Response

As mentioned in the first blog, Kaléo Pharma’s main ethical issue isn’t about their poor worker conditions or covering an issue up. It is quite the contrary, their issue is very much in the public. Their Auvi-Q, an alternative to the epi-pen, is being sold for $4,500 for two doses of $5 worth of epinephrine, and Evzio is being sold at the same price for $6 worth of naloxone.

One would think that something like this would require a hell of a good answer as to why it costs so much, as well as some explaining from people inside the company. But, there really has not been a ton of information coming from those working for Kaléo. That being said, Kaléo actually appears to have a general plan to make things less expensive for consumers.

“Company executives also said they were taking steps to limit the impact of the high list price on how much patients pay. They said Kaleo had put in place a program so that commercially insured patients, as well as uninsured patients with incomes less than $100,000, wouldn’t pay anything out of pocket and other patients wouldn’t pay more than $360.” (WSJ)

Kaléo appears to trying to take advantage of the disproval with the epi-pen, as Mylan, the owner of the epi-pen, has increased the price of their product 550% since 2007. It seems that Kaléo knows Mylan is having trouble with consumers with the epi-pen, so they are trying to get away with charging a high cost because they still will have a better reputation than Mylan. This is a bold strategy, but is much more thought out than the simple corporate greed that it appears to be.

Kaléo is obviously increasing competition in the pharmaceutical industry, which could end up decreasing the price for epinephrine administers as a whole, something that is much needed. Just two months ago Spencer Williamson, Kaléo’s Chief Executive, said that there is no other epinephrine injector on the market that offers a lower out of pocket cost to commercially insured patients than the Auvi-Q and Evzio, which can make justifying the reason for the high market price a little easier.

spencer williamson

Kaléo Chief Executive Spencer Williamson at a Clinton Foundation Event             (Source:clintonfoundation.org)

Williamson added that Kaléo has donated nearly 200,000 doses to “public health departments, first responders and nonprofits serving patients in need.” He also defends his company, stating that the listed wholesale price, which is for distributors selling to pharmacies, is $4,100, but it’s “not a true net price to anyone, including the distributors or pharmacies, due to numerous discounts and rebates that are negotiated in the supply chain that make up our health care system.”

https://www.wsj.com/articles/rival-to-epipen-allergy-treatment-to-return-to-market-1484855236

http://www.freep.com/story/money/business/2017/02/12/price-drug-overdoses-jumps-more-than-600/97709132/

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8 thoughts on “Response

  1. So, with all the money Kaleo has they donated numerous free products to charities to promote their ethical attitude. But if they needed to raise the pen to ridiculous prices for money needs they should not be fiscally able to give away so many products. Their CE had mentioned that no one actually pays the full price so why have the prices so high? Why not have a permanent coupon and reduce the prices to be more competitive with Epi-Pen? I am very curious on the reasoning behind the price inflation and I am sure it really angered customers when the CE did not give a direct answer. I am also wondering what kind of pressure the company received and if it was mostly from direct customers or other companies or insurance agencies.

    Liked by 1 person

    • Once again, the whole thing just doesn’t make a whole lot of sense due to the there is no reason to charge so much if the customer doesn’t pay for it out of pocket. Kaléo could go for market share and really impact the market by driving the price down and make it more affordable for customers, and still make a lot of profit.

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  2. It is great to see that they have donated to the public health departments and first-responders. With the rapid increase in competition in the pharmaceutical industry it will be interesting to see which competitors can penetrate their market share. The one good thing that can come out of their response is families that have income less than $100,000 will pay no more than $360. I wonder how the policies will change now that Donald Trump is president.

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    • I don’t know how much the president’s influence will impact the co-pay, because, if I interpret correctly, the co-pay depends on the insurance provider and the product you buy. I think that Kaléo could have great market share if they were to lower their price because that would take so many customers from Mylan and make them a powerhouse in the industry.

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  3. This was a very interesting post and really helped me understand how they were pulling this off. It’s quite clear that this part of the pharmaceutical industry is very exclusive, as it’s mainly a competition between Mylan and Kaleo. Part of the reason Kaleo is able to avoid consequences for their unethical behavior is because of the fact they are deflecting negative attention by offering lower out of pocket costs than Mylan and donating their products. To me, even though Kaleo is seen as behaving ethically by trying to diversify and improve the industry, I think many consumers are misunderstood because they have not done their research. I’m sure if the customers were made clear of the information you have provided thus far, they wouldn’t be thrilled to understand the truth behind the company they are trusting their life with.

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    • It’s very cool but also very disturbing to see all the things that go on behind the scenes. It’s a brilliant form of trickery and illusion, they say “look at this shiny low co-pay in my left hand”, while holding a dirty full price in their left. It just isn’t fair to charge that much, especially when there is no reason at all to keep the price astronomically high, while the out of pocket cost is minimal. Someone always will have to pay for it.

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  4. The deflection of the blame is key here. Since there is only one competitor, all Kaleo has to do is make sure they look good in the public eye. I think partially the reason why the prices are so high is because Kaleo has no solid numbers on their margins if the price at which they are selling to wholesale are. Especially including the cost of giving away several hundred thousand products a year.

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    • Absolutely, and giving away product is only a sustainable option for so long, I can’t think of any company that can afford to just give away large amounts of their products often. I think that you’re on to something as far as part of the reason the price to wholesale is so high, there aren’t any solid numbers on the margins that we’re aware of.

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