I’m sickened. While the number of opioid-overdose deaths continue to increase in the country, the price for the life-saving drug Naloxone, otherwise known as Narcan, has also increased sixfold, costing taxpayers millions.
News program “60 Minutes” on Sunday highlighted a report by Ohio Republican Sen. Rob Portman and Delaware Democrat Sen. Tom Carper, and they dove into the sky-rocketing price of naloxone.
A 99-page report by the Permanent Subcommittee on Investigations (PSI), chaired by Senator Carper, claims the Virginia-based drug company, Kaleo, “exploited the opioid crisis,” by increasing the price of its naloxone drug EVZIO from $575 per unit in 2016 to $3,750 and then to $4,100 just 11 months later, launching a new distribution model planning to “capitalize on the opportunity” of “opioid overdose at epidemic levels.”
The company also changed its sales strategy and encouraged doctors to complete paperwork to identify EVZIO as a medically necessary drug, allowing them to bypass cheaper generic versions of the drug.
“Naloxone is a critically important overdose reversal drug that our first-responders have used to save tens of thousands of lives,” said Senator Portman. “The fact that one company dramatically raised the price of its naloxone drug and cost taxpayers tens of millions of dollars in increased drug costs, all during a national opioid crisis no less, is simply outrageous.”
He additionally noted, “the Subcommittee will continue its efforts to protect taxpayers from drug manufacturers that are exploiting loopholes in the Medicare and Medicaid system in order to profit from a national opioid crisis.”
How It Happened
When the drug debuted on the market in 2014, outside experts recommended that Kaleo set the initial price between $250 and $300. However, the company decided to set the launch price at $575 – low enough to prevent restrictions on access under Medicare and for many commercial patients. It was reported that if the price hit $600, Medicare patients and an estimated 20% of commercial patients would have been required to pay more out of pocket costs for the drug, causing less prescriptions to be filled.
While at the time, sales started off weak due to insurers wanting cheaper alternatives to the drug before moving to a high priced brand-name. However, 18 months after the drug went onto the market, the drug went from $575 to $750, where as the report notes, “A company executive asserted “such post-launch price increases were ‘standard’ in the pharmaceutical industry.”
As the price increased, sales lagged, and the company brought in new consultants to advocate another approach, including price increases and the use of specialty pharmacies. During this time, prescriptions were routed through specialty pharmacies where they would clear away as many hurdles as possible to easier get the drug to their patients (ie. no more insurers looking for generic, cheaper versions or prior authorizations for the drug).
While there were some health plans expected to keep covering EVZIO, the new approach incorporated the company to cover copays, and if the insurance didn’t cover the drug, the company would provide it to the patient at no charge. So, to cover these costs, the company raised the price dramatically.
At this point, in the following months, the company raised the price of naloxone to $3,750 and then to $4,100. In 2015, the company collected an average payment of $609 per kit, and after raising the price and changing the sales strategy, the company collected from Medicare an average of $3,854 per kit.The report notes, “with the increased price and new business model, Kaleo sought to ‘capitalize on the opportunity’ of opioid overdose at epidemic levels – a well established public health crisis.”
Exploiting The Opioid Crisis
On Monday, the company defended its pricing in a public statement, noting that it’s donated kits and has saved thousands of lives – also noting it has never turned a profit.
“We believe patients and physicians should have meaningful choices,” a spokesperson for the company noted. “The is no doubt, the complexity of our healthcare system has had unintended negative implications for everyone involved, but most importantly, for patients. To this end, we explored viable paths within the current healthcare system to make EVZIO available to patients in a responsible, meaningful and affordable way.”
However, with that in mind the company still set a debut price in 2014 twice as high as experts recommended. Thankfully, EVZIO isn’t the only version of naloxone available. The nasal spray version is also available as well as generic versions of the drug.
The report concluded that, “Kaleo’s more than 600 percent price increase of EVZIO not only exploits a country in the middle of an opioid crisis, but also American taxpayers who fund government-run health care programs designed to be a safety net for our country’s elderly and most vulnerable.”