Fair Selling at Kaléo?

Kaléo Pharma, an American pharmaceutical company, is in hot water for raising the cost of an overdose antidote and for selling an epi-pen alternative called the Auvi-Q for $4,500. The Auvi-Q is automatic and offers audio instructions on how to administer the antidote, less than $5 worth, to the patient. In 2015 the Auvi-Q was listed at $450- 10% of the current price.

What is quite interesting is that the Auvi-Q was pulled from the market after malfunctioning- it was delivering inconsistent doses of epinephrine, failing to do precisely what it is designed to do.

Forbes-Timeline-EpipenVsAuviQ-LineGraph-v2

The price increases of both the Epipen from Mylan and the Auvi-Q of Kaléo, before the cease of production in late 2015.

Another intriguing piece of information about the Auvi-Q from Kaléo is that its co-pay, the customer’s out of pocket cost, is quite low relative to the rest of the market for epi-pens. This creates better access to markets for the drug companies, allowing them to sell more drugs. Also, the company says that the high price allows for greater discounts, and the rest of the costs to be shouldered by insurance companies.

This begs the question- how in the world is it ethical or logical to sell a product 10 times the amount of the original price to a customer base that needs the product in order to survive, especially after it had failed previously? This sounds a lot like pharmaceutical greed, something that is not unheard of. The most recent drug related incident of this nature was Martin Shkreli a few years ago, after he jacked the price of an anti parasitic drug from $13.50 per pill to $750 per pill, an action that was clearly unethical.

BeyondEpiPenGraph

The overall price increases of the Epinephrine market.

Kaléo is at a crossroads, the best move for the company could be to keep the price high and reap the benefits of having a very high profit margin. The company could utilize that fact that this product is in such high demand, and people/insurance providers will pay for it if it is needed. However, they could also keep the price lower and still make a profit, though not as high, and keep the price for the Auvi-Q at a much more affordable level for its customers, as well as lower the price of the bill that insurance companies must cover.

Along with the Auvi-Q, Kaléo is under fire for spiking the cost of their opioid overdoes treatment, Evzio. Evzio is also offered for $4,500, and has audio instructions to make it easy for anyone to administer a potentially life-saving injection to themselves or someone else. This administers naloxone rather than epinephrine, still at a very low production cost, allowing Kaléo to reap huge profits from its sale.

https://www.theguardian.com/business/2017/feb/13/kaleo-epipen-maker-alternative-drug-pharmaceutical

https://www.scientificamerican.com/article/massive-price-hike-for-lifesaving-opioid-overdose-antidote1/

Advertisements

6 thoughts on “Fair Selling at Kaléo?

  1. Great article!
    I did not know that Kaleo had such control of the market and the broad horizon of drugs they produce. The first graph from Forbes was very interesting. It definitely showed the sharp increase of price of epi-pen as soon as a competitor was added. This is contrary to what is believed to happen, as a (pure competitive) market becomes more diverse they should argue for the lowest price due their products being almost equal. The fact that before insurance a two pack of epi-pens will cost over $600. Now they are giving away coupons that are worth over $300 to everyone. Why not just make the cost lower if they have all these coupons? It will be interesting to see where this is going.

    Liked by 1 person

    • I thought the exact same thing! It seems to only make sense that the more competitors in the market, the more the price would decrease. It doesn’t make a ton of sense as to why they wouldn’t just lower the price, especially since they’d still make a ton of money if its only a few dollars a dose.

      Like

  2. This article provides a great insight because I, myself have a peanut allergy and require an epipen to be bought every year. Thankfully my Canadian insurance covers the cost, but it brings to light and reality that people who need this in dire situations. I have always wondered at what point (or price point) does making money and having big margins overshadow people that desperately need this?

    Liked by 1 person

    • We hear stories like this far too much. We’ve covered cases like this in class where corporate greed might get in the way of providing a truly beneficial product and making it accessible to all that might need it. I hope that they will realize in the future that they will not need to charge this much.

      Like

  3. Its very interesting to learn that this isn’t the only company to take advantage of the market like this. They aren’t the only ones in the market that are creating these high prices, and not a single company is under cutting them. Seems weird to me. And like Rebecca said, if they can make a profit while sending out $300 coupons, why can’t they just lower the price by 300$?

    Liked by 1 person

    • Like I replied to Rebecca, I don’t understand why they can’t just do that, or why they don’t lower the price by even more than that. They still make a great profit, as the machines only administer less than $10 per dose, and the production cost to make them isn’t much more than that. I think that Kaléo needs to come up with a pretty good answer to your question.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s