On Senate Floor, Portman Highlights How PSI Investigative Report Resulted in Lower Prices for Opioid Overdose Reversal Drug

December 14, 2018 | Press Releases

WASHINGTON, D.C. – Last night, U.S. Senator Rob Portman (R-OH) delivered remarks on the Senate floor about the bipartisan Permanent Subcommittee on Investigations report, which was highlighted on 60 Minutes, that found the drug manufacturer kaléo increased the price of its opioid overdose reversal drug by more than 600 percent to “capitalize on the opportunity” of “opioid overdose at epidemic levels.” Following the PSI report and a 60 Minutes segment, kaléo announced plans to take steps to reduce the price of its naloxone auto-injector from $4,100 per unit down to $178.

Transcript of his remarks can be found below and a video can be found here.

“This evening I want to talk a little about the nexus of high prescription drug costs and the opioid epidemic that has gripped my state and our country. It’s the number one public health crisis in America today. It’s a story of greed, frankly, and it’s a story of the need for some fixes here in Congress to keep it from happening again.

“With regard to the opioid crisis, I think that the degree that this is affecting our communities is well documented. 72,000 Americans died last year from overdoses from drugs. This is a high water mark for our country. It’s a grim statistics. More than two-thirds of those overdose deaths include what’s called opioids. This would be heroin, prescription drugs and painkillers, and also the new synthetic opioids—the fentanyl, which is responsible for most of the opioid deaths. I think we’ve made good progress over the past couple of years here in Congress in passing new legislation to help address this problem—new innovative ways to get people into treatment, longer-term recovery, which we know works well in some instances, and to do a better job on prevention and education.

“I do think those numbers will begin to turn around, but they haven’t yet. The Comprehensive Addiction and Recovery Act, which we passed in 2016, is starting to work. The CURES Act is starting to work. And most recently the president signed legislation to try to reduce the influx of this synthetic opioid coming through China, mostly through the U.S. mail system, based on research we had done. That’s called the STOP Act, so, again, making some progress. But these overdose death rates are just unbelievably high, and it’s a tragic situation, not just in my state, which is probably top three or four in country, but throughout our nation.

“There is a miracle drug that can be used to reverse the effects of an overdose, and one reason we’re beginning to see some progress in some regions of my state and around the country is that we are getting this out to more first responders others who can, in effect, save people from an overdose, and then of course the trick is to get that person into treatment and not just have these overdoses continue to occur, and that’s where the more innovative programing is starting to make a difference.

“But I guess I could say that we have never in the history of our country had more need for this miracle drug to reverse the effects of an overdose. It’s called naloxone, and naloxone is again something we’re using more and more and saving more and more lives. I’m going to talk this evening about a company that exploited the opioid epidemic by dramatically increasing the price of this naloxone drug by more than 600 percent, just in the space of a few years.

“The Senate Permanent Subcommittee on Investigations, which I chair alongside Tom Carper, a Democrat from Delaware, conducted a year-long investigation—bipartisan investigation, really nonpartisan investigation—into this naloxone issue. We were concerned about the rising costs and wanted to find out why it was happening. We focused on a pharmaceutical company called kaléo and their naloxone auto-injector called EVZIO. While naloxone is available in generic form, two branded products exist for take-home use by untrained individuals in the case of an overdose. One is the nasal spray called Narcan. You may have heard of that. Narcan is something that many first responders use and know about, but the other one is this EVZIO drug, which is, again, this other branded naloxone product. Narcan is available at a cost of $125 for two doses.

“EVZIO, I thought it was an innovative product when it came out. And indeed it has some innovative aspects to it. A unit includes two auto injectors and a training device that provides verbal instructions to talk the user through using the product. Before kaléo took EVZIO to the market, industry experts who were impressed with the products said they should probably charge between $250 and $300 for this product—again, miracle drug to reverse the effects of an overdose. They told the company that they could “own the market” at that price of $250 to $300 a unit.

“Instead the company decided on charging a higher price, taking it to the market in October of 2014. So about four years ago they took it to the market for a price of $575 per unit. With sluggish sales, I think because the price was a little higher than, again, was advised, kaléo could have lowered the price. Instead the company went the other direction. It implemented a new distribution model proposed by an outside drug pricing consultant who has installed similar distribution models at other pharmaceutical companies, by the way, and this involves dramatically raising the drug price. Now let me explain this.

“As part of the distribution model kaléo increased EVZIO’s price from $575 per unit in 2014—again, October 2014—to $3,750 in February of 2016 and then to the current price of $4,100 in January of 2017. So they started off a little high, had sluggish sales, and instead of going lower, they went from $575 to $4,100. That’s more than a 600 percent increase over the space of about two and a half years, 600 percent increase in this drug that’s so needed right now in our communities. Why did they do this? Well, according to company documents, the new distribution model for EVZIO was designed to ‘capitalize on the opportunity’ of ‘opioid overdose at epidemic levels.’

