Amy Klobuchar - Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age

My work with our nations antitrust laws started with a phone call in 2008. More than a year after I was sworn in as Minnesotas junior U.S. senator, a pharmacist at Childrens Hospital in Minneapolis called our office. He told our staff that the price of a life-saving drug used to treat premature babies with heart valve defects had suddenly gone up astronomically, and he was calling for help.

A few weeks later I met with Alan Goldbloom, then president of Minnesotas Childrens Hospitals and Clinics. He confirmed everything the pharmacist had said. Ovation Pharmaceuticalsa company headquartered in Deerfield, Illinoishad bought the drug indomethacin from the mega drug company Merck and was selling it under the brand name Indocin IV. He also confirmed that Ovation had inexplicably jacked up the price. This was a drug used to treat low-birth-weight infants born with an abnormal opening between the two major blood vessels leading to the heart. The conditioncalled patent ductus arteriosus, or PDAcan lead to major health problems for vulnerable newborns, including heart failure. The price had skyrocketed since Ovation had bought the drug, going from $78 per treatment to $1,614a price increase of more than twenty times its original cost.

Doctors and hospitals throughout the nation were experiencing the same price hike. And, when more than thirty thousand babies are born every year with PDA and the only other life-saving option is surgery (not only the most expensive treatment, but also less safe), this drug price hike was exorbitant for both families and hospitals. If a babys family couldnt afford the drug, the hospital would eat the costs, and in the case of Minneapolis Childrens, the total cost of the treatment for all newborns with PDA amounted to hundreds of thousands of dollars per year.

I sent a letter to Ovation. The company responded by saying that it had purchased the drug from Merck a few years before and that the huge price increase was due to moving manufacturing from one plant to another.

Moving expenses?

Three years before, Ovation had in fact bought the rights to indomethacin from Merck. A year after that purchase Ovation had also acquired the rights to the other drug used to treat the same condition. It was called NeoProfen, and Ovation bought the rights to that drug from Abbott Laboratories before Abbott had even started to sell it.

With the second deal, Ovation essentially cornered the PDA market. The Illinois company hit the monopoly jackpot because the only way doctors across the United States could help thirty thousand sick infants each year was by buying one of only two drugs that the U.S. Food and Drug Administration (FDA) had approved to treat it. Ovation now owned both. Two days after purchasing the other drug, Ovation raised the Indocin IV price from $109 per treatment to $1,500, eventually moving it to above $1,600. Ovation also priced NeoProfen at more than $1,500 per treatment.

After learning these facts, I held a public event at Minneapolis Childrens Hospital, a place near and dear to my heart since our daughter Abigail was treated there at birth with a significant swallowing disorder. How many times had I paced those hallways, not sure if she would live, not knowing what kind of life she would lead if she did. The one thing my husband John and I didnt have to worry about back then was paying her medical bills because my law firms health insurance covered the drugs and care she needed. Not so with many of the babies born with heart defects.

At the hospital press conference were doctors and pharmacists as well as little Sophia Benson. Now healthy and rosy-cheeked, Sophia and her twin sister Anna had been born prematurely in the hospital two years before at twenty-eight weeks. Both baby girls spent time in the hospitals neonatal intensive care unit, the same place where, a decade earlier, our daughter had been treated. Sophia had been hospitalized for life-threatening PDA back when Minneapolis Childrens was covering only about $200,000 worth of the heart drug for more than 150 babies a year due to the initial cost increase. The next yearwith no changes to the makeup of the drugthe hospital paid out more than $400,000 because of the price increase. Only about one-third of the drugs jacked-up price was covered by insurance. Nationwide estimates were that the price increase was costing families, hospitals, and the taxpayers tens of millions of dollars per year.

At the hospital that day I took on Ovations price gouging. I called on the Federal Trade Commission (FTC) to investigate. I also asked the FDA to quickly approve generics for the life-saving drug since at the time there were no generic versions of indomethacin on the market.