Sen. Amy Klobuchar (D-Minn.), for example, wrote a letter to Kaléo CEO Spencer Williamson in February, and called for transparency in drug pricing.
“Due to the severity of the opioid epidemic and Evzio’s life-saving attributes, it is critical that your products remain affordable to Americans,” she wrote.
She also sponsored an amendment that Sen. Bernie Sanders (I-Vt.) introduced in the Senate in January, to allow Medicare to negotiate with drug companies to secure lower prices and to enable Americans to import cheaper drugs from Canada and elsewhere. The amendment failed, 52 to 46.
Without drug industry regulation, however, it’s unlikely that the current pattern will change. Consumers will continue to shoulder the cost of increasing prescription drug prices in other ways, such as via increased premiums and deductibles.
The hidden way consumers bear the cost of drug spikes
Just because the price of Evzio has jumped 700 percent doesn’t mean patients are paying that much more for it. The list price is the average price wholesale buyers pay.
“Pharmaceutical list prices are not a true net prices to insurance companies, pharmacy benefits managers or distributors due to the numerous discounts, chargebacks and rebates that are routinely negotiated in the health care system,” said Mark Herzog, vice president of corporate affairs at Kaléo.
“Nobody actually pays that price,” Williamson told HuffPost. “There’s, I think, a lot of misunderstanding out there.”
Kaléo provides free Evzio to qualifying patients who don’t have commercial or government insurance and have a combined household income of less than $100,000, Williamson said. As of early February, Kaléo had donated more than 200,000 doses in 30 states. There are no out-of-pocket costs for people with insurance, but those patients are still responsible for insurance premiums.
Ezvio costs $360 for patients without insurance and household incomes above $100,000. That higher price allows the company to absorb the cost of giving away free Evzio when insurance companies block the drugs from their plans, Williamson said.
Arthur Caplan, the founding director of New York University’s Division of Medical Ethics, doesn’t buy Williamson’s claim that donating Evzio to vulnerable patients offsets its high list price. Raising a drug’s list price, after all, also increases a company’s profits.
“Anytime the price goes up, access goes down,” Caplan said. “It doesn’t matter whether the consumer sees it, or the third-party payer sees it or the budget of the EMT department of Baltimore sees it.”
And that increased price gets passed on to the consumer eventually, with higher premiums, copays, deductibles or coinsurance ― which is when a patient shares responsibility for paying a percentage of the prescription’s cost with his or her insurance company.
Williamson declined to comment on how much money Kaléo makes from Evzio, saying, “We don’t share the confidential information about the company.”
The fallacy of community donation programs
Kaléo has responded to criticism of the price spike by highlighting its donation grant program, which provides free Evzio to nonprofits, harm reduction groups and health departments serving patients with financial hardships.
But groups typically don’t get the drug for free unless they apply for a grant, and there’s no guarantee that the program will continue indefinitely. Insurance companies or municipalities that aren’t grant recipients may not choose to stock the drug if they can’t absorb the price increase.
“There’s no such thing in the drug industry as a partial giveaway program,” Caplan said. “You just are buying it. It’s a sales tactic, not an altruistic charitable act.”