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Express Scripts sues overdose treatment maker on price hike, unpaid fees

June 2, 2017

Pharmacy benefit manager Express Scripts sued a company that develops an emergency drug for opioid overdoses, escalating the ongoing debate on who should be held accountable for drug price hikes.

The nation’s largest PBM accused the drugmaker Kaléo of “wrongfully profiting from its price gouging” and not paying rebates and administrative fees owed to Express Scripts, according to a lawsuit filed Wednesday in federal court in St. Louis.

Kaléo develops the auto-injector device Evzio that uses an audio recording to direct users how to use the device on people who have overdosed on heroin or opioid painkillers. Evzio’s list price increased fivefold last year, drawing the ire of families who rely on the drug and members of Congress amid an opioid epidemic that’s sweeping the country. Express Scripts said in the lawsuit it is owed more than $14.5 million in unpaid “price protection” rebates and administrative fees.

“We filed this lawsuit to get money that is rightfully owed our clients,” Brian Henry, a spokesman for Express Scripts, said in a statement. “Kaléo owes rebates and administrative fees that we share with our clients and we are working to get that money back.”

Kaléo CEO Spencer Williamson in a statement called the suit “baseless.” The company’s priority is ensuring “affordable and unrestricted access” to the product, he said.

Drastic price increases for widely used drugs has sparked a national outcry as consumers’ out-of-pocket costs rose, premiums jumped and providers took a financial hit. High-profile lawsuits have brought drugmakers’ relationships with PBMs, which process drug claims and negotiate drug discounts with pharmaceutical companies on behalf of payers, into the forefront. Congressional leaders and other critics have called out PBMs for keeping their practices hidden through nondisclosure agreements. PBMs take a cut from the rebates they negotiate, but it’s hard to pinpoint how much they receive and how much is passed onto their clients.

According to the lawsuit, Evzio’s list price jumped from $937.50 to $4,687.50 in February 2016 and Express Scripts responded by removing it from the formulary’s preferred list, which allowed customers to pay a lower co-pay for Evzio than its competitors.

Kalèo attributed the price increase to a new program. In Feburary 2016, the drugmaker expanded patient access to Evzio by allowing insured customers with a prescription to receive the drug for “an out-of-pocket cost, in most cases, of $0,” the company said in a statement.

Kaléo’s monthly administrative fees and price protection rebates increased along with the price of the auto-injector, per its contract with Express Scripts, according to the lawsuit. In January 2016 when the drug was priced at $937.50, Express Scripts charged Kaléo monthly administrative fees of nearly $25,000 and price protection rebates of almost $5,690, which Kaléo paid in full, the lawsuit said. But when the administrative fees shot up in April 2016 to more than $129,000 and price protection rebates owed reached more than $4.95 million as the drug price increased by more than 500%, Kaléo only paid a portion, according to the lawsuit.

All told, Express Scripts claims it is owed more than $14.5 million, $14 million stemming from price protection rebates.

“The price protection rebates impose a contractual constraint on Kaléo’s ability to profiteer off the opioid crisis,” the complaint said. “Kaléo evidently decided to make outsized profits off those who rely on Evzio, so when it began owing substantial price protection rebates in mid-2016, it simply ceased paying.”

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