A new study published by JAMA Internal Medicine poses a really important question to lawmakers and taxpayers alike.

Over the past five years, why has the US government spent $1 billion on a drug that is no more effective than alternatives that are tens of thousands of dollars cheaper per treatment?

The drug is called Acthar, and for the past year it has been the focus of a study by the Oregon Health and Science University School of Medicine and Oregon State that has been trying to understand why doctors keep prescribing it for ailments it has never been proved to treat effectively.

The study found that a surge in government spending – ultimately a tenfold increase – on the drug was driven in part by a relatively small group of doctors who were prescribing it heavily (both with more prescriptions per person and with a spike in people being treated with it). And, the study notes, this can’t just be explained away by the fact that it may be used on more “severely ill” patients.

“I was shocked for my profession,” said Dr. Dennis Bourdette, one of the authors and a professor and chair of neurology at OHSU, told Business Insider following the publication of the findings in JAMA. There’s an accompanying – and scathing – editorial, written by Saate Shakil, a doctor at the University of California at San Francisco School of Medicine.

“I hold physicians to a higher standard,” Bourdette said, noting that some alternatives to Acthar cost 1/50th of the drug’s price. “It’s a mystery to me why someone would be prescribing the drug.”

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Acthar was grandfathered into approval by the Food and Drug Administration. Its primary use is to treat rare infantile spasms, but the company that makes it, Mallinckrodt Pharmaceuticals, is promoting its use for 18 other treatments too. And the price of the drug has gone from $748 a vial in 2001 to almost $40,000 today. That billion dollars the government is spending is from Medicare Part D, a program for elderly Americans (not infants) that spent more than $500 million on the drug in 2015 alone.

Business Insider has written about a lot of this before, including the fact that Acthar, and its importance to Mallinckrodt, has become a serious concern among its shareholders – and made the drugmaker a target for short sellers who profit from the stock’s decline.

But JAMA Internal Medicine notes that this goes well beyond Mallinckrodt’s intentions and the impact on its shareholders. Here’s how Shakil put it in the editorial, (referring to Acthar as rACTH):

“The lack of high-quality evidence supporting Acthar gel’s benefit in a variety of conditions, along with the unconscionable price increase by the manufacturer, should give pause to all practitioners. Not only should clinicians consider the lack of evidence supporting the efficacy of rACTH, but its story should cause us to reexamine and strengthen our standards for FDA approval, Medicare and private insurance coverage, and professional use patterns.”

No good studies

Foto: Medicare spending on Acthar. source Andy Kiersz/Business Insider

Bourdette’s paper focused on Acthar as a treatment for multiple sclerosis. Recently, the disease has caught the attention of Democrats in Washington because treating it is so expensive.

In a statement, Mallinckrodt reiterated that the FDA had approved Acthar for MS relapses and that MS relapses could vary among patients. Acthar is used to patients who don’t respond to first-line treatments (steroids) or who cannot tolerate them, the company said.

“Both the American Academy of Neurology and the National Multiple Sclerosis Society have said that alternative treatment options are needed for patients with MS relapse who cannot tolerate steroids, do not respond to steroids, or do not want to take steroids,” Mallinckrodt said in a statement. “Accordingly, H.P. Acthar Gel may provide an option for patients who need an alternative treatment option.”

Bourdette agreed that patients need alternatives, but he told Business Insider “there are no well-designed studies demonstrating that Acthar is an effective alternative treatment MS patients.”

What’s more, Bourdette pointed out, Mallinckrodt’s defense of Acthar’s treatment for MS says nothing about the other uses Medicare is paying for. Those make up 60% of the drug’s cost to taxpayers. Beyond neurologists, the paper also focused on rheumatologists and nephrologists prescribing the drug.

Foto: source Business Insider

Acthar has gotten attention for its cost and efficacy before. In an angry letter back in 2015, Sen. Tim Scott, a South Carolina Republican, demanded to know why Medicare was paying so much for the drug. Medicare responded by telling him that Acthar was being paid for legally – it would be up to Congress to change that.

When the city of Rockford, Illinois, realized Acthar was taking up 2.5% of its medical budget for just two infants, it filed a lawsuit against Mallinckrodt saying the expensive drug was part of “an anticompetitive, unfair and deceptive scheme.”

On top of that, a former Mallinckrodt employee and shareholder is also suing the company for failing to disclose that 60% of its revenue comes from Acthar. His shares were bought as part of the company’s stock-purchase plan, so he’s also suing on behalf of the plan.

Mallinckrodt says it’s also concerned with the high cost of drugs. Acthar, it has argued, is worth it when you “look at the total cost of managing MS relapse, which includes inpatient, outpatient and pharmacy costs.”

In his interview with Business Insider, Bourdette could not have been more emphatic that that was not the case.

“When we looked at it,” he said, “we realized it was so egregious we felt ethically obligated to say something.”