There's a great deal to be learned from the recent price hikes on Seconal Sodium (a/k/a Seconal) — some of it very difficult to think about. The fact is that Seconal is widely prescribed for physician assisted suicide, at least in the states where this practice is legal and reported. Seconal began life in the 1930's and quickly earned its reputation as a dangerous drug. Over time, it came off of patent and interest in its production declined. Seconal is back in the news because of very recent price increases by the firm with current rights to sell Seconal. Valeant Pharmaceuticals holds these rights now.
A lethal does of Seconal has reportedly gone from $200 in 2009 to about $3000 dollars today, so this is not exclusively a Valeant-driven run up in price. In fact, Valeant is just the latest of a series of owners of the right to sell (but not, necessarily, to produce) Seconal, though Valeant's recent doubling of the retail price has caused significant comment. Now, Valeant has its own troubles (as does Philidor Rx Services, a pharmacy until very recently closely association with Valeant). It is a firm built on a seek the undervalued product, buy it low, raise the price, and then move on strategy. Mike Pearson, Valeant CEO until about a week ago, was historically unapologetic about this business model, saying: [If ]“products are sort of mispriced and there’s an opportunity, we will act appropriately in terms of doing what I assume our shareholders would like us to do.”
There's the rub, particularly for a prescription drug widely used for physician assisted suicide. What does it mean for a sole source generic drug to be "sort of mispriced?' Pharmaceutical pricing can be and is based on a dizzying array of models. Valeant's refreshingly and startlingly clear adoption of market based pricing has shocked some not ordinarily exposed to the vagaries of pharmaceutical pricing but has shocked few within prescription drug land. This is the Valeant business model, after all, and Valeant has been the darling of Wall Street for some time for it.
Now, maybe it was genius to anticipate the spike in demand for Seconal once California's Physician-Assisted Suicide law was passed (though, through an interesting drafting provision, it will not take effect until June 9, 2016). Or, was it hubris, given that the numbers of those actually using physician-assisted suicide where it is legal and where it is studied are not large, though the trend line does show a steady increase? Or, was it both? Is what we are seeing a calculated gamble that California's new acceptance of physician-assisted suicide will spark a surge of both interest and use? Will it tip any number of other states into legalizing the practice?
It is worth noting that the value of a prescription for a potentially life-ending dose of Seconal is not in its use but, for the overwhelming majority of those seeking these prescriptions, in its potential as a back up plan. Seen from this perspective, Valeant's profits are extracted as the price of a health care system where so many can imagine a medical fate worse than death.
Whichever trend line develops, Valeant would have needed to make their money fast as significant increase in demand might well entice a generic manufacturer into the market. So, some growth but not wild growth might allow for maximum profit until it became time to abandon the drug and move on to the new cool thing.
But Valeant may have miscalculated the visceral public reaction on this one. Even though California law allows insurers to decide whether or not to cover the physician-assisted suicide drugs at will, a majority appear poised to do so. Medi-Cal will also cover these prescriptions. So, it will be a relatively small number of Californians exposed fully to these remarkable drug price increases unless, of course, steep price increases would lead to the placement of the drug on the top (high copay) tier of prescription drug coverage. Time will tell.
Veterinary Nembutol is, of course, much more modestly priced.