The huge price hike as sales strategy, taken to extremes by Retrophin

How's this for a business plan? Buy an old drug for a rare condition. Raise its price by 20 times. Prepare to reap the sales. What could be wrong with that?

Plenty, as Derek Lowe points out at In the Pipeline. The drug in question is Thiola (tiopronin), used to treat a rare disease that causes painful-and-unusual kidney stones. Till recently, it was marketed by Texas-based Mission Pharmacal at $1.50 per pill.

Retrophin snapped up the rights to that drug earlier this year, and now it's hiking the price to $30 per. And as Lowe reports, patients take "several" pills per day. It doesn't take a hand calculator to determine that the monthly cost quickly mounts to $1,800, at two daily doses, and $2,700 at three. Up from a whopping $135 cost pre-increase, and that's at the three-pill level.

Image removed.

This isn't the first time a company has taken an older product and moved its price into new-launch territory. KV Pharmaceuticals ($KV.A) may be the most notorious: It put an old standby hormone treatment for preterm labor through some new tests, rolled it out under the brand name Makena, and jacked up the price to $1,500 per injection. The previous price was about $20 per, as sold by compounding pharmacies.

We could also tell you about Colcrys, a branded version of the ancient gout-fighter colchicine, which URL Pharma tested, put through FDA review, and started selling at more than $5 per pill, up from just pennies. Thanks to FDA approval, it no longer faced competition, either. That price hike was scandalous enough to inspire politicians to demand explanations.

Or Anascorp, a scorpion antivenom. Rare Disease Therapeutics conducted a tiny study on the years-old treatment--15 patients--to win the right to market it under the Anascorp brand. It was still manufactured by the Mexican company that initially developed it--Instituto Bioclon--and still sells it in its home country for about $100 a vial. Rare Disease Therapeutics' new price for the U.S. market? $3,500 per dose.

But as In the Pipeline points out, Retrophin's maneuver with Thiola is different in one key way from all these examples: No new trials.

The Anascorp trial may have been tiny, but it did require at least a small amount of work. Rare Disease Therapeutics did have to pay for FDA inspections at the manufacturing facilities, file all the agency paperwork, and the like.

Not so for Retrophin, and as the blog points out, the company hasn't exactly been apologetic about it.

What next? Lots of criticism, if history repeats itself. KV's Makena pricing was so controversial that the FDA decided to allow compounding pharmacists to continue selling their injections (at least for awhile). The company itself bowed to public pressure and slashed the price--and slashed it again later.

Whether Retrophin cares enough to ratchet back its pricing ambitions is another question altogether. Payer pressure? If pharmacy benefits managers hyperventilate over a pricey hepatitis C cure that was approved after years of research and billions of dollars in investment, imagine what they might say about this.

- see the In the Pipeline post

Special Report: 10 big brands keep pumping out the big bucks, with help from price hikes