A Chicago pharma company raised the price of its skin gel to $7,968. Now it is bankrupt.

Novum Pharma has filed for Chapter 11 in U.S. Bankruptcy Court in Delaware. The Chicago pharmaceutical company gained notoriety in 2016, after raising the wholesale price of its hydrocortisone acetate/iodoquinol/aloe polysaccharides (Alcortin A) skin gel to $7,968 from $226, according to a U.S. Senate subcommittee report.

Novum Pharma has filed for Chapter 11 in U.S. Bankruptcy Court in Delaware. The Chicago pharmaceutical company gained notoriety in 2016, after raising the wholesale price of its hydrocortisone acetate/iodoquinol/aloe polysaccharides (Alcortin A) skin gel to $7,968 from $226, according to a U.S. Senate subcommittee report. The company defended its pricing at the time, saying the quoted prices for Alcortin A, Aloquin, and Novacort were inaccurate and that most patients with private insurance paid no co-pay for it while those without insurance never had to pay more than $35. According to the filing, Novum hopes to sell its assets and continue operating through the bankruptcy process. Novum Chief Restructuring Officer Thomas O'Donoghue attributed the company's bankruptcy to manufacturing issues, a dispute with a wholesaler and major pharmacy chain, and unauthorized generic alternatives being introduced into the market. He said that PBMs have refused to include the company's drugs on prescription formularies, which means insurance plans often do not cover the medications. The company increased its prices to deal with that lack of insurance coverage. Although the price increases were "necessary to support patient access commitments and ensure a minimum level of profitability for the business," they only exacerbated the problem, he said.