First came Martin Shkreli, the brash young pharmaceutical entrepreneur who raised the price for an AIDS treatment by 5,000 percent. Then, Heather Bresch, the CEO of Mylan, who oversaw the price hike for its signature Epi-Pen to more than $600 for a twin-pack, though its active ingredient costs pennies by comparison.
Now a small Virginia company called Kaleo is joining their ranks. It makes an injector device that is suddenly in demand because of the nation’s epidemic use of opioids, a class of drugs that includes heavy painkillers and heroin.
Called Evzio, it is used to deliver naloxone, a life-saving antidote to overdoses of opioids. More than 33,000 people are believed to have died from such overdoses in 2015, and deaths soared at a record pace in 2016, including all over the Philadelphia area.
And as demand for Kaleo’s product has grown, the privately held firm has raised its twin-pack price to $4,500, from $690 in 2014.
Founded by twin brothers Eric and Evan Edwards, 36, the company first sought to develop an Epi-Pen competitor, thanks to their own food allergies.
Now, they’ve taken that model and marketed it for a major public health crisis. It’s another auto-injector that delivers an inexpensive medicine.
One difference, though, is that Evzio talks users through the process as they inject naloxone. The company says the talking device is worth the price because it can guide anyone to jab an overdose victim correctly, leave the needle in for the right amount of time and potentially save his or her life.
According to Food and Drug Administration estimates, the Kaleo product, which won federal approval in 2014, accounted for nearly 20 percent of the naloxone dispensed through retail outlets between 2015 and 2016, and for nearly half of all naloxone products prescribed to patients between ages 40 and 64 — the group that comprises the bulk of naloxone users.
And the cost of generic, injectable naloxone — which has been on the market since 1971 — has been climbing. A 10-mililiter vial sold by one of the dominant vendors costs close to $150, more than double its price from even a few years ago, and far beyond the production costs of the naloxone chemical, researchers say. The other common injectable, which comes in a smaller but more potent dose, costs closer to $40, still about double its 2009 cost.
Still, experts say the device’s price surge is way out of step with production costs, and a needless drain on health-care resources.
“There’s absolutely nothing that warrants them charging what they’re charging,” said Leo Beletsky, an associate professor of law and health sciences at Northeastern University in Boston.
Kaleo, which is trying to blunt the pricing backlash and turn Evzio into the trusted brand, is dispensing its device for free — to cities, first responders and drug treatment programs. Such donations were also essential to the Epi-Pen’s business strategy.
The device has been invaluable to patients, said Eliza Wheeler of San Francisco’s Harm Reduction Coalition, a nonprofit that works to combat overdoses and has received donations of Evzio. But at $4,500 a package?
“I might have $10,000 to spend on naloxone for a year, to supply a whole city,” Wheeler said. “If I have 10 grand to spend, I certainly can’t buy two Evzios.”
Mark Herzog, Kaleo’s vice president of corporate affairs, said in an email that most earlier naloxone devices were “developed, designed and intended” for use in medically-supervised settings.
Prior kits contained a pre-filled syringe. The Evzio was the first to help laypeople dispense the drug. And competition is limited: One of the few consumer-friendly alternatives to Evzio is a nasal spray device for naloxone.
A growing market
The opioid crisis has led more experts to call for expanded access to naloxone — for people navigating addiction and for those around them. The idea is that if someone nearby could overdose, dispensing the drug should be as easy as pulling the fire alarm.
Federal and state governments have spent millions of dollars equipping police officers and other first responders with naloxone. In communities particularly hard-hit by drug overdoses, places such as schools, libraries and coffee shops are keeping the antidote on hand. Physicians are prescribing it to patients who are taking prescription painkillers in an effort to make sure they — and their families and friends — are prepared.
The Evzio could be ideal, especially when medical professionals are not nearby, noted Traci Green, an associate professor at Boston University’s School of Medicine. But the price limits access.
“It’s a really good product,” she said. “It’s elegant. People do like it — but they can’t afford it.”
“There’s a lot of value to this formulation,” said Ravi Gupta, a medical student and lead author of a December op-ed on the pricing issue, published in the New England Journal of Medicine. “But it’s not justified. This pricing is not justified.”
But consumers may not yet be pinched. In another Mylan parallel, Kaleo offers coupons to patients with private insurance, so they don’t have any co-pay when they pick up the device.
So Kaleo would say the price hikes are essentially moot. Herzog said they are necessary to subsidize programs that do not offer copayments. In a follow-up email, he added that the list price is “not a true gauge,” because insurance companies can sometimes negotiate rebates and discounts. And, he said, since the price increase, more patients have gotten Evzio prescriptions filled — so the cost doesn’t seem to be stopping them.
Mylan provides a similar Epi-Pen discount — a move that’s helped cement it as the dominant epinephrine provider. But even if consumers don’t directly pay for the price increases, they’re affected, analysts cautioned.
“When you have these kinds of programs, the cost is still borne by patients, because insurance premiums go up,” Beletsky said.
That, analysts say, undermines Kaleo’s argument that they’re somehow increasing access. After all, while some government agencies and private organizations get the drug for free or at a deep discount, that isn’t true across the board. For those who don’t get that deal, the list price matters.
Take Vermont. The state’s been particularly hard-hit by the epidemic — more than 70 people died of opioid overdose in 2015, and it’s been dubbed America’s “heroin capital.”
Its health department is trying to get naloxone into the hands of people using opioids, setting up distribution sites around the state. But because of its high cost, Evzio isn’t an option, said Chris Bell, who runs the state health department’s emergency preparedness and injury prevention division. So it is opting for the nasal spray that costs a fraction of the price.
That’s not true everywhere, though. The Veterans Health Administration, known for its especially high rate of patients taking opioid-based prescription painkillers, covers the auto-injector. It can do so, though, because of its bargaining power — the agency is legally authorized to negotiate with pharmaceutical companies.
As a result, the VA is paying “far, far less” than the Evzio list price, said Joseph Canzolino, deputy chief consultant for pharmaceutical benefits management at the VA. (He would not release the precise figure.)
The agency’s buying power is such, he added, that even when companies drive up prices, what the VA pays will stay more or less stable — far below a figure he called “pretty exorbitant.”
Thanks to an infusion of public funding to combat opioid overdoses, other institutional buyers may also be able to afford Evzios. Their budgets are larger right now, so they’re less price sensitive, said Nicholson Price, an assistant professor at the University of Michigan Law School.
But that money comes from somewhere — most likely taxpayers. And it’s hardly sustainable, Price noted, saying “at some point in time the rubber’s got to hit the road.”
Kaleo has given away more than 180,000 devices, Herzog said, distributed in 34 states among about 250 organizations such as police departments and nonprofit groups that distribute naloxone to people at risk of overdose.
Advocates and pharmacy groups have made videos touting the product. In neighborhoods where overdose is common, businesses — like fast-food restaurants, grocery stores and other retail establishments — are interested in keeping readily dispensable naloxone on hand.
But those who’ve accepted free Evzio devices and have come to rely on it may soon face withdrawal. Last year, Kaleo’s donation supply was exhausted by July. Herzog said the company has added to its donation supply and is taking applications from groups hoping for free devices.
Barring a meaningful expansion, the free device program could run out of supplies even sooner if the current opioid crisis keeps up.
The problem, law professor Price noted, is that policymakers haven’t found a solution to get people needed medication and keep pricing in line with value.
“Epi-Pen happened, and everyone was like, ‘Wow, this is terrible, we shouldn’t allow this to happen,’” he said. “And we haven’t done anything about that, and it’s not clear what the solution is. Now, shocker, it’s happening again.”