Drug Price Hiked 600% to Capitalize on Opioid Crisis

By Pat Anson, PNN Editor

A U.S. Senate report and 60 Minutes are highlighting how a Virginia drug maker exploited the opioid crisis by substantially raising the price of an overdose recovery drug and passing much of the cost to taxpayers.

The report by the Senate Subcommittee on Investigations found that Kaleo, a privately-owned pharmaceutical company, raised the price of its naloxone auto-injector Evzio by over 600% to “capitalize on the opportunity” of a “well established public health crisis.” As a result, the report estimates the U.S. government paid over $142 million in excess costs to Kaleo.

Naloxone is usually administered by injection or in a nasal spray to quickly reverse the effects of an opioid overdose. Syringes containing naloxone typically cost about $15 each, but Kaleo’s two-dose Evzio injector now sells for over $4,000. The original price was $575.

“Naloxone is a critically important overdose reversal drug that our first responders have used to save tens of thousands of lives,” subcommittee chairman Sen. Rob Portman, R-Ohio, 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.”

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“We raised the price to improve access to this product,” Kaleo CEO Spencer Williamson told 60 Minutes. “The big misperception is that by raising the price of Evzio we reduce the access to this product. The exact opposite is true.”

Prescriptions for Evzio increased substantially after the price increase, but largely because Kaleo urged its sales department to have doctors sign prior authorization forms for patients stating that “Evzio was medically necessary.” Under that language, Medicare had no choice but to pay for Evzio at nearly full price.

When it was approved by the Food and Drug Administration in 2014, federal health officials called Evzio a “more user-friendly version” of naloxone because the injector gives verbal instructions on how to use it and can be administered by anyone.  Evzio was given fast-track status by the FDA and approved in less than 15 weeks without an advisory committee hearing.

“The approval of this product is great,” Andrew Kolodny, MD, founder and Executive director of Physicians for Responsible Opioid Prescribing (PROP) told Medscape at the time.

Kaleo began raising the price for Evzio the following year. By 2018, the average cost of an injector for Medicare patients was nearly $4,100. The cost for patients who pay in cash or are covered under private insurance is similar, but they make up only a fraction of Evzio sales as most insurers refuse to pay for the injectors.  As a result, Medicare and Medicaid payments account for an oversized portion of Kaleo’s revenue.

The company claims Evzio has saved over 5,500 lives since it was introduced and that “we have never turned an annual profit on the sale of Evzio.”

Naloxone has rapidly gone mainstream in recent years as public health officials and politicians have reacted to the opioid crisis by spending billions of dollars on addiction treatment and overdose prevention. Naloxone rescue kits are now routinely carried by police, firefighters and paramedics or given to heroin and opioid addicts to keep at home.

Naloxone is not usually prescribed to patients taking opioids for pain relief, although a 2016 study suggested it should be. The CDC opioid guideline also encourages physicians to prescribe naloxone to pain patients – even those on relatively modest doses.

“Providers should incorporate into the management plan strategies to mitigate risk, including considering offering naloxone when factors that increase risk for opioid overdose, such as history of overdose, history of substance use disorder, or higher opioid dosages (≥50 MME), are present,” the guideline states.

Over the years, Kaleo has donated hundreds of thousands of free Evzio injectors to first responders, schools, hospitals and addiction treatment clinics. STAT News has reported that the naloxone in many of the injectors was just months away from expiring.

According to ProPublica, in 2016 Kaleo paid nearly $950,000 to pain management doctors and addiction treatment specialists for consulting, promotional speaking, travel, lodging, and food and beverage expenses.