Same drug, a new price, but same old headache in care

Each year, about 3,000 babies -- most of them premature -- are born in the United States with a heart defect that can be treated with drugs or surgery.

For many years, the condition, called patent ductus arteriosus or PDA, was treated with a drug that cost $108 -- not too pricey as drugs go. But recently Merck & Co. Inc. sold the drug to Illinois-based Ovation Pharmaceuticals, Inc. Ovations has since jacked up the price to more than $1,500 for a course of therapy.

Now U.S. Sen. Amy Klobuchar, D-Minn., wants to shine a bright light on what the company has done. She plans a news conference today at Children's Hospitals and Clinics in Minneapolis.

"We need to highlight how messed up the system is when a pharmaceutical company can rip off premature infants with bad hearts," she said Friday.

She's calling on the Federal Trade Commission to investigate and wants the Food and Drug Administration to move faster to approve generic versions of the drug, which would cost far less.

Ovation responds

In defense, Ovation says the higher price reflects the significant costs it incurred when it took over manufacturing and distributing of the drug indomethacin, which is sold under the brand name Indocin I.V.

PDA is a condition that involves the ductus arteriosus, an arterial shunt that helps distribute oxygen from the mother to the baby in utero. The shunt typically closes shortly after birth, permitting the baby's lungs to begin functioning normally. If the shunt remains open, the condition can lead to serious complications.

If the shunt doesn't close on its own, it must be prompted by a drug to close. If that doesn't work, it must be surgically tied off.

The cost of the drug is typically covered by insurance. But when the price shot up, Children's ended up picking up the rest of the tab because of existing contracts with insurance plans.

In 2006, just before prices went up, Children's treated 157 babies with the drug at a cost of $205,000, which insurance covered. In 2007, Children's treated 202 babies with the drug at a cost of $690,000. The hospital ate the difference of more than $400,000, said chief medical officer Phillip Kibort.

Sophia's case

Children's says it paid the difference in cost in that case, too.

Kibort said the hospital is used to paying high costs for drugs that have just hit the market. What's unusual about this drug, he said, is that it's been on the market for years and now suddenly has shot up in price.

Ovation, based in Deerfield, Ill., is a six-year-old private company that doesn't disclose its revenues.

In 2005, Ovation acquired Indocin I.V. from drug giant Merck. The next year, Ovation launched an alternative drug for the same condition, marketed under the name NeoProfen. NeoProfen is priced slightly below Indocin I.V.

Ovation bills itself as a company that develops and markets drugs for underserved populations, rather than the mass market. Eighty percent of its drug portfolio is approved for pediatric problems, said Young.