These Pharmaceutical Companies Are Making a Killing Off the Opioid Crisis

These Pharmaceutical Companies Are Making a Killing Off the Opioid Crisis

These Pharmaceutical Companies Are Making a Killing Off the Opioid Crisis

Why do the manufacturers of naloxone, the life-saving overdose antidote, keep hiking the price?

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On September 16, 2014, 25-year-old Matthew Comfort walked into his mother’s bathroom in the working-class Philadelphia suburb of Bensalem, shot up heroin, and died from an overdose. His mother, Liz Fox, was working at home that day to keep an eye on her son, who had struggled with addiction for three years, including spending time homeless on the streets of Kensington, once the heart of the city’s manufacturing industry and today its epicenter for injection-drug use. He had recently been released from jail, where he had served time for thefts he had committed to supply his habit. At his mom’s house, the two had searched for an inpatient rehab slot, with no success. Before he left jail, Fox had asked that her son be sent directly to rehab. She received no response.

In jail, Matt had been forced to detox. As a result, his tolerance was low when he was released, putting him at a higher risk of overdose. Nonetheless, the Bucks County jail had not supplied him with naloxone, a drug that can reverse overdoses and that might have saved his life. And his mother didn’t really know much about naloxone, or that it was something that she might want to keep on hand. Shockingly, the emergency crew that responded wasn’t carrying it either, she said.

“I think everyone should have it and everyone should be trained and ready because we’re losing a whole generation,” said Fox, who now volunteers with Angels in Motion, which, armed with naloxone, distributes food, clothing, and other resources to users on the Philly streets.

Yet, for all naloxone’s life-saving promise, the drug remains out of reach for thousands of people who need it. From cities like Philadelphia and New York to southwestern Ohio, family members and first responders are struggling to pay for enough doses to treat the need. And that is partly because the high price of the drug is limiting its distribution, even as an opioid crisis tears through the United States.

Between the beginning of February 2015 and the end of January 2016, an estimated 52,898 Americans died from a drug overdose, many from opioids like OxyContin, heroin and, most alarmingly, from the extremely potent synthetic opioid fentanyl. In the year that followed, the number of fatal overdoses recorded rose to 64,070. Many of these deaths should have been preventable: Naloxone can reverse an overdose before it fatally depresses a user’s respiratory and central nervous system. But as overdose deaths spike and government moves to respond, companies have seized the opportunity to profit from the crisis by exploiting skyrocketing demand.

Amphastar Pharmaceuticals, for instance, raised the average wholesale price of its naloxone, which can be injected or outfitted off-label with an atomizer for intranasal use, from $20.34 to $39.60, according to a December 2016 paper in The New England Journal of Medicine. The price of the popular Narcan nasal spray, manufactured by Adapt Pharma and approved in 2015, has not been raised, but it came on the market in 2015 at a high average wholesale price of $150. The largest price hike was for Evzio, an auto-injector device designed for easy use by laypersons. In 2014, a two-dose package of Evzio, manufactured by kaléo, cost $690. As of 2016, it cost $4,500. That’s more than a 500 percent increase.

Meanwhile, sales of naloxone have increased from $21.3 million in 2011 to $60.8 million in 2014 to $274.1 million in 2016, according to data provided by the healthcare analytics firm IQVIA.

The price hikes have reverberated throughout the country, but have taken a particularly acute toll on state and local governments, which have made purchasing and distributing naloxone—to first responders, nonprofit service providers, as well as community members—a top priority. As prices have climbed, squeezing already-tight budgets, they have found it harder and harder to get sufficient numbers of naloxone kits to the front lines of the crisis.

“States and local governments are often the primary purchasers of naloxone, but skyrocketing prices are making it increasingly challenging for them to afford this lifesaving overdose antidote,” said Senator Bernie Sanders, who began sounding the alarm about naloxone profiteering as early as 2015, in a statement to The Nation. “It is unconscionable that any company is willing to put people’s lives at risk for a higher profit.”

