New Office of Pharmacy Benefits' first round of investigations will focus on drug price spikes connected to COVID-19
Gov. Andrew Cuomo on Thursday announced the Department of Financial Services' newly formed Office of Pharmacy Benefits has initiated investigations into significant price spikes for six drugs that were connected to the COVID-19 pandemic by sending a demand pursuant to New York Insurance Law Section 111 requiring a statement from the manufacturer explaining the facts and circumstances surrounding the spikes.
"Throughout the COVID-19 pandemic, we've seen too many instances of pharmaceutical companies taking advantage of those in need and significantly raising the prices on life-saving prescription drugs," Cuomo said. "This shameful behavior cannot stand and needs to be rooted out at all costs. Companies should be on notice: If you attempt to capitalize on the health needs of New Yorkers, we will investigate you and hold you fully accountable."
"Putting profits over people's lives is unconscionable," said Superintendent Linda Lacewell. "When drug manufacturers exploit a global pandemic for their own benefit, it cannot go unanswered. DFS will use every power at its disposal to shine a light on the world of drug prices. Today, we have taken our first steps in addressing the problem of excessive drug prices that has hit consumers' pocketbooks directly and through insurance premiums."
Cuomo’s office said, “The impact on consumers is not just about dollars and cents: as these drugs are sometimes the difference between life and death, an extreme price spike can be a real barrier to lifesaving treatment, particularly during this global health emergency.”
"It requires extreme greed and cynicism to see a global pandemic costing millions of lives as an opportunity for profit," said Commissioner of the New York State Department of Health Dr. Howard Zucker. "I applaud DFS and Superintendent Lacewell for taking these steps to address the problem of excessive drug prices during this international public health crisis."
The Department of Financial Services' (DFS) Office of Pharmacy Benefits (OPB) has examined changes in drug prices during the state of emergency to identify spikes in price worthy of further investigation. On Thursday, the OPB commenced investigations under section 111 of the insurance law into anomalously large spikes in the prices of six drugs that occurred during the COVID-19 pandemic, under circumstances determined to warrant further investigation. These drugs are (with descriptions from the governor’s office):
•Ascor (ascorbic acid) 25,000 mg/50 mL bulk vial – Ascor is a formulation of vitamin C for IV injection manufactured by McGuff Pharmaceuticals. McGuff raised the price of this drug by 110% about a week after clinical trials were announced for use of the drug to treat COVID-19 patients suffering acute symptoms.
•Budesonide 0.5 mg/2 mL inhalation (60 mL) – One of two corticosteroids to be investigated, a generic formulation produced by Cipla USA Inc. increased in price by over 1,350% in the midst of the first wave of COVID-19 cases in the U.S. and on the heels of an announcement of international clinical trials for its use to treat COVID-19 patients.
•Dexonto (dexamethasone) 5 mL vial of a 0.4% solution – Dexonto is the other corticosteroid under investigation and is a branded generic drug manufactured by Nubratori Inc. This manufacturer announced a price increase of over 65% at the beginning of the pandemic, just 11 days before clinical trials for treating COVID-19 patients with the drug were announced in China.
•Mytesi (crofelemer) 125 mg delayed release tablet, 60s – Manufactured by Jaguar Health, Mytesi is a drug used to treat gastrointestinal side effects of antiretroviral therapies used by HIV patients. Jaguar increased the price of the drug by 230% just days after it applied for an emergency use authorization for use to treat COVID-19 patients.
•Duramorph (morphine sulfate) 1 mg/1 ml (10 mL 10s) – While most morphine formulations experienced modest increases in price during the early months of the pandemic, this branded product manufactured by Hikma Pharmaceuticals experienced an anomalous increase of nearly 60%.
•Chloroquine phosphate 250 mg tablets – The chloroquine family of drugs has made many headlines during the pandemic, but Rising Pharmaceuticals appears to have attempted to capitalize on unsubstantiated reports of its effectiveness in treating COVID-19 patients early in the pandemic when it raised its price by 97.8%.
Each of these manufacturers will now be required to provide information about and a justification for each spike the OPB has identified. Pursuant to the demands sent, the manufacturers will provide DFS with written responses to questions such as the dates pricing decisions were made, the officers or employees involved in the decisions, any analyses conducted prior to the price spike, and the reasons for the price spike given internally. The OPB is authorized to collect additional information, including by examining witnesses or issuing subpoenas.
The commencement of an investigation does not mean a price spike was unlawful or even unjustified; rather, it means DFS has determined the circumstances warrant a closer look. If the investigation finds illegal conduct occurred or that a price spike was not justified, these conclusions will be memorialized in a report of the Drug Accountability Board, the panel of experts appointed by the superintendent just last month, and referrals to other relevant legal authorities may be made.
If it is determined a valid reason for the spike exists, DFS will announce that development as well, and close the investigation. Through this work, DFS will provide transparency in an area that has traditionally been opaque.