimis’ founder and CEO Mark Baum about the unique and expanding role of drug compounders in the medical marketplace–and how the drug firms may help bring down the high cost of certain drugs. The interview was edited for brevity and clarity.
What role does compounding play in the pharmaceutical industry?
Compounding pharmacies were the original drug companies. Compounding existed before Merck & Co. and before Pfizer. Compounding existed before the [U.S. Food and Drug Administration]. Before 1962, FDA was in the safety business. After the Thalidomide tragedy, the FDA’s mandate for new drugs was expanded to include efficacy. Compounding’s role got smaller as national and international drug companies grew larger. FDA began playing a larger role in drug inspection and regulation. Eventually, compounding became a bespoke-medicine industry, [making customized formulations of FDA-approved drugs].
Are these drugs widely used?
If you go into virtually every hospital in the United States, they all use compounded drugs. You go into any ophthalmology practice, any urology practice or any dermatology practice, they’re all using compounded drugs – every single day. The idea that compounding is some sort of fringe industry is absurd. It is an integral part of our drug economy.
Can you give some examples of drugs made by compounders?
The typical compounder makes many different drug formulations. For women who need them, they make customized doses of hormones. For children who need antibiotics, they put them in a dosage form that children are able to take, such as liquids or suspensions. If a drug is made with dye that someone has an allergy to, they’ll make the drug without the dye. It’s truly personalized medicine.
Where does Imprimis fit in this picture?
We are a national company. We make formulations in all 50 states and we have processes in place to scale production to larger quantities, for sterile and nonsterile drugs.
The federal Drug Quality and Security Act of 2013 [which amended the Federal Food Drug and Cosmetic Act to include compounding] divided compounding into [these] two distinct areas. One involves the traditional compounding pharmacies, making individual drugs for individual people.
The second is more commercially scalable [to create formulations for mass distribution]. Those are called outsourcing facilities. We operate facilities for individual patients and we’re building two outsourcing facilities.
How did the partnership with Express Scripts come about?
Philosophically, Express Scripts as a business is focused on accessibility. Accessibility has a lot to do with economics, especially today, when you have [so many] high-deductible pharmacy benefit plans. Before the [Affordable Care Act] it would have been reasonable to have a pharmacy plan with a $500 or a $1,000 annual deductible. Today, it’s normal for folks to have a $3,000, $4,000 or even a $5,000 deductible. That means they’re paying out of pocket thousands of dollars every year.
Also, Express Scripts is in a highly competitive market. They need to find cost savings for their plan sponsors. An oral medicine like Daraprim, with a very low risk profile, was an easy opportunity.
Did they contact you or did you contact them?
They contacted us. I was in New York actually. They said, “Hey we want you to visit our St. Louis campus.” We did. We’ve been working with them, and it’s been a really good relationship.
Are you now selling this compound to patients? Are doctors writing prescriptions?
We’re filling prescriptions every day.
Can you share any numbers?
No, we’re a public company, and I can’t give you any nonpublic information. But I think you’ll see a significant percentage of Daraprim scrips from [Express Scripts] and, frankly, from other [pharmacy-benefit managers]. I think you’ll see other PBMs adopt this solution.
Do people have reservations about taking drugs made by a compounder rather than a traditional manufacturer?
We put out a press release because people were concerned about quality. I’ve tried to make it very clear—and this is a fact—that the FDA, not to mention state authorities, are all over our drug supply chain. We’re not making these drugs in the back of a Chinese restaurant. We’re working in a clean-room environment that’s highly regulated, from our raw materials to our records on who we dispense to after the drug leaves our office.
Compounding has been used mainly to tailor medicines for individual patients. Will that change?
Compounding can also address these commercial scale solutions. The problem is that FDA doesn’t review compounded drugs, though they do regulate manufacturing processes. We can’t become a viable commercial scale solution until FDA regulates compounded drugs.
They’ve got an office for branded drugs, for generic drugs and for over-the-counter drugs. But they don’t have an office for compounded drugs. This is what is unique about my position. I want FDA inspection, I want FDA regulation. I think that’s the best thing for the long term health of our industry. It’s best for patients and it’s best for our customers.
…They now have a law in place, The Drug Quality and Security Act, that allows them to regulate compounding, but they’re afraid to touch it because they got burned so bad on the New England compounding tragedy.
It is certainly a commercial scale solution. I don’t think it’s a complete solution to the drug pricing crisis, but it is a substantial solution.
Is it hard to keep up with demand for the Express Scripts drug?
This is an easy dosage. We do thousands and thousands of prescriptions every day of [more] complicated drugs; this is a walk in the park for us. It’s not complicated and it’s not sterile.
Some suggest that the best solution might be for FDA to fast-track orphan generic drugs – solo drugs for which there is no competitive alternative – so that they can be approved more quickly. What do you think about that solution?
Fast-tracking generic approval is a good idea if they can do it. I’d be surprised if they were able to add that flexibility to what they do. But we’ll see.