Naloxone has saved many lives in the opioid epidemic. The prescription drug quickly reverses the effect of an overdose. Without its availability, the toll would be higher than the devastating 49,000 dead from opioid overdoses nationwide in 2017, with 4,162 in Ohio. The reach of naloxone improved four years ago when the drug company Kaleo introduced the new, easier-to-inject version, no longer requiring professionals to administer. A friend or family member could apply the drug.
Kaleo had a product soon to be in demand. The company sought the advice of outside experts in setting the initial price for the drug EVIZO. They recommended between $250 and $300 per unit. One consultant predicted the company would “own the naloxone market.”
The company didn’t take the advice. It set a launch price of $575, and when sales did not follow as hoped, it looked for an alternative path to “[c]apitalize on the opportunity” of “opioid overdoses at epidemic levels — a well established public health crisis, ” according to a company document. Kaleo even found a way to set the price higher, ultimately reaping $142 million in taxpayer dollars.
This is a story of exploitation told by the U.S. Senate Permanent Subcommittee on Investigations, chaired by Rob Portman, an Ohio Republican, in a report released this week. In the past, the panel has examined other aspects of the opioid epidemic, including the shipment of illegal opiates from China into this country through international mail, resulting in the STOP Act, enacted last month. In this instance, Portman did not overstate things when in a statement he described Kaleo’s conduct as “simply outrageous.”
With EVIZO struggling to gain a presence, Kaleo looked to new pricing consultants for help. They recommended, and the company embraced, even steeper price increases and a route around the traditional market, going directly to the patient through physician offices and specialty pharmacies. This meant securing the paperwork or prior authorizations to ensure that EVIZO would be deemed medically necessary, the prescriptions filled and covered, in particular, by government programs such as Medicaid and Medicare.
The company thus avoided bureaucratic hurdles such as patients required first to try cheaper options. How high did the price climb? It went to $3,730 and then to $4,100 per unit. According to the report, the unit cost of EVIZO amounted to roughly $174.
Kaleo argues the new distribution model expanded access, and the company, as the report points out, “self-insured prescriptions not covered by health plans giving the patient the EVIZO at no cost.” Those patients with insurance coverage ended up subsidizing heavily those without coverage. Which gets to the high price.
It follows, too, that under the model, Kaleo tapped deeply into Medicaid and Medicare, the health-care programs playing a large role in that subsidy. The report highlights how Medicaid and Medicare paid far more per-unit for EVIZO than commercial payers.
Thus, the report recommends that the federal government examine the loophole exploited by Kaleo, gaining the paperwork that deemed EVIZO medically necessary, ensuring it would be covered no matter the cost, essentially. Another recommendation rightly calls for improved transparency regarding the total sum spent for drugs bought by the federal government.
Kaleo insists it has yet to make a profit from ENVIZO sales. The drug has been a lifesaver, many times. What Rob Portman and the subcommittee have uncovered is how the system shouldn’t work, ENVIZO priced at such outrageously high levels.