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Something's wrong: At the heart of the worst drug overdose crisis in US history, the price of a life-saving drug has been multiplied by six.
Kaleo has increased the price of its naloxone drug by 600% – from $ 575 to $ 4,100 – over the past four years. According to a new investigation report of Sens. Rob Portman (R-OH) and Tom Carper (D-DE), the pharmaceutical group wanted to "take advantage of the opportunity" presented by the opioid crisis in America. More than 70,000 people died of a drug overdose in 2017.
Fortunately, EVZIO is not the only available version of naloxone, which can quickly reverse the effects of an opioid overdose, saving thousands of lives over the years. There is also a nasal spray that the uninitiated can use, as well as generic versions of the drug.
Yet it is the story of a company that has set a starting price twice as high as that recommended by outside experts. Then, when the market did not materialize as expected, it was not corrected, but EVZIO increased the price even more.
"The more than 600% increase in the price of Kaleo on EVZIO not only exploits a country in the midst of an opioid crisis," says the Senate report, "but also US taxpayers who fund managed health care programs by the government and designed to serve as a safety net for our seniors and the most vulnerable in the country.
The price of drugs could be one of the rare opportunities for compromise between the new Democratic House, the Republican Senate and the White House Trump. Stories like Kaleo's will surely spark calls to action, even if it's a special case; Most price increases do not apply to emergency treatments to save lives.
But in its sensationalism, the story of EVZIO exposes many difficulties to solve the Byzantine and distorting system that allows a drug that saves life to see its price jump 600% during this period of urgent need.
Why a drug that saves lives has seen its price multiplied by six
Portman and Carper, who oversee the investigations of the Senate Committee on Homeland Security, have launched several investigations into the commercial side of the opioid crisis. Kaleo has been in the Senate's sights for a while, and the 99-page report deserves full reading if you have the time.
When it was created in 2014, EVZIO was an innovative treatment that allows non-users to inject naloxone into someone who has overdosed. Previous injectables of the drug required some medical expertise to inject it into a vein, while EVZIO could simply be injected into a muscle – and was accompanied by audio instructions, without the required assembly.
In this spirit, the Senate report tells the remarkable saga of a company looking for a profitable economic model in a deadly crisis.
It is a complex story, which is not suitable to be summarized in points. But I will do my best. This is what happened, according to Senate investigators:
1. Two separate external experts recommended that Kaleo establish the initial list price between $ 250 and $ 300 for EVZIO for launch in 2014. The insurers had told them that starting at $ 300, patient access to the drug would begin to be restricted and at $ 500, they could refuse to cover it. Even at a lower price, experts thought that Kaleo could "own" the naloxone market.
2. The company has nevertheless set its introductory price at $ 575. It was just low enough to prevent deep access restrictions under Medicare and for many commercial patients. If the price reached $ 600, most Medicare patients and about 20% of the commercial patients would have been forced to spend more money out of pocket for the drug, which would likely result in a reduction in the number of patients. ; orders.
3. Sales have still not materialized. This was probably due to the fact that, as the company had warned, insurers wanted lower-cost solutions to be tested before moving to a more expensive version (a so-called staged therapy strategy) or prior approval of the company. a doctor before approving a prescription.
Kaleo thought that this was more than the bureaucracy of the health care administration, as the Senate report states. Patients may not always want to be prescribed naloxone, fearing stigma and denying the overdose hypothesis. Similarly, physicians may be concerned about the implication that they would have mismanaged their patients if they needed a prescription for an overdose reversal drug.
The company's first price increase came about a year and a half after the launch of the drug, from $ 575 to $ 750. The justification for this first increase, as described in the Senate report, is revealing: a business executive said that "such post-launch price increases are" standard "in the pharmaceutical industry."
5. With sales behind schedule, Kaleo recruited new pricing consultants who advocated a two-pronged approach: dramatic price increases and the aggressive use of specialty pharmacies. They reviewed the whole model of distribution of EVZIO. Prescriptions would be routed through specialty pharmacies, bypassing the traditional marketplace where health care plans and drug benefit managers had limited access to the drug.
The company would work with physicians and specialty pharmacies to eliminate as many bureaucratic hurdles as possible – progressive therapies, prior approvals, and so on. – to facilitate the process of bringing the drug to their patients. In short, the paperwork would no longer prevent EVZIO from being prescribed.
6. Some commercial health plans were to continue to cover the drug, but under the new model, Kaleo would cover all copies, and for patients whose insurance did not cover the drug, Kaleo would provide it free of charge to the patient.
According to the Senate report, to cover these costs, the company should significantly increase the price.
"In summary, sales to EVZIO-insured patients were intended to cover Kaleo's cost of sending the drug to patients whose insurance coverage did not include Kaleo," wrote the Senate investigators. "Thus, the need to increase the price."
7. In the following months, Kaleo increased the price of her naloxone injection to $ 3,750 and then to $ 4,100. We find here the most striking part of the Senate report (it is I who underlines):
Along with rising prices, Kaleo launched its new business plan. The Executive Summary of the EVZIO Commercial Update, shown here, dated April 2016, states that "2016 is critical to long-term success." With price increases and the new business model, Kaleo has sought to "[c]apitalize on the "opportunity" of "opioid overdose at the epidemic level – a well-established public health crisis".
The report does not attract attention, but I found the final price of $ 4,100 interesting. Investigators noted at the beginning of their findings that a single package of naloxone was considered cost-effective if its price was less than $ 4,480. The price set by Kaleo for its naloxone product is therefore just below this threshold: it is about as high as possible while remaining profitable, according to estimates.
8 The company has notably introduced a new version of EVZIO at higher dosage, which has been classified as a new drug by the FDA. As a result, Medicaid and Medicare would end up paying a higher price for the drug, according to Senate investigators.
The company's executives insisted that their various decisions were made with private insurers in mind and not with government programs. Still, the company's exceptional profits would come from Medicare and Medicaid.
As explained in Kaleo's internal documents cited in the Senate report, "Medicare is a small [percentage] unit sales … but a big [percentage] net sales. "
According to the report, Medicare accounted for only 16% of EVZIO units sold in the first quarter of 2017, but 56% of revenues. Similarly, Medicaid accounted for 8% of displaced units, but 19% of revenues.
Commercial payers accounted for 66% of the units sold, but only 25% of revenues.
9. Senate investigators estimated the total cost to taxpayers of EVZIO over the last four years at $ 142 million.
10. You can read Kaleo's complete response to the Senate's findings and in-depth public scrutiny. right here. According to the company, they have never generated a profit on EVZIO. They also said that according to the information gathered in the field, their drug has saved more than 5,000 lives in recent years.
"The patients, not the profits, motivated our actions," they said.
This story is published in VoxCare, a Vox newsletter on the latest twists in the health care debate in America. Register for receive VoxCare in your inbox with more health statistics and news.
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