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Drug Company Taking on Hedge Fund Dick's Pharma Startup Might Be Bending FDA Rules

A San Diego compounding pharmacy says it plans to come to patients’ rescue by offering a cheaper version of Daraprim and other drugs whose prices have skyrocketed in recent year — but will the FDA allow it?
Photo via Wikimedia Commons

This story is part of a partnership between MedPage Today and VICE News.

After former hedge fund manager Martin Shkreli's reviled drug startup Turing Pharmaceuticals became the sole manufacturer of the anti-parasitic medicine Daraprim and immediately raised the price from $13.50 to $750 per pill, the story has prompted national outrage and become a symbol of what's wrong with drug pricing in America. Last week, a compounding pharmaceutical company in San Diego called Imprimis Pharmaceuticals made a splash by announcing that it would create and sell a Daraprim alternative for $1 a pill as part of Imprimis Cares, its new program to compound cheaper alternatives to pricey commercial drugs — but it turns out that it could be skating on thin ice with the Food and Drug Administration.

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A compounding pharmacy makes drugs for individual patients whose health needs aren't met by off-the-shelf, manufactured pharmaceuticals. Compounders — which can range from small mom-and-pop operations to in-house hospital compounders to publicly traded multimillion dollar corporations like Imprimis — make up between one and three percent of the prescription drug market.

Related:  This Is How Drug Companies Jack Up Their Prices and Hurt Patients

"Today, some drug prices are simply out of control and we believe we may be able to help control costs by offering compounded alternatives to several sole source legacy generic drugs," Imprimis president and CEO Mark Baum said in a statement on Thursday. "Imprimis Cares and its team of compounding pharmacists will work with physicians and their patients to ensure they have affordable access to the medicines they need from the over 7,800 generic FDA-approved drugs."

Daraprim is prescribed to treat potentially fatal parasitic infections that occur in people with compromised immune systems, such as those with HIV/AIDS and those undergoing chemotherapy. The other drugs have yet to be announced.

As a compounding pharmacy, however, Imprimis is beholden to section 503A of the federal Food, Drug, and Cosmetic Act, which states that it can't compound drugs "that are essentially copies of a commercially available drug product." The only legal exception to 503A would be if a company altered an existing drug for an individual patient to make a "significant difference" for that patient, according to the law.

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Gabrielle Cosel, the manager of drug safety for the Pew Charitable Trusts, explained that the law allows doctors to create a slightly modified version of existing drugs in order to accommodate patients' allergies or other medical conditions, a technique often used to help treat sick children.

"If their doctor wants to give them medicine only available in pill form and the child can't swallow pills, the pharmacy compounder could put that into syrup form," she said.

When VICE News asked the Food and Drug Administration about how Imprimis' Daraprim announcement fit into this law, the agency said that it was looking into the issue and would provide no further comment.

In 2011, the FDA dealt with a similar matter after it approved the preterm birth drug Makena, which cost $1,500 per injection. The compounded version of Makena cost between $10 and $20 per injection, but Makena's manufacturer, KV Pharmaceuticals, was supposed to have exclusivity under the Orphan Drug Act for seven years.

In the end, the FDA continued to allow compounding pharmacies to produce the active ingredient in Makena, hydroxyprogesterone caproate, because the compounded version predated the Makena brand name and an FDA analysis of compounded samples didn't yield major safety concerns.

The following year, tainted steroid injections made by New England Compounding Center led to an outbreak of fungal infections that killed 64 people and sickened hundreds of others. The company's president was arrested and charged with murder in December 2014.

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The outbreak forced regulators and policymakers to reevaluate compounding pharmacy practices and led to the passage of the Drug Quality and Security Act of 2013, which clarified the compounding rules set forth in section 503A, and made them more enforceable, Cosel said.

Related: Clinton and Social Media Wrath Prompts Pharma CEO to Roll Back Drug Price

John Saharek, Imprimis' chief commercial officer, told VICE News that making an alternative to Daraprim does not violate federal law because its drug is not a copy. Instead, their pharmacists have combined two ingredients: pyrimethamine (the generic compound behind the Daraprim brand name) and leucovorin.

Leucovorin is usually prescribed with Daraprim to avoid bone marrow side effects because Daraprim blocks the production of folic acid, which can lead to bone marrow suppression, according to Dennis Saadeh, the company's senior vice president of corporate development and one of the pharmacists who worked on the new compounded drug.

It's unclear whether combining two drugs that are almost always prescribed together amounts to the "significant difference" required by the law.

Allan Coukell, Pew's senior director for health programs, said he couldn't comment on Imprimis, but stressed key terms in the federal law.

"Congress's intent was that compounders should not copy marketed drugs," he said. "Congress didn't say 'exact copy.' They said 'essentially a copy.'"

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Boston University School of Law professor Kevin Outterson said that he doesn't expect the FDA to take action against Imprimis unless the agency somehow learns that the company isn't following safety protocols. Furthermore, he said it is rare for anyone to verify whether a patient really needs a compounded drug and isn't being given the prescription simply because the compounded version is cheaper.

"This is a unique situation that plays into the politics of the high-priced pill," he said. "The FDA has a lot of enforcement discretion. So long as what's being sold is safe, so long as it's slightly different… I think they're in business."

Photo via Wikicommons

Watch the VICE News documentary: Khat Power: The Latest War on Drugs