Consider Philadelphia, where more than 900 people died from a drug overdose in 2016 and significantly more are expected to die this year. (As of June, the death rate had jumped nearly 60 percent over the same period the previous year.) In Philadelphia, explained Alicia Taylor, a spokesperson for the City of Philadelphia’s Office of Health and Human Services, in an e-mail, “[t]he high prices of naloxone have limited the number of doses that [the local government] and its partner organizations can purchase and distribute.” And that, she said, “has hurt our ability to treat overdoses and save lives.”

Indeed, the situation is such that the Tuttleman Foundation this year stepped in with a $50,000 grant to help supply naloxone kits to police officers. The donation was expected to allow the city to double the number of officers carrying the anti-overdose drug, from 1500 to 3000, or almost half the force.

One person who could help bring naloxone prices back down to earth—or, at the very least, help states and cities to afford the higher prices—is Donald Trump. In October, Trump took a much-delayed step in declaring the opioid crisis a public-health emergency—a move that was more limited than declaring a national emergency and that experts say likely won’t amount to much. To the dismay of advocates and Senate Democrats, he took no action to tackle the high price of naloxone, such as having the government directly negotiating with pharmaceutical companies.

Trump did, however, promise “really big, really great advertising” to encourage people not to try drugs in the first place.

At first blush, the naloxone price hikes are perplexing. Naloxone is far from a brand-new drug, and generic versions of the injectable form of the drug have been available since 1985—a fact that would seem to keep prices of the injectable from running too high. But while injectable versions of the drug are available in generic form, “they don’t have many manufacturers,” explained Ravi Gupta, an Internal Medicine Resident at Johns Hopkins Hospital and co-author of last year’s New England Journal of Medicine (NEJM) report. Indeed, only six different companies manufacture the drug, five selling injectable forms and one selling a nasal spray, according to the article. What’s more, kaléo and Adapt hold patents for their respective modes of administration. And so, with such “limited competition,” Gupta said, “companies can increase the price.”

Which is precisely what they have been doing.

Elvis Rosado, education and community outreach coordinator at the harm-reduction group Prevention Point Philadelphia, said that he noticed prices rising just after Pennsylvania Governor Tom Wolf joined counterparts across the country to put a “standing order” in place for naloxone, meaning that anyone could buy it at pharmacies without a prescription. “Soon after the standing order went into place, prices started to change,” said Rosado, speculating on the timing of the price hikes. “Once people became familiar with the fact that there was now easy access for anybody, and everybody to be able to purchase it, somehow the prices started to skyrocket.”

Indeed, the NEJM article noted that in 2016 “Evzio’s price jumped significantly and without explanation the month before” the Centers for Disease Control and Prevention released guidelines recommending that clinicians co-prescribe naloxone to patients taking opioids who have higher risk factors.

Rosado said that if naloxone prices were lowered, more families could purchase the drug. It should be, he said, a basic product like a fire extinguisher in homes where someone uses opioids—including legally prescribed doses.

“We think we’re going to have over 900 overdose-related deaths in Philadelphia County. Three times the homicide rate. So it’s huge,” said Prevention Point Philadelphia Executive Director Jose Benitez. “Clearly we’re not getting enough Narcan out to those who are at highest risk.”

What would Prevention Point do if the price were cut in half? Simple, said Benitez: They would purchase twice as much.

The same, effectively, goes for the City of Philadelphia where, in 2016, first responders administered roughly 5,000 doses of naloxone and spent at least $275,000 on purchasing various forms of the drug. “We would like to be distributing and administering much more,” said Taylor. “We would like to know why the companies have such a huge markup for their prices.”

The situation is growing serious in rural parts of Pennsylvania, where the opioid crisis is hitting hard without anything resembling the public-health and harm-reduction infrastructure that’s in place in large cities.

Tioga County is sparsely populated and remote, just south of the New York border, with a county seat two and a half hours by car from Harrisburg. Though the total number of reported overdose deaths in 2016—six—don’t remotely compare to those in more larger counties, the crisis is real.

Lisa Appleby, a certified recovery specialist at Harbor Counseling, tries to distribute as much naloxone as she can to users and their families. But she is not close to meeting the need. The many opioid users she can’t reach must go to the pharmacy, where they face stigma from pharmacists and high prices if they’re paying out of pocket. They often don’t go.

