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Planned Parenthood Strikes Deal on Plan B

Editor   |   August 30, 2005

By Jim Sedlak, director of STOPP International

The Food and Drug Administration is expected to announce its decision on whether a drug known as Plan B will be available over the counter without a doctor’s prescription.

Plan B is a morning-after pill — an “emergency contraceptive,” or so its manufacturers say. FDA approval would not only represent an ideological victory for Planned Parenthood Federation of America, but it would also generate a financial windfall. Because of a series of shrewd business agreements, the organization could be in position to make a minimum of $100 million profit over a five-year period from Plan B sales if the FDA gives the go-ahead for over-the-counter distribution.

The details came tumbling out when internal Planned Parenthood e-mails were made public during a California court case. These documents detail how Planned Parenthood worked out a deal with Barr Pharmaceuticals, Plan B’s owner. Under a five-year agreement, Planned Parenthood would be able to buy Plan B from Barr at bargain-basement prices, undercut local pharmacies, and clear an average $20 profit on each Plan B kit.

But even if the FDA turns down over-the-counter status, Planned Parenthood has already turned a tidy profit on Plan B.

The story begins in 1997, when the Women’s Capital Corporation was formed for the express purpose of bringing a morning-after pill to market in the United States and Canada through a public/private partnership. Five nonprofit Planned Parenthood affiliates made equity investments in the corporation, so these affiliates were positioned to share in any profits Women’s Capital generated.

Those profits began to be realized two years later, when the FDA approved Plan B as a prescription medication on July 28, 1999. By the end of the year, Planned Parenthood had already sold more than 100,000 units of Plan B. The sales figure at Planned Parenthood alone climbed to more than two million units by 2003, generating tremendous interest in Plan B and enhancing the value of the interest those five Planned Parenthood affiliates held in Women’s Capital Corporation.

Seeing an opportunity to expand its market as well as its income, Women’s Capital asked for FDA approval to sell Plan B over the counter in April 2003. Shortly afterward, Barr Pharmaceuticals entered the picture by making an offer to buy Women’s Capital Corporation. Barr’s pursuit accelerated in December of that year, when FDA advisory committees recommended over-the-counter sales of the so-called emergency contraceptive.

In a deal worth about $21 million, Barr’s purchase of Women’s Capital Corporation was finalized in February 2004. As equity holders in Women’s Capital, the five participating Planned Parenthood affiliates shared in the profits of that sale. But that’s not the end of the story, and that’s not the only way Planned Parenthood has profited — and will continue to profit — from Plan B.

The details of this enormous money-making enterprise were uncovered in an unrelated California court case. A top financial officer of Planned Parenthood of Los Angeles sued the organization for wrongful termination. As part of that trial, private documents became public, outlining Planned Parenthood’s deal with Barr Pharmaceuticals and its profit potential from Plan B.

One of the documents is a February 9, 2004 e-mail from the PPFA vice president of medical affairs, Vanessa Cullins, M.D., to all Planned Parenthood affiliate CEOs. The executives were told that Planned Parenthood was “in the midst of confidential discussions” with Barr and that Planned Parenthood’s “immediate interest is to develop and protect our market base.”

Cullins then wrote that “Barr’s senior management has informed us that they are committed to hold intact public sector pricing and the Planned Parenthood special pricing at $4.50 and $4.25, respectively, for the next five years. This will remain valid whether the product becomes an over-the-counter product or continues with prescription status.”

On reading this startling e-mail, STOPP International asked people around the country to find out what Planned Parenthood was charging for Plan B at its clinics. Prices varied from $18 to $42, but the average was $25. So here you have a product that Planned Parenthood purchases for less than $5 and sells for an average of $25. Planned Parenthood is making a profit of more than $20 on each kit it sells. By 2003, Planned Parenthood reported selling more than 750,000 kits in that year alone. By using those average figures, this means Planned Parenthood made at least $15 million in profit from this one product in one year.

STOPP’s research showed that the average retail price for Plan B is about $32. So not only is Planned Parenthood making a huge profit, but because of the “special pricing” from Barr, it is able to undercut its competition.

What happens if Plan B becomes available over the counter? We know from Cullins’ e-mail that Barr has committed to hold the retail price steady. This means that Planned Parenthood will still be able to significantly undercut retail stores and still make an huge profit.

In addition, over-the-counter status will greatly increase Planned Parenthood’s ability to sell the product in different venues. Planned Parenthood may take the kits to county fairs and sell it directly from its booths. They may sell this product at health fairs across the country. We certainly expect Planned Parenthood to sell the products by phone and through its stores on the Internet.

With its five-year deal with Barr, Planned Parenthood stands to make hundreds of millions of dollars from over-the-counter availability of this one product alone. Is it any wonder that Planned Parenthood is so forcefully pushing for FDA approval and has recently threatened to file a lawsuit against the FDA if it dares to deny over-the-counter status?

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