Drug company raised price of lifesaving opioid overdose antidote more than 600 percent

Ken Alltucker | USA TODAY

As the nation struggled with the rising number of opioid deaths, a private drug company increased the price of an overdose antidote more than 600 percent, a Senate subcommittee says in a new report.

The increase has cost the federal Medicare and Medicaid health programs more than $142 million since 2014, according the Homeland Security permanent subcommittee on investigations.

Richmond, Virginia-based Kaleo increased the price of its auto-injectable overdose-reversal drug EVZIO from $575 to $4,100, the subcommittee reported.

The company also changed its sales strategy and encouraged doctors to complete paperwork identifying it as a medically necessary drug, allowing them to bypass potentially cheaper generic versions of naloxone, the subcommittee reported.

Sen. Rob Portman, R-Ohio, who chairs the subcommittee, blasted the price hike.

"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, is simply outrageous," Portman said in a statement.

Kaleo defended its pricing Monday. The company said its donated kits have saved thousands of lives. It also said it has never turned a profit.

"We believe patients and physicians should have meaningful choices," the company said in a statement. "There is no doubt, the complexity of our healthcare system has had unintended negative implications for everyone involved, but most importantly, for patients. To this end, we explored viable paths within the current healthcare system to make EVZIO available to patients in a responsible, meaningful and affordable way."

Naloxone, an opioid overdose-reversal drug available since the early 1970s, has been in great demand to slow an epidemic that kills more Americans every year than motor vehicle crashes. The U.S. Surgeon General and states across the nation have encouraged policies to widely distribute the drug.

Private drug companies have responded to the crisis with newer, easier-to-use versions of the drug.

EVZIO was launched in 2014 at a wholesale price of $575 per kit.

Adapt Pharma gained approval the following year to sale a nasal version of naloxone called Narcan, and set the wholesale price at $125 per kit.

The subcommittee focused on the price of EVZIO because it increased so sharply and because the sales strategy that relied on reimbursement from private and government insurance plans.

The subcommittee said the company relied on a private consultant to implement the new sales strategy, which included dropping contracts with private Medicare plans and Medicaid, the federal-state insurance program for low-income and disabled residents.

That decision freed the company from administrative costs and rebate payments.

The company collected an average payment of $609 per kit in 2015. After raising the price and adapting the new sales strategy, the company collected from Medicare an average of $3,854 per kit.

The company paid $10.2 million to the private consultant who suggested the new approach, the subcommittee said.

"Kaleo's more than 600 percent price increase of EVZIO not only exploits a country in the middle of an opioid crisis, but also American taxpayers who fund government-run health care programs designed to be a safety net for our country’s elderly and most vulnerable," the subcommittee reported.