“Most people who are using heroin don’t have insurance,” said Appleby, a recovering user who said her own life was saved by naloxone.

Appleby would purchase 200 kits right now if she could afford to. As it is, she is trying to raise money to buy 20 or 25.

“The kits that we gave out last year, they were used,” she said, noting that she personally administered naloxone to four people. “Peoples live are being saved, and they’re being changed.”

When asked, naloxone manufacturers defend their pricing practices. In a statement, kaléo said that its auto-injector has no co-pay for people with commercial insurance, and that it has donated more than a quarter-million devices to public-health departments, first responders, and advocacy groups. In a statement, Pfizer, which acquired Hospira in 2015, told The Nation that “the list price does not reflect the considerable discounts offered to our customers” and that their “Naloxone Access Program includes a donation of up to 1 million doses of naloxone over four years and $1 million in opioid overdose grants to several states.” According to the NEJM report, Hospira’s cost was lower than injectable naloxone manufactured by Mylan and West-Ward by volume even after it more than doubled in recent years. Mylan said that it had reduced the cost of its product in June. West-Ward said that its product was a good deal compared to the one offered by kaléo.

Adapt, whose product is in high demand because of its ease of use for laypeople, emphasizes that it provides the only approved naloxone nasal spray on the market, and said that it is doing its best to get Narcan to the people who need it, including by providing a discount to government and nonprofit agencies.

“Many different factors go into setting price for a pharmaceutical product, and it’s very complex,” said Adapt president of US operations Mike Kelly. “Our vision is to make sure that every single household in the United States has access to this product. Anybody who’s taking an opioid has this product in a medicine cabinet.”

But Adapt’s prices for Narcan are still high, especially given that the National Institute on Drug Abuse (NIDA), part of the federal National Institutes of Health, designed and conducted the clinical trials.

According to NIDA, their scientists worked with Lightlake Therapeutics Inc. to develop the clinical study protocols, after which NIDA scientists working at Vince & Associates, a NIDA contractor, directed the studies. Lightlake in turn licensed the pharmaceutical product to Adapt. NIDA said that it could not provide a total breakdown of costs, including what portion of the tab was picked up by taxpayers.

Last January, NIDA Director Dr. Nora D. Volkow told the Senate Judiciary Committee that “more market competition is expected to help bring down the cost of naloxone products and increase their distribution.​”

Yet, clearly, that hasn’t happened. Adapt, in fact, has been making moves that could restrict competition by blocking manufacturers of other naloxone nasal sprays from coming onto the market.

In July 2016, Adapt petitioned the FDA to take actions that could make it more difficult for new naloxone products to receive agency approval. These included requesting that the FDA specify an optimal dose of naloxone before approving any new naloxone products for individual use and that the agency not approve any product that does not meet specific design specifications. The FDA mostly rejected the petition.

Dr. Peter Lurie, who until recently led Health and Human Services activities on naloxone as associate commissioner for public health strategy and analysis at the Food and Drug Administration, said that Adapt was clearly trying to restrict competition.

“I would characterize this as shutting the barn door once you’ve already entered the barn. And that’s what I think is the broader purpose of the petition,” said Lurie, who recently became executive director and president of the Center for Science in the Public Interest. “It doesn’t mean that the petition doesn’t raise certain interesting and even important regulatory and scientific issues. But viewed as a whole, the desired impact was to shut the barn door after you’ve already entered.”

Patricia J. Zettler, a professor at Georgia State University College of Law who formerly worked as an associate chief counsel at the FDA, agreed, describing Adapt’s effort “as consistent with those other types of petitions where we might be concerned that the company is attempting to delay competition.”

Meanwhile, in a related attempt to keep competition at bay, Adapt and its partner company Opiant have brought suit in federal court against Teva Pharmaceutical Industries Ltd., which makes generics. The companies charge that Teva’s application to sell a generic form of naloxone nasal spray infringes on their patent.

Adapt would not respond to follow up questions on its FDA petition or on its legal fight against Teva.

