US drugmaker raises price of vitamins by more than 800%

Cost of a bottle of 100 tablets of Avondale’s Niacor increased from $32.46 to $295

In the US healthcare market the cost of medicines is not controlled by the government

In the US healthcare market the cost of medicines is not controlled by the government

 

A US drugmaker is charging almost $300 for a bottle of prescription vitamins that can be bought online for less than $5, in the latest example of price gouging in the world’s largest healthcare market.

Avondale Pharmaceuticals raised the price of Niacor, a prescription-only version of niacin, by 809 per cent last month, taking a bottle of 100 tablets from $32.46 to $295, according to figures seen by the Financial Times.

Although niacin, a type of vitamin B3, is available in over-the-counter forms for less than $5 per 100 tablets, some doctors still prefer to use the version approved by the US Food and Drug Administration to treat high cholesterol.

Avondale, a secretive Alabama-based company, put the price of Niacor up shortly after acquiring the rights to the medicine in a so-called “buy-and-raise” deal – a strategy made famous by Martin Shkreli, the disgraced biotech entrepreneur.

It bought the medicine from Upsher Smith, a division of Japan’s Sawai Pharmaceutical, this year, although neither the transaction nor its terms has been announced by the companies.

Competition

Buy-and-raise deals involve acquiring a drug that faces little or no competition before sharply increasing the price in an attempt to profit from inefficiencies in the US healthcare market, where the cost of medicines is not controlled by the government.

Avondale, which was formed in August, appears to have been set up for the sole purpose of acquiring two products from Upsher Smith.

In addition to Niacor, it bought a second of Upsher’s drugs, a respiratory medicine known as SSKI. The company makes no other medicines, according to FDA records.

Avondale increased the price of SSKI by 2,469 per cent, taking a 30ml bottle from $11.48 to $295, according to the figures seen by the FT.

The increases were confirmed by Truven Health Analytics and Elsevier, which both maintain a database of drug prices.

– Copyright The Financial Times Limited 2017