Opioid Antidote Price Hikes Cost Taxpayer Millions, Senators Say

(Bloomberg) -- Kaleo Inc.’s more than 600 percent price increase on its opioid-overdose antidote has cost the Medicare and Medicaid health program $142 million since 2014, according to a report by two U.S. senators.

Senators Rob Portman of Ohio and Tom Carper of Delaware said in the report, released Monday, that Kaleo “exploited the opioid crisis” by sharply increasing the price of Evzio between 2014 and 2017. Portman, a Republican, and Carper, a Democrat, run the Senate Homeland Security and Governmental Affairs investigative subcommittee.

The senators said that Richmond, Virginia-based Kaleo encouraged doctors’ offices to sign paperwork indicating that Evzio, which administers the opioid antidote naloxone, was medically necessary, ensuring it would be covered by government-run health programs even though less-costly alternatives existed.

“Naloxone is a critically important overdose reversal drug that our first responders have used to save tens of thousands of lives,” Portman said in a statement. “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.”

Kaleo defended its pricing strategy and said it was working with insurers and other stakeholders to provide Evzio at a lower cost.

“We believe two facts are critical to the Evzio story,” the company said in a statement. “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.”

Kaleo’s sales strategy was to drop agreements to participate in government programs -- and the corresponding discounts that came with that participation -- and then to push for reimbursement at the higher price they were now charging. According to the report, the price Medicare drug plans paid for Evzio went from $609 per unit in 2015, to $3,852 per unit in 2017.

The price increases came after Kaleo hired two Chicago-based consultants, Todd Smith and Benjamin Bove, who had executed similar strategies at other drugmakers.

Smith and Bove pitched a “patient-access-centered model” that was hassle-free for doctors and easy for patients too, since customers paid low or zero co-payments. At least three other pharmaceutical companies in which Smith and Bove played important roles sharply raised prices on pharmaceutical products -- in one instance by 4,116 percent, Bloomberg reported.

Neither Smith nor Bove could immediately be reached for comment. In April, a spokesman defended their work, calling it “a creative approach to ensure physicians and patients are not encumbered by the current broken system.”

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