Realistically, prices of naloxone must fall dramatically for the need to be met. Mark Kinzly, co-founder of the Texas Overdose Naloxone Initiative, suggests that the optimal price would be “between one and five dollars. Closer to one.”

The companies, however, are selling naloxone at high prices because there is little competition in the market for its two forms, injectable and intranasal. And the federal government refuses to rein in pharmaceutical profiteering.

New York City recently switched from purchasing naloxone from Amphastar to buying Adapt’s product because it is easier for laypeople and first responders to use. The average wholesale price of Amphastar’s naloxone had nearly doubled to $39.60 in recent years. The city had begun to receive a $6-per-dose rebate through a deal the New York attorney general had struck with the company to help defray the cost and prevent shortages. Likewise, the city and state have secured Adapt’s product at below-retail prices. But the overall high prices still pose a threat.

“When the price of naloxone goes up, that has the potential to limit access” said Dr. Hillary Kunins, assistant commissioner of alcohol and drug use-prevention, care, and treatment at the New York City Department of Health and Mental Hygiene, in a statement to The Nation.

In August, New York Governor Andrew Cuomo announced a new program to subsidize co-payments for people purchasing naloxone with prescription health-insurance coverage. That will likely save lives. But taxpayers will still be picking up the tab for high prices, just as high drug costs to insurance companies are passed along to consumers via premiums and deductibles. And even with discounts, bulk purchasers, such as local government agencies and nonprofits, will continue to struggle.

“We’ve sort of been on this roller coaster for the last couple of years,” said Daniel Raymond, deputy director of planning and policy at the Harm Reduction Coalition. “We’ve clearly heard from programs and health departments…that the price increases have really stretched their budgets, but so far they haven’t broken them.”

Worse yet, the gap between those who need naloxone and those who have it appears to be growing as more powerful opioids like fentanyl drive up overdose rates.

The price spikes have received surprisingly little media scrutiny, given the widespread coverage of the opioid crisis and the viral outrage over drug company greed, from pharma bro Martin Shkreli to Mylan’s profiteering from EpiPens (as mentioned above, Mylan also produces naloxone).

That’s likely because naloxone patients aren’t as sympathetic as the children and parents buying EpiPens. They are opioid users. And despite the fact that the white face of the opioid crisis tends to elicit the sort of public and political empathy that was never offered to black crack users in the 1980s, drug use remains heavily stigmatized.

Pharmaceutical companies defend these high prices in part by pointing to discounts they offer to nonprofits and government.

Adapt, for example, sells naloxone to the Philadelphia-suburb-based Drug Addiction oVerdose Education at a discounted rate of $75 per kit, said founder Cathy Messina. “Adapt has been very, very good to us,” said Messina, who started the group after two of her sons overdosed the same night at her house three years ago, one fatally. “I think it’s very generous.”

But the two-tiered pricing scheme is not about charity but rather a matter of selling to different consumers at the price point that will maximize profits and avoid negative publicity, said Ravi Gupta. In economics, it’s called price discrimination—the same idea behind movie theaters’ offering discounts to senior citizens.

“I don’t think that’s cynical at all,” said Gupta. “That’s just true.”

One way to lower naloxone prices is for government to take action against pharmaceutical profiteering across the board by directly negotiating lower prices directly with the companies. On February 8 of this year, 31 US senators sent a letter to kaléo pharmaceuticals expressing concern that the company has “responded to the increased need for naloxone devices by ratcheting up the price.” More recently, Democratic senators have asked the Trump administration to allow the Department of Health and Human Services to negotiate reduced pricing for government purchases.

The authors of the NEJM article suggest a number of possible solutions, including that the federal government buy naloxone in bulk to attract more companies into the market; contract with a manufacturer to produce kaléo’s product in exchange for royalty payments; and allow the importation of generics from international manufacturers. So far, as overdose deaths skyrocket, none of that has happened.

Meanwhile, pharmaceutical companies continue to make a killing.

“I appreciate folks want something for less,” said Kelly, Adapt president of US operations. “And we feel that our pricing structure allows us to maximize access.”

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