After researching this issue with Kaléo Pharma for the past few months, I’ve developed a few questions that I have for the company, and a little bit of advice to give them in regards to public perceptions of their products.
My first question is directed to CEO Spencer Williamson: why not be perfectly clear about the price issue and how Evzio and Auvi-Q will be payed for when asked about the price issue? He has explained numerous times that the co-pay will be nonexistent for those with insurance and those making under $100k without insurance. However, he hasn’t gone in depth as to how that will be paid for, obviously the price doesn’t magically just disappear. Williamson has said that the drug will be paid for through insurance and the “supply chain that makes up our healthcare system.” Much like David Lazarus, mentioned in my last blog, I do not believe that this is a satisfying answer. Kaléo, specifically Williamson, should come out and explain the basics of how the drug maintains a low co-pay and explain who pays for it, rather than be vague about the exact people who pay for it.
The next question is if the co-pay is so low for the patient, why charge the high price to insurance companies anyway? Obviously, the company wants to make as much profit as they can and it is still cheaper than the alternative treatments from Mylan, but doesn’t it make sense to be much cheaper than Mylan and gain market share through a lower price in order to reach more customers? Wouldn’t that earn them huge profits? $4,500 for $5 and $6 worth of life saving treatment seems like far too much to charge if they really do care about the patients that need it, regardless how much they end up paying out of pocket. (Short video to analyze pay here)
I believe that Kaléo Pharma is simply taking the wrong approach to answering the questions raised about their price hike. On their website, they emphasize their customer oriented approach to business, and, by the looks of the $4,500 price tag on their treatment, it doesn’t appear to be that way. Kaléo should try to stick to their approach or the public perception of the company will not be as good as it could be.
In today’s day and age of transparency, it pays to be open and honest about what they are doing and to practice good and ethical business. Once it comes out that something is wrong or questions the ethics of a company, it can turn into a PR disaster or, worse, the downfall of a company. However, fortunately for Kaléo, the nature of the products in the spotlight will always be in high demand.
It seems that Kaléo is trying to practice a Utilitarian framework, yet aren’t really putting the best effort and ideas into it. That being said, I think that the Utilitarian principle is truly the best method to take for this company, so long as they really put some time into it and actually try and enact on that belief. Being a pharmaceutical company, the very nature of the products they sell is to do a great good for a great number of people. Now, to enact on this, they should take into account all facets of the product, including the price. Once they do this by doing everything they can to make this great product readily accessible and easily affordable, they will truly be displaying a the Utilitarian framework that they should have been displaying all along.
The Auvi-Q and Evzio are two innovative and groundbreaking products, that make it easy to save lives. Why not make it easy to afford?