Valeant Pharmaceuticals Intl Inc (NYSE:VRX) might be back at square one of backlash danger zone, after U.S. hospital officials are accusing the company of backtracking on a discount promise for two heart drugs. These heart drugs without any price markdowns tower at precariously steep prices.
When a leading non-profit, research, academic-based medical center like the prestigious Cleveland Clinic has not laid eyes on a single penny of compensation for drugs whose prices shot up last year by 525% and 212%, respectively, those missing dollars certainly do not go unnoticed. At those price hikes, discounts are found wanting.
Clearly, VRX is soon to return to thrashing amid negative PR purgatory, just when new CEO Joe Papa had told CNBC back in May, “I’m not in it for the money.” In fact, it was only last week that Papa had discussed with CNBC’s Meg Tirrell about revamping the fallen company with renewed focus on bettering patient’s lives, asserting, “How can we improve people’s lives through all of our health care products? That’s first and foremost the mission that we are focusing on.”
Of the 23 hospital systems and purchasing groups chosen from the largest and most prominent U.S. hospitals, Bloomberg reached out and noted a dismal eleven have yet to receive a single discount. Only one major hospital system and one purchasing group recognize the supposed 10% to 40% discounts Papa reiterated in an interview this past Tuesday that all hospitals were eligible to receive. The other ten? No comment or no response.
Still, Papa stands by the discounts first offered to the table in May. Papa contends, “Everybody has access to that 10%, either through the GPO or negotiating directly with us,” adding, “The more they use, the more they’d be eligible for additional volume rebates.”
In April, VRX reps affirmed before Congress of its intent to reduce its drug prices, after medical centers noted fierce displeasure with the company’s massive price raises. On the heels of VRX’s acquisitions last year of Isuprel, designed to support circulation mid-surgery, or to perform diagnostic tests, and Nitropress, designed to treat hypertensive crisis, the prices for both drugs experienced an immediate climb.
Present-day, hospitals were not fans of the biotech firm’s contract propositions and the ones that tried to make the contract work never heard word back from VRX. Some were not even aware discounts were up for negotiation, on the assumption that the price cuts would be automatic.
The chief pharmacy officer for Cleveland Clinic, Scott Knoer, is not afraid to make his frustration known with the gap between promises VRX offered and the gaping reality, and he questions when and if these discounts will really materialize.
Knoer voices his grievances, commenting, “Despite their promises to Congress, we’ve seen no reduction in cost nor any improvement in communication.” Moreover, Knoer notes the Cleveland Clinic is one of the aforementioned medical centers that numerous times attempted to approach VRX in regards to the discount issues. How many calls were returned, as per Knoer? None.
Other hospital officials are also speaking out, distressed that they need these drugs, but not happy with the price tags.
Roger Neal, an executive of Duncan Regional Hospital in Oklahoma, paints a condemning picture similar to Knoer’s for Valeant, explaining, “We’ve communicated with them. We communicated through our suppliers,” and yet, “We try to do everything we can, but we’ve really not had any success.”
Valeant might be facing another legal kerfuffle soon if California has anything to say about it. November’s ballot looks to be issuing in Proposition 61, The California Drug Price Relief Act, a law that would place a restriction on health programs run by the state from paying medication prices over that paid by the U.S. Department of Veterans Affairs, notably billed 25% less than comparative government agencies.
The University of Southern California (USC) polled over 1,900 registered voters, with the Los Angeles Times finding that only 23% oppose the act.
If Californian medical officials think like Dr. Jonathan Lewin, senior vice president of Integrated Healthcare Delivery for Johns Hopkins medicine, Valeant might be out of luck if the giant intends to hoard the missing discounts. Lewin, who dislikes other drug options for unfortunate side effects, explains regarding VRX’s Nitropress, “There’s no other injectable drug that works like that.”
That is the real problem when companies like Valeant do not hold up to their end of the bargain. The very patients Papa claims to be making his chief priority and the hospitals trying to treat them are the ones that suffer.
Now that the public eye is carefully watching VRX more than ever, hospital officials await to see what happens to mysteriously absent drug discounts when Papa faces pressure.