Here's one way to eliminate competition: Buy it. As The New York Times reports, Questcor Pharmaceuticals has snapped up the rights to a Novartis ($NVS) drug that could have challenged its H.P. Acthar Gel product, which brought in $509 million last year. With the licensing deal, Questcor ($QCOR) elbowed aside a startup company that wanted to roll out the Acthar rival at a price far, far lower than Questcor's.
Questcor agreed to pay $135 million for the rights to Synacthen, a Novartis treatment for immune-related disorders that's already sold in Europe but not in the U.S. It outbid a company called Retrophin, which was planning to roll out Synacthen in the U.S. market at a price of a few hundred dollars per vial, the NYT's sources say.
Once upon a time, Acthar also sold for a few hundred dollars per vial--and even less. When Questcor bought the drug--a hormone purified from pig pituitary glands--it was selling for only about $40 per vial. The company hiked the price up to $1,650 per vial, and then, in 2007, jacked it up to about $23,000 per. Its price tag is now $28,000.
Obviously, Questcor has plenty of motivation to preserve that pricing power. And Synacthen was an obvious threat. Questcor executives pooh-poohed the potential rival, the NYT says, but after Novartis started taking bids, they apparently changed their tune. Retrophin had agreed to pay $16 million up front, plus a 20% royalty, for Synacthen rights, but Questcor jumped in with its $135 million deal, which includes a $60 million initial payment plus milestones and royalties.
Questcor now says it intends to develop Synacthen not only for uses different from Acthar's, but in cases where it might "provide a clinical benefit over Acthar," the NYT says.
An antitrust lawyer tells the Times that the deal is likely to come under scrutiny from antitrust regulators. It wouldn't be the first time Questcor has attracted attention from the feds. The U.S. government is probing the company's Acthar marketing. The company has also run into trouble with payers who aren't thrilled about paying the freight for Acthar; Aetna nixed the drug almost entirely last September.
- read the NYT piece