Valeant discounts on heart drugs may be a hard sell to some hospitals

Seeking to blunt criticism of its pricing, Valeant Pharmaceuticals on Monday announced a new program to offer discounts of at least 10 percent to hospitals for a pair of life-saving heart drugs. The move comes after the company caused a firestorm last year by raising prices for the medicines – Nitropress and Isuprel – by 525 percent and 212 percent, respectively, on the same day they purchased them.

The price hikes sparked outrage over the cost of pharmaceuticals, in general, and led to several congressional hearings last fall that focused on Valeant’s strategy of buying drugs from other companies and then quickly jacking price tags to previously unseen heights. Valeant responded by signaling it would offer up to 30 percent discounts to hospitals, but never followed through and continued raising its prices, upsetting hospitals still more.

One hospital administrator is unimpressed by the latest effort.

“It’s definitely much more information than we got last time, but we’re still going to pay a huge markup,” said Erin Fox, who heads the Drug Information Service at University of Utah Health Care, a four-hospital network in Salt Lake City that expects to spend nearly $700,000 on the two Valeant drugs.

“A 10 percent discount is helpful, but not meaningful,”she added. “It’s really like a slap in the face, because you have to buy a lot more to get a 30 or 40 percent discount. In my view, $700,000 for two drugs is a significant amount of money to spend. So we’re still working toward using less (of the drugs). I hope they don’t get a lot of good press for doing this.”

And Scott Knoer, the chief pharmacy officer at the Cleveland Clinic, a nonprofit network of 11 hospitals and 17 outpatient centers, primarily in Ohio, said “Even with these discounts, the costs are still extraordinarily high for these life-saving drugs. The terms of the discount are cumbersome, because they are payable by rebate only. We estimate that over 90 percent of hospitals will just receive the minimal 10 percent discount.”

Several hospitals last month told a Senate committee that they did not receive price breaks on the heart medicines because Valeant did not offer discounts through their group purchasing organizations. And Premier, one of the largest purchasing organizations, said that for most of the 2,500 hospitals who are customers, the “discounts they offered were minimal to nonexistent.”

Only one of 2,500 hospitals qualified for the 30 percent discount mentioned last fall, while many received one penny off the price of Isuprel. In fact, only 1 percent of Premier’s customers received a discount on Nitropress, and less than 1 percent got a price break on Isuprel. The percentage of hospitals getting the discount was so low because it only applies to very high-volume purchases.

Now, though, Valeant says that all hospitals will be eligible for a rebate of at least 10 percent — and as much as 40 percent — based on the quantity of the medicines that are purchased during each quarter of the calendar year. Hospitals will receive these discounts primarily through their group purchasing organizations, according to the drug maker.

“Under this new program, the discounts we previously implemented for Nitropress and Isuprel will be simplified and more accessible,” said Joseph Papa, who began work as Valeant chief executive this month. “I understand the concerns our partners in the health care community have had about the pricing of these drugs, and we want to ensure hospitals and patients can get the drugs they need.”

But it remains to be seen the extent to which the discounts will be embraced. A Premier spokeswoman told us that “we received the new pricing schedule at the same time as everyone else. So we still have to review it as we would any new pricing proposal, and so we won’t have a comment until we talk to our member committees and evaluate the terms and contracts.”