arly last year, a former Valeant Pharmaceuticals (VRX) executive told Congress that, when the company took huge price hikes on two life-saving heart drugs in 2013, the drug maker believed the move “should not reduce patient access.”
He was wrong.
Instead, dozens of hospitals subsequently slashed their use of the two medicines — Nitropress and Isuprel — through 2015, according to a new analysis in the New England Journal of Medicine. Meanwhile, hospital use of two similar medicines that maintained stable pricing did not change.
“There’s a cost for pharmaceutical companies to bear,” said Dr. Umesh Khot, vice chairman of cardiovascular medicine at Cleveland Clinic Foundation and one of three researchers who analyzed the usage data from 47 hospitals. “They’ve seen a market share drop. The numbers are very clear.”
In early 2013, Valeant had purchased the two heart drugs, which are often used by emergency rooms in life-threatening moments, and immediately raised their list prices. The cost of a vial of Isuprel jumped 525 percent, while the price of a Nitropress vial climbed 212 percent.
The price hikes did not escape notice.
Hospitals began complaining about the sudden cost and, after the move was widely publicized, Valeant became a poster child for greed. Its profitable strategy of buying old drugs and jacking up prices by sky-high amounts, which was embraced by Wall Street, suddenly drew intense scrutiny and helped trigger intensifying criticism of the pharmaceutical industry at large.
Before the price hikes, usage appeared stable, but then declined quickly, according to the analysis.
In 2013, more than 17,200 patients were given Nitropress, but only 13,300 in 2014 and just 8,100 in 2015. From 2012 to 2015, the absolute number of patients treated with the drug fell by 53 percent. Similarly, more than 4,000 patients were treated with Isuprel in 2012, but only 3,300 the following year and 2,600 in 2015. And from 2012 to 2015, the number of patients treated dropped by 35 percent.
“If their hypothesis had been correct, you should not have seen a decrease,” said Khot, referring to the February 2016 congressional testimony by former Valeant chief financial officer Howard Schiller.
Meanwhile, he noted, usage for two comparable drugs rose as cash-strapped hospitals sought alternatives to keep their budgets in line. During the same period, the absolute number of patients treated with nitroglycerin — an alternative to Nitropress increased by 118 percent. And the number treated with dobutamine, which some hospitals used instead of Isupress, rose by 7 percent.
“We couldn’t continue paying for the same amount of these drugs we had been using. So we took a hard look to find best way to quickly reduce use,” said Erin Fox, who directs the drug-information service at University of Utah Health Care, which has four hospitals. “We removed Isuprel from crash carts (which stock drugs for emergencies). But these are very critical, which is why use is not down to zero.”
Valeant subsequently offered a discount and rebate program that lowered the cost of its two drugs by up to 40 percent. A Valeant spokeswoman added that “the current management team is committed to ensuring that past decisions with respect to product pricing are not repeated.” She also pointed to a commitment to keep annual price hikes to single digits.
As a postscript, pricing for Nitropress has, indeed, changed. Earlier this year, Valeant dropped the price by 66 percent and a vial now costs $300, down from $880 a vial, Fox noted. Meanwhile, ine of three generic versions costs $750 a vial, while two recently approved generics each cost about the same as the Valeant drug — $290 and $299, respectively.
However, Fox pointed out these prices are still higher than the cost for Nitropress before Valeant bought the drug in early 2013, when it was sold for about $250 a vial.
“Unfortunately, it’s still higher than when Valeant jacked up the prices,” she told us, “but at least it’s better than it was.”