How Drug-Company ‘Benevolence’ Silences the Sick

(Bloomberg View) — Among the drugs that helped bring Valeant Pharmaceuticals International low, none did more damage to its reputation and stock price than Syprine. Syprine is a drug that treats a rare illness called Wilson disease, which prevents the body from metabolizing copper and can lead to liver failure and death if left untreated.

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For decades, the price of Syprine was $1 per 250-milligram tablet, according to a recent article in the medical journal Hepatology. For most people, a maintenance dose requires four pills a day, bringing the price during that era to $1,460 a year.

With only 3,000 diagnosed cases of Wilson disease in the U.S., the drug was hardly worth the trouble for its longtime manufacturer, the giant pharmaceutical company Merck & Co. So in 2006, Merck sold Syprine, along with another Wilson-disease treatment, Cuprimine, to the much smaller Aton company, which began hiking the price. By the time Valeant bought Aton four years later, Syprine had risen fivefold, to $7,824 a year, according to the Senate Special Committee on Aging.

To the delight of Wall Street, Valeant had built its business by buying companies with drugs that were the gold standard for a particular disease, and then raising prices relentlessly. Today, Valeant charges around $300,000 for a year’s worth of Syprine. The company’s most recent annual report shows that the division that houses Syprine and many other controversial drugs generated $1.5 billion in profit in 2016, on 1.9 billion in revenue. That is a margin of 79%.

In the fall of 2015, however, the Valeant bubble burst and the company came under intense scrutiny for its pricing strategy. Syprine was Exhibit A. When that Senate aging panel conducted a hard-hitting investigation into prescription drug prices, Syprine and Cuprimine were two of the four Valeant drugs included in the committee’s examination.

And when my former colleague Bethany McLean wrote an account of Valeant’s financial meltdown for Vanity Fair, she led with the story of a man she called J. He had become obsessed with Valeant’s pricing practices after one of his relatives went to refill a Syprine prescription, only to be told that her insurance company would no longer cover it, and that she would have to pay $20,000 for a month’s supply. (The insurer eventually relented, but her co-pays are now $500.)

J is John Brennan, a lacrosse coach in suburban Chicago. He agreed to shed his anonymity because there is another story about Syprine and Valeant that he wanted to get into the public realm. It’s about the relationship between the company and the Wilson Disease Association, the advocacy group working on behalf of patients. Just about every serious disease has at least one nonprofit devoted to curing the illness or helping patients. Yet with all the furor over skyrocketing drug prices, virtually all these groups have been curiously silent. The story Brennan brought me may help explain why.

Last May, after Valeant’s share price had dropped from $260 to $32 in nine months, the board fired its chief executive, Michael Pearson, the man who had devised the price-hike strategy.

Hospital (Photo: Thinkstock)

His replacement was Joseph Papa, a longtime pharmaceutical executive, whose job was not only to repair the company’s deteriorating balance sheet but to restore its tattered reputation. One of the ways Papa took on the latter task was by flying to Milwaukee to visit Mary Graper, who was president of the Wilson Disease Association at the time and whose son has the disease.

Prior to Papa’s hiring, Graper had three meetings with Valeant executives, begging them to lower the price of Syprine and Cuprimine. They had refused. As she wrote in a February 2016 email to Brennan:

I have given them countless stories of patients who are struggling for access to their meds. They keep telling me that they want to help everyone with their patient-assistance program, which as you already know is of little or no help to most patients. Now I am working with them to make the program eligibility standards less stringent so that more patients will be helped.

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She added: “We have not and will not accept any funding from them. Our board decided that it just would not be morally responsible to do so.”

When Graper met with Papa shortly after he took over, she again raised the issue of price reductions. Like his predecessor, he refused to consider it. According to Graper, Papa then asked her, “Has Valeant ever supported you financially?” When she said no, Papa offered to donate $100,000.

The Wilson Disease Association is tiny. Its paid staff consists of one part-time employee. In 2014, according to a filing it made to New York State, its revenue barely topped $90,000.

Despite the qualms she had expressed to Brennan months earlier, Graper recommended that the association take the money, which she felt could be put to good use. She was opposed by her board colleague Carol Terry, a co-founder of the Wilson Disease Association and a sufferer herself.

Terry feared that the Valeant offer was an exercise in public relations, a way to use the association as a shield against accusations of price gouging. After a great deal of soul-searching, the board decided that if Valeant would commit to a handful of conditions, most importantly improving its patient-assistance, the association would take the money. Which it did.

The association’s board also made it clear that its new relationship with Valeant should not be described as a partnership. Yet when Valeant drafted a press release announcing the donation, it used the words “partner” or “partnership” five times, and made it appear to be a joint statement. Graper rewrote the release, taking out all mention of a partnership and insisted that the release come from Valeant alone. Valeant was so eager to get the press release out that it did so even before the conditions were finalized in writing. It went out on Aug. 8.

There was a reason for Valeant’s haste: Its second-quarter earnings call was taking place the next day. And wouldn’t you know it? Early in Papa’s remarks, as he listed a series of events purporting to show that the company was turning around, he included Valeant’s relationship with the Wilson Disease Association. Except he didn’t use the word “relationship.” He used the word “partnership.” When Papa was questioned about this by an analyst, here’s what he said: