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‘Price gouging’ complaint filed against $800K anti-malarial drug sale to state

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Utah Gov. Gary R. Herbert speaks during the daily COVID-19 briefing at the Capitol in Salt Lake City on Friday, April 24, 2020.

Steve Griffin, Deseret News

SALT LAKE CITY — The group Alliance for a Better Utah filed a “price gouging” complaint Tuesday against the Utah pharmacy Meds in Motion, which last month sold the state 20,000 doses of anti-malarial drugs for $800,000 amid the COVID-19 pandemic.

“The people of Utah deserve to have this matter investigated,” Chase Thomas, Alliance for a Better Utah’s executive director, said in a prepared statement.

“As if price gouging wasn’t bad enough, price gouging of an unproven drug during a pandemic in a transaction that uses public funds is truly beyond the pale,” Thomas said. “The public trust is at stake here, and Meds in Motion and Dan Richards must be held accountable if they are found to have used this crisis to pad their pockets.” 

Dan Richards, owner of Meds in Motion and a Utah pharmacy lobbyist, did not immediately respond to a request for comment Tuesday.

The price gouging complaint, filed with the Utah Department of Consumer Protection, alleges the $40 the state of Utah paid per medication pack — which includes chloroquine, zinc and hydroxychloroquine, according to an invoice of the transaction — far exceeded fair pricing for the drugs.

Before the $800,000 purchase of 20,000 treatments of the drug came to light, Utah Department of Health officials were negotiating a larger contract with Meds in Motion for 200,000 more medication packs, and the Utah Legislature had appropriated up to $8 million to purchase the drug stockpile. State officials said each treatment would include a seven-day regiment.

If that $40, seven-day regimen consists of seven tablets, the price the state paid per tablet would have been roughly $5.71.

According to prices of the generic hydroxychloroquine drug (Plaquenil) listed Tuesday on GoodRx, 60 tablets of the drug could be purchased with a GoodRx discount for $14.95 at Smith’s, or $176.91 for 60 tablets for the average full retail price, without any discounts. At that price, the cost is about 25 cents per tablet with a discount, or nearly $2.95 per tablet for average retail price.

“At $5.71 per tablet, the price from Meds in Motion is almost double the nondiscounted price for these drugs ($2.95 per tablet) and almost 10 times the price of these drugs for most consumers ($0.25 per tablet),” Alliance for a Better Utah’s complaint states.

The medication packs the state of Utah purchased are not the same as generic hydroxychloroquine, but critics are still concerned the state paid way too much for the medicine.

Upon learning of the state’s $800,000 purchase of the drugs, Megan Milne, a third-generation Utah pharmacist, sent an email last week to the Utah Department of Health and the Utah Division of Occupational and Professional Licenses saying she was “incredibly concerned” about the purchase, questioning whether Meds in Motion could legally manufacture and sell that many treatments of the drug.

In a phone interview with the Deseret News, Milne also called the pricing of those drugs “completely exorbitant.”

Gov. Gary Herbert said in a news conference last week the state health department’s negotiations to purchase more of the drugs have “ceased,” and that he didn’t know about the $800,000 purchase executed March 31. Saying he had questions about the “transparency” of the purchase, the governor also said the deal is now also under a legal review by the Utah Attorney General’s Office to see “why it happened, when it happened and how it happened.”

Carrie Dunford, a pharmacist and the chairwoman of the Utah Board of Pharmacy, said Tuesday there are questions to be answered about the price state officials paid for the drugs.

“I’m supportive of them looking into more details so we can understand what it includes,” Dunford said, acknowledging the price is high compared to typical hydroxychloroquine prices. She wondered if the price also included delivery or any other service.

A request to state officials for more information about the $40 price-per-medication packet was not immediately returned Tuesday.

Overall, however, Dunford said she was “pleased with the way the department of health has landed on the hydroxychloroquine issue.” She said the “safest option” for patients is to be treated with a manufactured drug in a hospital or clinical trial setting.

The Utah Board of Pharmacy was slated to consider drafting a letter to state officials concerning the purchase and any other future purchase of anti-malarial drugs for COVID-19 treatment, but decided against it after their concerns were address by Gen. Jeff Burton, acting executive director of the Utah Department of Health, Utah Department of Health Deputy Director Dr. Marc E. Babitz, and Dr. Angela Dunn, state epidemiologist with the Utah Department of Health, in the board’s meeting Tuesday morning.

The health officials told the Utah Board of Pharmacy they have ended considerations to purchase any more of the drugs.

“Since then we’ve decided it’s not a wise purchase,” Burton told the board, adding state officials have “learned a great deal” as the pandemic has evolved.

As for the 20,000 medication packs the state has already purchased, it’s not clear what will happen to those drugs. State officials say Meds in Motion still has possession of the medication. The governor said he’s “hopeful” for a refund.

Last week, a health department spokesman told the Deseret News when asked about the $800,000 purchase that the health department was not aware of that transaction, which was separate from the health department’s negotiations on a larger contract with Meds in Motion.

Paul Edwards, communications director of the state’s COVID-19 Community Task Force, said the order was authorized by the Governor’s Office of Management and Budget after the governor’s administration granted the authority to that office early on in its pandemic response.

Babitz last month told the Deseret News he was supportive of using the drugs to treat COVID-19 patients, and he didn’t agree with critics who said there hasn’t been enough study yet on treating the symptoms of COVID-19.

Babitz also said state officials were considering a standing order that would allow Utahns to bypass their own doctors and use a new online screening tool to determine if they can receive the drugs directly from a pharmacist. At the time, Babitz said the health department still needed to resolve legal issues between the state and the company that runs the screening tool, as well as details of how it would work with pharmacies.

Though the drug had been approved by the Food and Drug Administration for off-label use, last week the FDA cautioned against using hydroxychloroquine or chloroquine to treat COVID-19 outside of a hospital setting or clinical trial.

Richards has not returned multiple requests for comment. Last month, about a week before the $800,000 invoice for the transaction was signed, Richards told the Deseret News that Meds in Motion had spent close to $1 million acquiring the raw chemical powder that can be compounded into the drug, and it was a humanitarian effort.

“We’ll figure it out on the back end,” Richards told the Deseret News on March 23. “We are not a state-appointed, organized task force. We are just a bunch of people who raised our hands and said something had to be done.”

He acknowledged at the time there was some doubt about the drugs.

“Not everyone’s on board yet and that’s tough,” Richards said, adding there just isn’t enough time for the usual medical studies. “This is not the cure. This is not the solution. This is the best available treatment based on the knowledge we have.”