Did This Big Pharma Company Bilk Recovering Drug Addicts?
Suboxone is a drug treatment for addiction to opioids. A visit to the suboxone.com website shows pictures of caring doctors and the “we’re here to help” mantra. It’s all well and good, but the big question surrounding Suboxone is this: Did the manufacturer of the drug profit off of recovering addicts? A majority of states (36) say that manufacturer Reckitt Benckiser Group PLC indeed did profit off the backs of drug addicts, and they launched a wave of lawsuits against the company.
The lawsuits alleged that the company is taking advantage of America’s opioid crisis by manipulating the market, overcharging customers, and gaming regulators — all to keep prices high. The state attorney generals also alleged that Reckitt Benckiser violated both federal and state antitrust laws.
Plaintiffs in these lawsuits say that insurance companies and recovering addicts were charged way too much for Suboxone prescriptions. Even labor unions joined in, saying that Reckitt directly contributed to increasing the health care costs of their members. Pennsylvania initially led the effort by filing several class action suits, then Wisconsin joined in, and their state Attorney General Brad Schimmel convinced 34 other states to join in.
One of the states’ biggest allegations is that taxpayer dollars were wasted on inflated Medicaid payouts for the drug–$857 million worth, according to a New York Times article reporting on the cost of the drug during the three-year period between 2009 and 2012.
Suboxone is an essential medication for any heroin or other addict trying to get clean because it provides the body with a mild opioid dose (buprenorphine) to ease withdrawal symptoms and cravings. The drug also contains naloxone, an opioid blocker so the patient cannot abuse the Suboxone itself. Indeed, drug addicts can buy Suboxone from dealers.
Reckitt’s powerful combo of buprenorphine and naloxone is one of the best remedies out there for opioid addiction. It’s been studied and research is well documented. A typical prescription can cost $600 per month.
One of the reasons the states are so miffed is that patients won’t fill prescriptions they can’t afford — there are many research studies that show this. Therefore addicts never get the help they need, or, if they have a Suboxone prescription, they might skip doses to save money. However, skipping a dose of Suboxone has severe consequences — major withdrawal, anxiety, and even nausea. A $600 prescription compared to a $10 bag of heroin is actually not a comparison at all — it’s easy to see what happens next.
Opioid addiction is an epic problem in the United States. The Department of Health and Human Services estimates that while 2.5 million people need treatment, only about one million actually get the treatment.
Reckitt took advantage of the orphan drug status, and they didn’t even really pay for any of their own R&D because the federal government via the National Institutes of Health funded most of the studies. After years of research, Suboxone took the place of methadone because it was more effective and safer. Drug addiction was not designated as a rare condition, but Reckitt got the orphan status anyway, which provides tax credits and other incentives for rare diseases, after passage of the Drug Addiction Treatment in 2000. Reckitt soon began reaping the profits, to the tune of more than $300 million net per year.
However, the drug’s orphan status expired in 2009, and Reckitt was facing losing a huge majority of its market share to generic versions of Suboxone. Shareholder letters issued at the time reassured shareholders that the company was seeking other ways to offset this impact.
The lawsuits allege that Reckitt indeed found a solution by blocking the regulatory process at every turn. The FDA requires brand producers like Reckitt to share information with generic producers, a.k.a. future competitors. One generic manufacturer, Amneal Pharmaceuticals, sued Reckitt, saying the company sabotaged that process at every turn. Amneal claims that Reckitt missed meetings, withheld research and pulled other moves to greatly delay and complicate the transfer of information.
Reckitt also slightly changed the drug to extend their exclusive manufacturing rights. This approach worked for four years, as generic manufacturers like Amneal were delayed. One of their smooth moves was changing from a tablet formulation to the meltaway sublingual strips. Interestingly, all the stalling on Reckitt’s part ended when their meltaway product was finally for sale on the market.
Reckitt then embarked on an unprecedented marketing campaign to make sure people used their meltaway product instead of their tablets. The company even rewarded their sales representatives if they were able to get doctors to use their meltaways rather than the tablets.
Reckitt’s plan worked. Generic tablets were delayed, doctors got used to the meltaway strips. Furthermore, the strips were patent-protected until 2023, ensuring that the market was cornered. The final nail in the generic coffin occurred when Reckitt discontinued their own production of tablets in 2012. Generics finally hit the market in 2013, but by that time Reckitt had netted over $4 billion.
But cornering the market wasn’t enough. Reckitt went further. They claimed they had discontinued their own tablets to protect against child safety, and Reckitt then appealed to the FDA to stop all generic manufacture of Suboxone tablets for the same reason.
But the FDA wasn’t buying it. Instead, the FDA referred the case to the Federal Trade Commission, asking them to “investigate anticompetitive business practices.” To date, that federal investigation is still ongoing.
At this point, most companies like Reckitt settle out of court rather than face enormous litigation. But not Reckitt – instead, they created a spin-off company, Indivior PLC, which now owns Suboxone. The states quickly tried to name Indivior in the open lawsuits, but they were outmaneuvered in October 2017 when a U.S. district judge deemed Indivior a separate company and thus the two separate companies couldn’t be named jointly in an anti-trust suit. So Indivior and Reckitt are off the hook and not subject to the litigation.
Just as Reckitt appears to have hidden much information from their competitors, it is also impossible to tell how much their scheme has cost consumers, insurance providers and the federal government.
In the U.S., the actual cost of a drug is a trade secret. The cost of a drug varies according to the insurance benefit it is part of. Most companies like Reckitt use pharmaceutical benefit managers (PBMs) to deal with anyone who arranges drug benefits, but the drug’s true cost cannot be revealed to insurance companies or Medicaid.