Novum draws scrutiny for raising drug prices thousands of dollars

By Lisa Schencker

Chicago Tribune

CHICAGO — A pharmaceutical company that’s selling skin medications for thousands of dollars is the latest to take heat in the nationwide furor over drug pricing.

Novum Pharma as of Sept. 12 was charging pharmacies a wholesale price of $7,968 for 48-gram tubes of skin gel Alcortin A, which can be used to treat eczema and certain skin infections, and the same price for 60-gram tubes of Aloquin, also used on eczema and skin infections. That price was up 128 percent since June, according to the Elsevier Clinical Solutions’ Gold Standard Drug Database. Chicago-based Novum was selling 29-gram tubes of Novacort, also used to treat eczema and skin infections, for $5,952 wholesale as of Sept. 12 — a nearly 71 percent increase from June.

Consumers typically are charged more than a manufacturer’s wholesale price, before insurance or cost-saving programs kick in.

The Chicago Tribune confirmed that Alcortin A is selling at some Chicago-area pharmacies for $8,000 or more, before insurance. The company’s two other medications, Aloquin and Novacort, also are selling for thousands of dollars each at local pharmacies.

Novum bought the three drugs from Primus Pharmaceuticals during the first half of 2015. As recently as Jan. 1, 2015, Alcortin A had a wholesale price of $189, Aloquin had a wholesale price of $201, and Novacort had a wholesale price of $121, according to Elsevier.

Novum said in an emailed statement Thursday that many of the prices, first quoted by the Financial Times, are inaccurate and are not the prices Novum charges. But Novum did not offer any alternate numbers.

Novum, which was founded last year, describes itself as a small “specialty pharmaceutical company focused on acquiring and licensing under promoted/mature products.”

“The prices cited in the (Financial Times) article include thousands of dollars in extra charges that are added by various third-party middlemen and passed onto patients,” Novum said in the statement. “This practice reflects one of the many fundamental challenges inherent in the health care system today that add to the cost of access for patients.” Rand Walton, a Novum spokesman, declined to elaborate on the “extra charges.”

Novum also said that through its patient access programs, most patients with private insurance pay no co-pay for Novum products. Those paying for the products without insurance never have to pay more than $35, Novum said.

The company said it reinvests “virtually all of its pricing directly and immediately into its patient support program, which severely limits cost to insurers and to the health care system in general.”

Garth Reynolds, executive director of the Illinois Pharmacists Association, said there are alternate, significantly less expensive drugs available to treat the same skin conditions. Reynolds said pharmaceutical companies have a right to set prices wherever they want but they have to be careful not to price themselves out of the market.

He said the price of Alcortin A is mind-boggling.

“I would never have thought in all my years that we would have a topical medication that would be that expensive,” Reynolds said.

Over the past year, a number of pharmaceutical companies and executives have come under fire for what many see as unreasonably high drug prices.

“Companies are raising the prices because they can,” said Peter Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York. “It’s much easier to raise your revenue by raising your price than by increasing the number of people taking your drug or proving it works better than the alternative.”

A congressional committee grilled Mylan CEO Heather Bresch last week over the price of EpiPens.

EpiPens contain epinephrine, that when injected into a person’s thigh, can counter often life-threatening allergic reactions. Mylan has raised the price of EpiPens more than 500 percent since early 2008, charging pharmacies a wholesale price of more than $600 for a two-pack of the devices as of May, according to the Elsevier drug database.

In recent weeks, Mylan has tried to quell the outrage by offering $300 savings cards to patients with private insurance and expanding its patient assistance program for underinsured and uninsured patients. It also said it will offer a generic version of EpiPen priced at $300. Bresch told the committee last week that Mylan has invested heavily in making the EpiPen better and more widely available.

She also said Mylan makes only about a $100 profit on each EpiPen two-pack, though The Wall Street Journal reported Monday that Mylan actually makes a profit of $160 before taxes. Mylan spokeswoman Nina Devlin said in a statement Monday the Journal story is “misleading” and the way Mylan reached the $100 estimate is “standard.”

Savings cards and co-pay assistance programs also draw criticism from many who say they do little to reduce costs for the overall health care system.

“Ultimately this always trickles down to the consumer,” said Michael Rea, founder and CEO of Rx Savings Solutions. Rea’s company sells software to insurers and employers aimed at helping consumers understand their health care options. “Maybe the insurance company has to pay the majority of that big price tag, but that shows up in premiums next year.”