Questcor uses the Orphan Drug Act as a strategy tool to boost marketing and development

"Abusing the orphan drug law to rip off customers" by David Williams, Health Business Blog. When I read Williams' article, I became furious, not because I am familiar with Infantile Spasms (IS), but because the families affected by IS will be facing an outrageous financial battle. On August 30, 2007, the Epilepsy Foundation announced "Dramatic Increase Seen in Cost of H.P.Acthar Gel."

Acthar was developed in the 1950's for the treatment of exacerbations in Multiple Sclerosis. In 1997, the FDA recognized the need to continue manufacturing of H.P.Acthar Gel by Centour for use in the treatment of Infantile Spasms. In August 2006, Questcor Pharmaceuticals, Inc. submitted sNDA for FDA approval to include treatment of IS on the label of H.P.Acthar Gel which had been acquired from Aventis in 2001. On May 14, 2007, Questcor announced that the FDA did not approve the sNDA. One week later, Questcor CEO James Fares resigns.

On August 27, 2007, Questcor board announces New Strategy and Business Model for H.P. Acthar Gel.
Questcor will initiate a new pricing model, create an expanded safety net for patients using Acthar, and provide a group of Medical Science Liaisons to work with health care providers who are administering Acthar.
"...the goal of Questcor's new strategy is to make manufacturing and distribution of Acthar economically viable on a stand-alone basis, so that Questcor can continue to ensure the availability of Acthar for those patients who need it most and fund projects which can contribute to the growth of the company."
Previously, the FDA granted Orphan Designation to H.P.Acthar Gel for the treatment of IS. As a result of this Orphan Designation, if Questcor is successful in obtaining FDA approval for the IS indication, Questcor will also qualify for a seven year exclusivity period...
The cost for a course of treatment could approach $80,000-$100,000.

The term "orphan drug" refers to a product that treats a rare disease affecting fewer than 200,000 Americans. The Orphan Drug Act was signed into law on January 4, 1983. The intent of the Orphan Drug Act is to stimulate the research, development, and approval of products that treat rare diseases.

Now the issue of "rare diseases" is one which I do have personal knowledge. I have MS and I use an expensive self-injectible drug. The safety net for that drug is administered by National Organization for Rare Disorders (NORD), which is the same safety net Questcor now uses for H.P.Acthar Gel. However, this 'safety net' has big holes and many families will likely fall right through. If you've read my other posts, you are aware that NORD finally awarded full assistance in receiving that $21,000 drug after my earnings sunk below $20,000.

So this is what I suspect happened sometime before 2001 (of course I have no proof):

• Investor A looks at the drug industry and thinks to himself, "where is there a better opportunity to make some money?"
• Investor B - "hey, the neurological med field is booming...just look at the success of the self-injectible MS meds. They are industry blockbusters."
• Investor C - "yeah, those MS drugs are working so well that the old standby exacerbation drugs, like Aventis' H.P.Acthar Gel, aren't doing as well."
• Investor B - "you're right, but the H.P.Acthar Gel is working wonders for Infantile Spasms."
• Investor C - "you know, it's the specialty pharms which are raking in the money. We could do that with the Acthar Gel, if we owned it."

In 2001, Questcor acquires H.P.Acthar Gel from Aventis. In 2002, the FDA uses Questcor's Acthar Gel as an example of how they respond to drug shortages which affect seriously ill patients. In Oct 2003, the FDA grants 'orphan drug' status to Acthar Gel for the treatment of Infantile Spasms. In November 2003, Questcor and IDIS enter into an exclusive agreement for distribution outside of the U.S. Between 2001 and 2005, Questcor makes several strategic moves to consolidate Acthar manufacturing and distribution.

In February 2005, Questcor names James L. Fares President and CEO, followed by the announcement in April of a New Business Strategy -- Company to Focus on Neurology Products." Between May 2005 and September 2005, Questcor hires Craig Chambliss as Vice President of Sales & Marketing, Gregg Lapointe to the Board of Directors, and George Stuart as Chief Financial Officer. In October 2005, Questcor sells three of their products for $28.3 Million earning them enough money to pay off much debt and focus on realizing their grand vision. In May 2006, Questcor acquires Doral(R) giving them a Second Product for National Neurology Sales Force. In December 2006, Questcor presents data on H.P.Acthar Gel at American Epilepsy Society annual meeting. In May 2007, FDA rejects sNDA application and James Fares resigns.

So in August 2007, Questcor finally announces their new strategy which will effectively drain as much profit as possible out of A.P.Acthar Gel. Whether from private insurance, Medicare, SCHIP, Medicaid, or the patient...it doesn't matter as long as Questcor is able to...

..."fund projects which can contribute to the growth of the company."

Job well done clever investors.

So sorry patients.

Aargh!!!!

http://www.acthar.com/