If you’re starting a biotechnology company and thinking of developing anything other than a super-high-priced medicine for a niche market, this morning’s news that Questcor Pharmaceuticals QCOR +14.13% is being bought by Dublin-based specialty pharma Mallinckrodt for $5.6 billion may make you reconsider. Forget new drugs for any common diseases, find an old one that you can justify charging a lot more for.
In December 2012 the New York Times’ Andrew Pollack chronicled how Questcor had become an overnight success by raising the price of its product, Acthar Gel, used to treat kids with severe seizures, from $50 per vial to $28,000 per vial at that time. The drug was originally approved in the 1950s. Pollack wrote:
How the price of this drug rose so far, so fast is a story for these troubled times in American health care — a tale of aggressive marketing, questionable medicine and, not least, out-of-control costs. At the center of it is Questcor, which turned the once-obscure Acthar into a hugely profitable wonder drug and itself into one of Wall Street’s highest fliers.
At least until recently, that is. Now some doctors, insurance companies and investors are beginning to have doubts about whether the drug is really any better than much cheaper alternatives. Short-sellers have written scathing criticisms of the company, questioning its marketing tactics and predicting that its shareholders are highly vulnerable.
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Source: Matthew Herper (www.forbes.com)