“So, in effect from the company’s own documents, they chose to capitalize or exploit the opportunity of the opioid epidemic, this tragic epidemic that is killing more Americans than any other thing in my home state of Ohio and the number one cause of death for Americans under 50 in the entire country. 72,000 is the number from last year, number of overdose deaths. So, as part of this new model, the company worked to ensure that doctors’ offices signed paperwork indicating that EVZIO was medically necessary. Why is that important? Well this ensured that government programs like Medicare and Medicaid, programs that, as you know, are already programs that we look at every year and think, gosh, how do these costs keep going up? What do we do to maintain these important programs? But they said they would increase the cost of this drug because they could get doctors to say that this was medically necessary, and that meant that these government programs, Medicare and Medicaid, would cover the costs regardless of what the cost was, even though it increased 600 percent in two and a half years.

“That was the concept behind the new distribution model. It relied on a portion of the prescriptions being filled by patients with commercial health plans that covered EVZIO at the much higher cost. And it worked. For people whose plans didn’t cover EVZIO or who didn’t have insurance, kaléo gave the drug to the patient for free. In these instances, the company incurred the roughly $52 cost for the goods. It was worth it because they could get these incredibly high prices from Medicare and Medicaid. This distribution model worked, as I mentioned, when physicians deemed that EVZIO was medically necessary. Then it would cover the cost, Medicare and Medicaid, all the way up to $4,100 a unit. Under this new model, EVZIO fill rates jumped from 39 percent to 81 percent.

“So it worked. They sold more product. They made a killing—but at the expense of the U.S. taxpayer and the expense of all of us really. The majority of kaléo’s initial revenue was from Medicare and Medicaid, and the resulting cost to the taxpayer to date has been about $142 million, despite the fact that a much less costly alternative was readily available. You will remember for most of this time Narcan, this other product—not EVZIO but Narcan—was available for $125 for two doses. So instead of following recommendations by drug pricing experts to take the product to market at that lower price, the company decided to exploit this loophole in our health insurance market and charge this much higher price to the American taxpayer through Medicare and Medicaid.

“Our report from the Permanent Subcommittee on Investigations was released on the same day that 60 Minutes aired a new story on kaléo, its new product, and why the price was so high. The findings of our report were used in that segment to highlight kaléo’s distribution model that transferred the cost of this drug to taxpayers. You can see our report online at the Permanent Subcommittee on Investigations website. That PSI report and the 60 minute segment were both released on November 18.

“Today, less than a month later, I’m very pleased to tell you that kaléo has publicly stated its plan to take steps toward now reducing the cost, the price of its naloxone auto injector from the current price of $4,100 per unit down to $178. This is a very positive step forward, and I’m hopeful that it will increase access to naloxone, this critically important overdose reversal drug that saved so many thousands of lives already, but I’m also pleased that they made this change because it’s going to save taxpayers a lot of money.

“Make no mistake, I don’t believe that this change would have occurred but for our year-long investigation, the PSI report, and the 60 Minutes story shinning a light on these incredibly high drug prices. Does anybody really believe that these prices would have been lower if not for exposing it and the transparency that was then able to show what was happening? So the bipartisan investigation has produced a good result, but we need to do a lot more.

“Our report includes recommendations to prevent similar situations moving forward. Our report recommends that the Centers for Medicare and Medicaid Services, CMS, should review its policies governing physician use of  medical necessity exceptions for Part D in Medicare to prevent companies from inappropriately influencing prescribing. That’s the least they should do. While there are legitimate uses of the exception sometimes we need to be sure it is not exploited as it was in this case. Congress should also require CMS to improve transparency regarding the total amount spent for drugs purchased by government health care programs so we can identify these problems early on and stop them. And to combat the underlying factors affecting addiction, of course, Congress has to do more here.

“We should put in place a three-day limit, in my view, on prescription pain medication for acute pain, not for chronic pain, not for cancer, but for acute pain. That would make a huge difference—and by the way, it’s consistent with the Centers for Disease Control recommendations. Requiring all states to utilize prescription monitoring programs is another thing we should do. And we should allocate more funding for immediate overdose remedies and first responder training.

“There’s reason to be optimistic, as I said earlier, about the direction our country is heading to in overcoming the opioid epidemic. We committed ourselves here at the government to be better partners with state government, local government, and nonprofits. That’s good, and I’m proud of the work that this Congress has done.

“But the tragedy of overwhelming opioid overdoses has also created the opportunity for companies like kaléo to exploit, or as they said ‘capitalize,’ on this public health crisis. That’s wrong. It’s shameful. I’m proud of the investigative work we’ve done. I will continue to work in a bipartisan manner to do what we can to reduce prescription drug prices and also protect taxpayer programs like Medicare and Medicaid.

“Thank you, Mr. President”