How two com­mon med­i­ca­tions be­came one $455 mil­lion spe­cialty pill

Walker County Messenger - - Front Page - By Mar­shall Allen, ProPublica

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)

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