How two common medications became one $455 million specialty pill
After I was prescribed a brandname drug I didn’t need and given a coupon to cover the out-of-pocket costs, I discovered another reason Americans pay too much for health care.
Everything happened so fast as I walked out of the doctor’s exam room. I was tucking in my shirt and wondering if I’d asked all my questions about my injured shoulder when one of the doctor’s assistants handed me two small boxes of pills.
“These will hold you over until your prescription arrives in the mail,” she said, pointing to the drug samples.
Strange, I thought to myself, the doctor didn’t mention giving me any drugs.
I must have looked puzzled because she tried to reassure me.
“Don’t worry,” she said. “It won’t cost you any more than $10.”
I was glad whatever was coming wouldn’t break my budget, but I didn’t understand why I needed the drugs in the first place. And why wasn’t I picking them up at my local CVS?
At first I shrugged it off. This had been my first visit with an orthopedic specialist and he, Dr. Mohnish Ramani, hadn’t been the chatty type. He’d barely said a word as he examined me, tugging my arm this way and bending it that way before rotating it behind my back. The pain made me squirm and yelp, but he knew what he was doing. He promptly diagnosed me with frozen shoulder, a debilitating inflammation of the shoulder capsule.
But back to the drugs. As an investigative reporter who has covered health care for more than a decade, the interaction was just the sort of thing to pique my interest. One thing I’ve learned is that almost nothing in medicine — especially brand-name drugs — is ever really a deal. When I got home, I looked up the drug: Vimovo.
The drug has been controversial, to say the least. Vimovo was created using two readily and cheaply available generic, or over-thecounter, medicines: naproxen, also known by the brand Aleve, and esomeprazole magnesium, also known as Nexium. The Aleve handles your pain and the Nexium helps with the upset stomach that’s sometimes caused by the pain reliever. The key selling point of this new “convenience drug”? It’s easier to take one pill than two.
But only a minority of patients get an upset stomach, and there was no indication I’d be one of them. Did I even need the Nexium component?
Of course I also did the math. You can walk into your local drugstore and buy a month’s supply of Aleve and Nexium for about $40. For Vimovo, the pharmacy billed my insurance company $3,252. This doesn’t mean the drug company ultimately gets paid that much. The pharmaceutical world is rife with rebates and side deals — all designed to elbow ahead of the competition. But apparently the price of convenience comes at a steep mark-up.
Think about it another way. Let’s say you want to eat a peanut butter and jelly sandwich every day for a month. You could buy a big jar of peanut butter and a jar of grape jelly for less than 10 bucks. Or you could buy some of that stuff where they combine the peanut butter and grape jelly into the same jar. Smucker’s makes it. It’s called Goober. Except in this scenario, instead of its usual $3.50 price tag, Smucker’s is charging $565 for the jar of Goober.
So if Vimovo is the Goober of drugs, then why have Americans been spending so much on it? My insurance company, smartly, rejected the pharmacy’s claim. But I knew Vimovo’s makers weren’t wooing doctors like mine for nothing. So I looked up the annual reports for the Ireland-based company, Horizon Pharma, which makes Vimovo. Since 2014, Vimovo’s net sales have been more than $455 million. That means a lot of insurers are paying way more than they should for their Goober.
And Vimovo wasn’t Horizon’s only such drug. It has brought in an additional $465 million in net sales from Duexis, a similar convenience drug that combines ibuprofen and famotidine, AKA Advil and Pepcid.
This year I have been documenting the kind of waste in the health care system that’s not typically tracked. Americans pay more for health care than anyone else in the world, and experts estimate that the U.S. system wastes hundreds of billions of dollars a year. In recent months I’ve looked at what hospitals throw away and how nursing homes flush or toss out hundreds of millions of dollars’ worth of usable medicine every year. We all pay for this waste, through lower wages and higher premiums, deductibles and out-of-pocket costs. There doesn’t seem to be an end in sight — I just got a notice that my premiums may be increasing by another 12 percent next year.
With Vimovo, it seemed I stumbled on another waste stream: overpriced drugs whose actual costs are hidden from doctors and patients. In the case of Horizon, the brazenness of its approach was even more astounding because it had previously been called out in media reports and in a 2016 congressional hearing on out-of-control drug prices.
Health care economists also were wise to it.
“It’s a scam,” said Devon Herrick, a health care economist with the National Center for Policy Analysis. “It is just a way to gouge insurance companies or employer health care plans.”
Unsurprisingly, Horizon says the high price is justified. In fact, the drug maker wrote in an email, “The price of Vimovo is based on the value it brings to patients.”
Thousands of patients die and suffer injuries every year, the company said, because of gastric complications from naproxen and other non-steroid antiinflammatory drugs (NSAIDs). Providing pain relief and stomach protection in a single pill makes it more likely patients will be protected from complications, it said.
And Horizon stressed Vimovo is a “special formulation” of Aleve and Nexium, so it’s not the same as taking the two separately. But several experts said that’s a scientific distinction that doesn’t make a therapeutic difference. “I would take the two medications from the drugstore in a heartbeat — therapeutically it makes sense,” said Michael Fossler, a pharmacist and clinical pharmacologist who is chair of the publicpolicy committee for the American College of Clinical Pharmacology. “What you’re paying for with [Vimovo] is the convenience. But it does seem awful pricey for that.”
Public outrage is boiling over when it comes to high drug prices, leading the media and lawmakers to scold pharmaceutical companies. You’d think a regulator would monitor this, but the Food and Drug Administration told me they are only authorized to review new drugs for safety and effectiveness, not prices. “Prices are set by manufacturers and distributors,” the FDA said in a statement.
Horizon acquired Vimovo in November 2013 from the global pharmaceutical giant AstraZeneca. Horizon knew it faced challenges trying to get top dollar for inexpensive ingredients. “Use of these therapies separately in generic form may be cheaper,” it said in its 2013 report to investors. But the company executed a shrewd strategy to give everyone — insurers, patients, doctors and pharmacies — the incentive to use Vimovo. It’s instructive to review its playbook.
To get Vimovo covered, Horizon made deals with insurance payers and pharmacy benefit managers — the intermediaries who help determine which drugs get reimbursed. The contracts generally included special rebates and even administrative fees for these intermediaries, the Horizon reports said, so the drug maker got paid much less than the sticker price, though it wouldn’t say how much. But the company’s net sales show the deals worked.
Horizon put boots on the ground to get the prescriptions rolling, expanding its sales force by the hundreds and focusing its marketing and sales efforts on doctors who already liked to prescribe brand-name drugs. The company’s message to doctors emphasized the convenience of
Above: Pharmacist Neal Florence shows the two generic drugs he provides at Medi-Thrift Pharmacy that are comparable to the drug Duexis, a drug that carries a retail price of more than $2,700 for 90 pills. Duexis’ two components, ibuprofen and famotidine, of the expensive drug have a combined retail price of less than $30. Right: The drug Vimovo has a retail price of $2,363 when billed to a third (insurance) party, the patient is billed a $10 co-pay. The equivalent dosages of naproxen and nexium, shown here, have a retail price of about $131. (Messenger photos/Mike O’Neal)