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