WASHINGTON, D.C. - A Virginia pharmaceutical company raised the price of its opioid overdose reversal drug by more than 600 percent in 2016 as a way to "capitalize on the opportunity," says a report released Sunday by an investigative subcommittee chaired by Ohio GOP Sen. Rob. Portman.
The report from Portman's Permanent Subcommittee on Investigations said actions by the Richmond drug company, kaleo, to push up the price of its nalaxone drug, EVZIO, increased costs to taxpayers by more than $142 million in the last four years even though less expensive versions of naloxone were available.
"Naloxone is a critically important overdose reversal drug that our first responders have used to save tens of thousands of lives," said a statement from Portman about the report, whose details were first aired on CBS' "60 Minutes."
"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," Portman continued, pledging his 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."
The report from Portman's subcommittee says kaleo raised its prices on the recommendation of drug industry consultant Todd Smith, who drastically raised prices at other firms that hired him. The company paid Smith and his partner more than $10.2 million for their work.
The distribution model that Smith proposed raised the price of the drug by more than 600 percent by 2016, from $575 per unit to $3,750 and then to $4,100, the report said, even though the company said its production cost for the drug is $174 per unit.
To make sure the drug would be covered by government programs like Medicare and Medicaid, the company's sales force focused on making sure doctors' offices signed necessary paperwork that said that EVZIO was medically necessary, the report said.
Its model relied on patients with insurance coverage to subsidize patients without coverage, the report said. Kaleo said insurance covers around 26 percent of EVZIO prescriptions for commercial patients and the company gives away the remaining 74 percent of the drug.
Sales of the drug climbed after the price increase. While the company said its new model focused on patients covered by commercial health insurance, most of its initial revenues were from Medicare and Medicaid, which paid excess costs of $142 million for the drug even though less costly medicines were available, the report said.
"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," the report said.
The company says it gives away a high proportion of the EVZIO it makes, and it is working with "insurers, policymakers and government officials, to provide EVZIO at a lower cost while ensuring patients and their loved ones have access to this life-saving drug."
"We believe two facts are critical to the EVZIO story," said a statement from kaleo. "First, we have received voluntary reports from recipients of donated product that EVZIO has saved more than 5,500 lives since we launched the product in 2014. Second, we have never turned an annual profit on the sale of EVZIO. Patients, not profits, have driven our actions."
The report from Portman recommends that the Centers for Medicare and Medicaid Services review its policies to keep drug companies from inappropriately influencing prescribing, and that Congress should mandate a three-day limit on opioid prescriptions because addiction risks increase with longer use.