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FEUD! Big Pharma vs. Your PBM


May 31, 2017 – In a lawsuit that highlights the dangers of rising drug costs, PMBs and drugmakers reveal the games the games they play.


In the midst of an opioid crisis that has become an epidemic, Kaleo Pharmaceuticals, a small private drugmaker, last year rasied the price of its drug Evizio. The price of a twin pack of the injectable overdose treatment went from $690 to $4500 overnight, an increase of 550%. In a letter to Kaleo, Senator Claire McCaskill and 30 other senators wanted to know WHY.


According to the CDC, at least 91 Americans succumb to opioid overdose every day, which experts partly blame on prescription painkillers. In response, the company pointed out that Americans with insurance and a prescription could get Evzio for no out-of-pocket cost, or for $360 if they paid cash. This was, of course, cold comfort for the self-funded companies footing the bill.


Express Scripts Sues Kaleo for Unpaid Fees


The story might have ended with the senators’ strongly-worded letter and Kaleo’s response, if not for Express Scripts, the nation’s largest pharmacy benefits manager (PBM). In a recent filing in the United States District Court, Expresss Scripts has sued Kaleo for unpaid fees pursuant to “rebate agreements” between the two companies.


In the course of advising self-funded employers, we often find that our clients are reluctant to make formulary changes due to the promise of “rebates” for a given drug. The Express Scripts filing – redacted though it is to protect “sensitive business information” – exposes the ways in which deals between drugmakers and PBMs have been structured to the detriment of patients and their employers


As the New York Times put it, PBMs have been accused of “operating in the shadows, pocketing an undisclosed share of the payments from drug makers even as consumers are asked to pay inflated prices.” The Express Scripts complaint all but confirms this: following Kaleo’s price increase, rebates remained roughly stable, while “administrative fees” – monies pocketed by Express Scripts – skyrocketed!


Keeping an Eye on Your PBM


Scripta has worked with Express Scripts, and we know that PBMs do a lot of heavy-lifting for client companies, offering both administrative and pricing effciencies. With that said, hidden fees are commonly found in standard contracts and discount cards circumvent existing pricing protections. It is therefore critical that self-funded employers (most of all) keep an eye this tug-of-war between drugmakers and PBMs.


In response to Senator McCaskill’s letter Kaleo touted its “Evizio Savings Program,” which like so many other discount cards merely drives sales of more expensive drugs. Evizio delivers a single dose of naloxzone, which can reverse the effects of an opiod overdose. That’s great, but the fact is that there are much-less expensive alternatives, including generic naloxzone and other, cost-effective alternatives.


Note that Express Scripts chose to cover Evizo expecting to be paid, and they are still waiting.

Read the New York Times account here:

“Express Scripts Sues Maker of Overdose Drug, Intensifying Feud”


Have a look at the lawsuit itself as filed in US District Court, Eastern District of Missouri: 

“Express Scripts vs. Kaleo”

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Scripta™ is neither a pharmacy nor a doctor. The benefit service does not tell you what drug to take and does not participate in the drug selection process. Only your physician can determine the medications that are right for you. These alternative medications are options for less costly drugs that physicians may prescribe in place of the medications you are taking now. Scripta has reviewed your current medications only for the purpose of identifying potential cost savings for you to consider with your physician. Scripta has not analyzed the effectiveness or other therapeutic aspects of these medication alternatives. Accordingly, this report and any other forms of communication received from Scripta are not, nor should they be interpreted as, any form of treatment, drug regimen review, or provision of counseling or consultation by a prescriber, pharmacist or pharmacy. Do not stop taking your medication, change your medication, or start taking a new medication without being directed to do so by your physician and filling the prescription under the oversight of a licensed pharmacist. The alternatives set forth above may not be equivalent to your current medication, may interact adversely with your other medications, may not be indicated in light of your other conditions, may cause different or severe side effects, or may be less effective at treating your condition. Medication prices are approximate based on information provided by your pharmacy benefits manager, insurance plans, and/or employer, and may vary from pharmacy to pharmacy. Check with your insurance plan to obtain a full list of pharmacies where your prescriptions can be filled. All information herein is HIPAA protected, treated as highly confidential, and never shared with your employer.

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