Kaléo Pharma's price hikes on the lifesaving overdose med Evzio haven’t only angered lawmakers. A leading pharmacy benefit manager, Express Scripts, is going after the tiny drugmaker for unpaid rebates triggered by the exponential price increases.
Express Scripts sued last month in St. Louis federal court, claiming Kaléo owes it $14.5 million in unpaid rebates. The company’s coverage contract with Kaléo includes two types of rebates, a “formulary rebate” designed to secure coverage and a “price protection rebate” to limit exposure to dramatic price hikes.
According to Express Scripts’ suit, Kaléo stopped paying its full rebate bill back in April 2016, when it paid $4.9 million of a $5.1 million invoice. The next month, Express Scripts billed Kaléo for $2.4 million and the Richmond, Virginia-based drugmaker paid $147,212.
From June 2016 onward, Kaléo has paid no rebates, Express Scripts claimed. The PBM giant removed Evzio from its national preferred formulary effective July 1, 2016, according to the lawsuit. Express Scripts tried to resolve the issue outside of court to no avail, according to the suit.
In a statement, Kaléo CEO Spencer WIlliamson called the lawsuit “baseless,” adding that his company “will respond accordingly.”
“Patients deserve fair access to medicines that offer technological innovations that address their medical needs without burdensome paperwork or high out-of-pocket costs,” he said in the statement. “Kaléo is committed to ensuring that patients with commercial insurance, or those facing financial hardship, can affordably obtain our potentially lifesaving product."
Kaléo faced Congressional heat earlier this year, when more than 30 senators wrote to the drugmaker seeking information about the drastic price hikes. According to the lawsuit, Kaléo took Evzio’s price from $718 per unit in September 2014 to $4,687 by November 2015.
The senators wrote that they were “deeply concerned” about the price hikes that came amid an opioid-abuse epidemic. “Such a steep rise in the cost of this drug threatens to price-out families and communities that depend on naloxone to save lives,” the letter stated (PDF).
Importantly, it’s not the fact that Kaléo increased the price so drastically that prompted Express Scripts to bring the suit. It’s that the tiny drugmaker stopped paying its rebates.
Kaléo has also faced intense pricing scrutiny on its only other marketed product, an EpiPen rival called Auvi-Q. The company priced the anaphylaxis injection at a level several times higher than the big-selling Mylan product. After Kaléo announced its $4,500 list price for the relaunched product, several payers blocked coverage on the grounds that comparable alternatives are far cheaper.
The new suit comes during a tenuous time for the drug supply chain as pharma companies and middlemen such as Express Scripts look to deflect blame for high drug costs and price increases. Express Scripts recently hit out at Gilead over statements by an executive who claimed PBMs prefer high prices and high rebates.
Responding in a letter to Gilead’s CEO, an Express Scripts executive reiterated that Gilead sets the price for its hepatitis C medications.