Ovation Pharmaceuticals may be in hot water. The company, which dedicates itself to drugs for rare medical conditions, purchased the rights to Merck's Indocin in 2005, bought a rival drug in 2006 and then hiked the prices of both, according to allegations made by the Federal Trade Commission. Indocin is a medication used to treat a congenital condition called patent ductus arteriosus (PDA), which occurs in some premature babies and can be fatal without medication. About 30,000 newborns a year receive medication to treat a PDA.
The FTC says Ovation bought out its only competitor, and then charged "monopoly prices," to the tune of about a 1,300 percent increase in price. The competitor medication, NeoProfen, was under development by Abbott Laboratories when Ovation purchased it and subsequently received FDA approval.
When Ovation originally purchased the product from Merck, it raised the price from $10 to $36 per vial, but after buying the competing drug in 2006, the FTC says it raised the price of both Indocin and NeoProfen to nearly $500 per vial. The FTC is hoping that the federal court will prevent Ovation's ownership from the competing products and spill the profits it gained in the interim.
"The company strongly disputes the claims in the complaint, strongly disputes the FTC's characterization of the facts and the propriety of seeking disgorgement," Ovation said in a statement.
FTC Commissioner Jon Leibowitz said of the issue, "Ovation's profiteering on the backs of critically ill premature babies is not only immoral, it is illegal."