Valeant Drug Discounts Haven’t Materialized, Hospitals Say

  • ‘We’ve seen no reduction in cost,’ hospital executive says
  • Valeant says discounts are available to all hospitals

Months after Valeant Pharmaceuticals International Inc. said it would make discounts available to U.S. hospitals for two high-priced heart drugs, some medical centers say they have yet to see a cent of savings.

Valeant became the face of high American drug prices when it acquired Isuprel and Nitropress last year and immediately raised their prices by 525 percent and 212 percent. Facing a backlash, representatives from the company stood before Congress in April and said they would work to cut prices for the drugs.

Mike Pearson, left, on April 27.
Mike Pearson, left, on April 27.
Photographer: Andrew Harrer/Bloomberg

The drugmaker’s chief executive officer says the discounts are available to all, and hospitals may not be seeing them yet because of how the supply chain works.

In some cases, the hospitals said Valeant’s contract offers were undesirable. In others, they were unable to get a response from the drugmaker. Others appeared not to know that they might need to negotiate with Valeant for discounts, rather than get them automatically.

“Despite their promises to Congress, we’ve seen no reduction in cost nor any improvement in communication,” said Scott Knoer, chief pharmacy officer at the Cleveland Clinic. Knoer said his organization contacted Valeant repeatedly about a discount and didn’t have their calls returned.

Range of Hospitals

Bloomberg contacted 23 hospital systems and purchasing groups selected from lists of the U.S.’s biggest or top-rated hospitals -- ranging from regional chains to famed centers like the Cleveland Clinic.

Eleven of the hospitals or purchasing groups said they weren’t yet getting lower prices on one or both drugs. One large hospital system and one purchasing group said they were getting discounts. Ten others either declined to comment or didn’t respond.

Valeant Comment

Valeant, in a statement Friday, said that the discounts were available mostly through group purchasing organizations used by hospitals, and that it was possible some hospitals that said they were still paying high prices hadn’t gotten the discounts passed through yet. And in an interview Tuesday, Valeant CEO Joe Papa said that all hospitals were eligible and that he would be surprised if they weren’t getting them.

“Everybody has access to that 10 percent, either through the GPO or negotiating directly with us,” Papa said in the interview in New York, using the industry’s acronym for a purchasing group. “The more they use, the more they’d be eligible for additional volume rebates.”

Valeant, in its statement Friday, said that its work with the purchasing groups meant that 90 percent of hospitals would be covered.

“We have taken the concerns of the health-care community very seriously and we are committed to working with hospital groups,” Papa said in the statement. “We have also contacted hospital administrators who have said that their calls were not returned. At this time, Valeant Customer Service is unaware of any inbound inquiries by phone or e-mail that have yet to receive a response.”

Discount Struggle

Some hospital executives interviewed by Bloomberg expressed confusion or frustration over trying to access the program.

University of Utah Health Care spent $540,000 on Nitropress this year, said Erin Fox, director of the health system’s drug information service. That’s more than 20 times more than in 2013, she said.

“Valeant is being very consistent about not returning calls, and providing zero information on accessing potential discounts,” Fox said.

At Johns Hopkins Hospital, a day’s therapy of Nitropress costs almost $10,000 on average, up from about $440 a day in 2013, said John Lewin, director of the critical care and surgery pharmacy division. “We are and have been paying the same high price.” He said he’s looked at alternatives to Nitropress.

Contract Concerns

Another hospital found Valeant’s offer undesirable. Roy Guharoy, chief pharmacy officer at 141-hospital Ascension Health, said he didn’t sign a contract from Valeant because it didn’t promise to maintain lower prices on the drugs. Before Valeant bought the drugs and raised their prices, Ascension spent $3.49 million on them in the 12 months through January of 2015. In the 12 months after, it spent more than three times as much.

Valeant representatives appeared before the Senate on April 27, when departing Chief Executive Officer Mike Pearson spoke alongside board member and investor Bill Ackman at a hearing by the Special Committee on Aging.

“We have made mistakes,” Pearson told lawmakers who questioned the company’s price increases. “Valeant was too aggressive.”

Ackman, whose investment firm Pershing Square Capital Management LP is one of Valeant’s biggest shareholders, joined Valeant’s board in March.

“My recommendation is going to be that we reduce the prices of those drugs,” Ackman said at the hearing.

Through a spokesman, Ackman declined to comment.

Some Get Discounts

The two organizations Bloomberg contacted that were getting discounts included a purchasing group and a hospital chain.

Premier Inc., which negotiates on behalf of 3,750 U.S. hospitals and 130,000 other health-care providers, said it’s getting percentage discounts in the mid-teens, on average, and more of its members are getting discounts than before the May program was unveiled. Catholic Health Initiatives, a Colorado-based nonprofit health system that operates more than 100 hospitals, said it began receiving discounts on July 1, adding that further details were proprietary.

Other purchasing groups, such as Vizient Inc., said they’re trying to finalize purchasing contracts with Valeant after they weren’t happy with the drugmaker’s initial offers, which “did not adequately meet the needs of the member providers we represent,” spokeswoman Angie Boliver said in an e-mail.

Vizient eventually expects to end up with discounts in line with what Valeant promised in its May press release, Boliver said, adding that it’s not unusual to go back and forth with drugmakers when negotiating discounts. In the meantime, it’s reduced purchasing of Nitropress by 52 percent and Isuprel by 48 percent.

Necessary Drugs

Nitropress is used to treat hypertensive crisis -- when a patient’s blood pressure dramatically and dangerously rises. Its rapid action is critical, said Johns Hopkins Hospital’s Lewin. Isuprel is used to support patients’ circulation, during surgery, or to perform diagnostic tests.

“There’s no other injectable drug that works like that,” Lewin said of Isuprel, and other drugs may have unwanted side effects, he said.

Papa said discounts for the two drugs may rise as the program is expanded, and cheaper competing versions of the drugs will come to market by the end of next year.

In the meantime, Roger Neal of Duncan Regional Hospital in Oklahoma isn’t holding his breath. The executive says he’s “scoured the globe” for a cheaper version of Nitropress, after not being offered the discounts.

“We’ve communicated with them. We communicated through our suppliers,” he said of Valeant. “We try to do everything we can, but we’ve really not had any success.”

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