The privately held drugmaker Kaleo Inc. increased the price of its lifesaving medication by more than 600% in recent years, a new Senate subcommittee report has found, calling the company’s actions a way of taking advantage of the U.S. opioid crisis.
Evzio dispenses naloxone, a substance that can reverse an opioid overdose that is widely used by medics in treating addicts. After price hikes made over the course of just 11 months, Evzio cost $4,100 for two doses, a burden shouldered by federal programs, taxpayers and health insurers, according to the report.
Two doses of the other brand-name naloxone product, Narcan, cost $125, by contrast, and more inexpensive generic naloxone products are also available.
In spite of the product’s high price tag, though, “Kaléo has still not earned a profit in over four years of the drug being on the market,” the new report found.
For its part, Kaleo points to that fact as proof of its good intentions, as well as the thousands of lives it says that Evzio has saved since its launch.
The company is “disappointed with the way in which some of the facts are being presented and believe there is much more to this very complex story,” it said in a statement. “Patients, not profits, have driven our actions.”
Senate subcommittee report Privately held Kaleo increased the price of its opioid overdose rescue medication, Evzio, by 600%, at the advice of two drug-pricing consultants, a new report has found.
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The latest revelations about Kaleo and its drug-pricing strategy come by way of a new report from the U.S. Senate Committee on Homeland Security and Governmental Affairs permanent subcommittee on investigations.
The subcommittee interviewed individuals at Kaleo, consulting companies that advised the company on pricing issues and other industry players, and reviewed more than 170,000 documents.
Kaleo’s Evzio packages the rescue medication naloxone in an auto-injector, a pre-loaded medical device that makes it easier to administer. The product is small enough to fit in most pockets, according to Kaleo, and gives voice and visual guidance to help those using it.
Drug-pricing consultants recommended that Kaleo price it at around $250 to $300, according to the new report, but when it came on the market in mid-2014 Evzio was priced higher, at about $575.
Cheaper options were available, though, and Evzio “failed to develop a market,” the report found.
Then two new consultants were brought in. The consultants, Todd Smith and partner Ben Bove, had a reputation for a non-traditional approach to new medications, according to the report.
See more: Opioids are ravaging the U.S., but they’re still the best pain drug we’ve got
Smith typically used a new distribution model that also significantly upped drug prices, and was behind increases at Horizon Pharma HZNP, +1.35% for an arthritis medication and at privately held Novum Pharma for a skin gel, the report said.
The consultant came up with a similar strategy for Evzio, and Kaleo paid his consulting firm, Underhill Pharma LLC, more than $10 million for about two years of work, according to the report.
In February 2016, Kaleo increased the drug’s price to $3,750, saying that it was geared at making sure more people could get it at no cost.
According to Kaleo’s website, all individuals with commercial insurance “pay absolutely nothing out of pocket” for the product, so long as they go through a direct delivery service.
Prescriptions rose, the report found.
When health plans wouldn’t cover Evzio, which Kaleo said happened for roughly 74% of commercial prescriptions, according to the report, Kaleo ate the cost, or about $174 for two products.
Ultimately, this model “relied on patients with insurance coverage to subsidize patients without coverage,” the report concluded. “Thus, the need to raise the price to $3,750 and, eventually, 11 months later to $4,100.”
Another player paying big for Evzio prescriptions: the government, and ultimately taxpayers.
Medicare and Medicaid accounted for three-quarters of net sales of Evzio in the first quarter of 2017, according to the report, with Medicare paying $3,522 on average per prescription and Medicaid paying $2,412 on average.
