premature babies, premature baby

Maker of Medication for Premature Babies Accused of Price Gouging

December 17, 2008 01:01 PM
by Lindsey Chapman
The Federal Trade Commission has accused the pharmaceutical company Ovation of raising prices on two heart medications for premature babies by 1,300 percent.

FTC Sues Ovation

On Dec. 16, the FTC filed a lawsuit against Illinois-based Ovation Pharmaceuticals Inc., accusing it of holding an illegal monopoly over two drugs that treat a congenital heart defect in premature babies, according to the Associated Press.

The FTC has reported that after Ovation purchased the rights to the drugs Indocin and NeoProfen, the cost of a course of treatment rose from approximately $108 in 2005 to $1,500 today.

In a statement separate from the lawsuit, the Associated Press quoted FTC Commissioner John Leibowitz as saying, “Ovation’s profiteering on the backs of critically ill premature babies is not only immoral, it is illegal.”

According to the FTC, surgery is the only alternative to paying the high prices for the drugs that treat the heart defect, yet surgery is even more expensive and risky. As a result, hospitals pay the prices for the drugs, which “ultimately raise costs for families, tax-supported programs such as Medicaid, and other public and private purchasers.”

The lawsuit against Ovation was filed in Minnesota after a hospital in the state contacted U.S. Sen. Amy Klobuchar, D-Minn., about the price of the heart defect medicine. The Star Tribune reported that Minnesota Children’s Hospital paid an extra $150,000 in one year for the medication before health plans started picking up the tab.

In its lawsuit, the FTC “has taken the unusual step of asking the court to force Ovation” to hand over “unlawfully obtained profits,” according to the Star Tribune.

As for Ovation, the company has said it welcomes the opportunity to defend itself in court.

Additional Price Gouging Cases

In 2004, the United States Department of Health and Human Services lent its support to a Florida lawsuit against a company accused of hiking up the price of a flu vaccine by more than 900 percent. According to Medical News Today, the agency said the gouging was “unconscionable” and “a threat to public health.” Vials of flu vaccine were sold to a Kansas City, Kan., pharmacy for $900 when they typically cost $63 to $85.

California was also paying attention to flu vaccine prices that same year. The state attorney general’s office subpoenaed three flu-shot distributors in Southern California to determine whether they were inflating vaccine prices. According to the Los Angeles Times, the U.S. supply of flu vaccine was reduced to almost half after a vaccine manufacturer in Britain experienced a bacterial contamination.

Reaction: Thoughts on medical price gouging

Clark Howard has written that uninsured Americans are price gouged by hospitals as well. According to Howard, a medical journal performed a study comparing services insured patients paid at hospitals versus uninsured patients. Uninsured patients can pay considerably more for the same procedure as an insured person, Howard explains, because they lack the negotiating power of a large insurance company.

Clark concluded, “It’s nuts that our system is upside down and backwards, especially if the goal is to move toward consumer-driven healthcare based on quality of service and price.”

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