Fred Kellerman, a retired car salesman from Los Angeles, was bedridden with a rare neuromuscular disease when he started taking a drug in the 1990s at Duke University in North Carolina. It changed his life.
“I had to have a wheelchair to get onto the airplane, but by the time I left, I could walk on,” he said.
Mr. Kellerman has been using the drug ever since, paying nothing but postage. In an unusual act of charity, a small family-run drug company in Plainsboro, N.J., has been giving it away. The drug was never formally approved by the Food and Drug Administration, but was provided under an obscure federal drug provision.
But one company’s generosity is another’s opportunity. Catalyst Pharmaceuticals, a Wall Street-traded company, last week completed an application to the F.D.A. for formal approval of a slightly modified version of the drug that does not need refrigeration. In a presentation to investors last spring, Catalyst estimated that it could make $300 million to $900 million a year from the drug, named Firdapse, that could eventually benefit as many as 8,000 patients. That works out to possibly more than $100,000 per patient.
Catalyst’s move has brought fears among patients of a punishing price increase and led to a recent call from more than 100 neuromuscular doctors for “ethical and just pricing.” Catalyst says it has not yet chosen a price and that patients’ fears are misplaced. Jacobus Pharmaceutical, the private company that has been giving away the drug, says it will also seek F.D.A. approval. The winner is likely to receive seven years of exclusive rights to sell the drug. The F.D.A. does not consider price in its evaluations, though the doctors argue that perhaps it should.
The showdown between the companies powerfully illustrates the growing tension in the United States over the rising prices of drugs. The issue has drawn increased scrutiny from policy makers and prompted rising public outrage, much of it directed at Martin Shkreli, a former hedge fund manager who has become a symbol for pharmaceutical price gouging. Turing Pharmaceuticals, the company he formerly headed, and others have been harshly criticized for abruptly raising the prices of medicines after acquiring them — without having taken the risks involved in research and development.
The neuromuscular doctors who signed an editorial in the journal Muscle and Nerve this month argue that Catalyst is seeking to profit from old medical research. But other experts credit the company with spending the time and money to get the drug approved. That will eventually make it possible for doctors everywhere to write prescriptions, instead of the few willing to fill out paperwork for each patient, said Kenneth I. Kaitin, director of the Tufts Center for the Study of Drug Development.
Catalyst’s drug has been granted special status under the Orphan Drug Act, a law passed by Congress in 1983 to stimulate the development of drugs for rare diseases that would otherwise not be profitable, offering fast-track approval, tax breaks and seven years of market monopoly. But the law has been abused, critics say, with drug companies “salami slicing” more common diseases into small categories, or repurposing older drugs that have been in general use for many years but never had F.D.A. approval, or were approved for different treatments.
“The Orphan Drug Act has been turned on its head in recent years,” said Henry A. Waxman, the former Democratic congressman who sponsored the law. “It has created a special status for orphan diseases that offer large potentials for making generous profits.”
In an analysis published in November in the American Journal of Clinical Oncology, Dr. Martin A. Makary, a professor of surgery at Johns Hopkins University School of Medicine, calculated that 44 percent of drugs approved by the F.D.A. last year qualified as orphan drugs. Prices for orphan drugs have soared, but insurance companies often cover them because they affect such small populations of patients.
“The Orphan Drug Act was intended to promote new drug development, not price gouging of old drugs,” Dr. Makary said.
Catalyst’s chief executive, Patrick J. McEnany, said in an interview that the company would offer financial assistance to any patients who couldn’t afford the medicine, and that the presentation to investors last spring was not a benchmark. Still, the drug’s approval will change its unusual status and patients like Mr. Kellerman fear rising costs.
“I’m really worried,” said Mr. Kellerman, who now lives in Las Vegas, and whose disease, Lambert-Eaton Myasthenic Syndrome, or LEMS, causes disabling muscle weakness of the limbs, body, eyes and face. “If I don’t get my drugs, I’m back to being in a bed.”
Only a fraction of Americans who need the drug are getting it, Mr. McEnany said, largely because it lacks F.D.A. approval.
Leigh Shell, whose daughter was confined to a wheelchair in 2013 and is now better on Firdapse, said in two years of searching for medicine she had never heard of Jacobus.
Mr. McEnany denied that Catalyst was repurposing an old drug. The chemical composition that allows Firdapse to be kept at room temperature makes it somewhat different from the original drug, he said, adding that he had acquired the rights from a third company — one that sells the drug in Europe.
Mr. McEnany noted that Catalyst had done many scientific and clinical studies.
The origin of the drug dates back decades. Researchers in Scotland discovered compounds in the 1970s that increased the efficiency of how nerves work, said Dr. Anthony Windebank, a professor of neurology at the Mayo Clinic College of Medicine. In the early 1980s, researchers in Sweden showed how the drug could work in LEMS patients.
Firdapse, he said, “is still basically the same drug.”
Dr. Donald Sanders, a neurologist at Duke University who has been treating LEMS patients since the 1980s and helped Jacobus Pharmaceutical design its trial, said that in the early days, he bought the raw materials for the drug from a chemical company in Morton Grove, Ill.
“It was a simple chemical,” he said. The current raw chemical price for the drug puts a year’s supply per patient at about $600, he said.
In the early 1990s, Jacobus began supplying the drug after a request from doctors working with the Muscular Dystrophy Association. The company has been giving it away ever since.
It is run by a father-and-daughter team, David and Laura Jacobus. She said they should have applied for F.D.A. approval long ago, but the process would have cost millions and the company’s other work, including on antimalarial compounds and tuberculosis drugs, was more pressing.
Asked why the company gave the drug away, she said, “We just decided that it was the right thing to do.”
She added that Jacobus would have to start charging if their drug was approved, but likely far less than Catalyst.
Most doctors say that F.D.A. approval would be a big help. Doctors now have to fill out voluminous paperwork for each patient, and patients sometimes have to travel hours to reach them.
But what premium could Catalyst fairly charge?
“If this was going to cost patients $50 a month, I’d say yes, that makes sense,” Dr. Windebank said. “But if it’s going to cost $5,000 a month, that’s outlandish.”
Dr. Ted M. Burns, chief of the neuromuscular division at the University of Virginia and lead author of the editorial calling for fair pricing, disagreed. “It’s like putting a fence on public land and charging a huge entrance fee,” he said.