EpiPen rival to be offered free to many but high price for insurers

(This story has been corrected in 4th paragraph to delete reference to government)

(Reuters) - Privately held drugmaker Kaleo on Thursday said it would offer its Auvi-Q emergency allergy auto-injector at no cost to many consumers, but set a list price for the EpiPen rival that will be used as the benchmark cost to insurance companies at a whopping $4,500.

EpiPen maker Mylan NV came under intense criticism last year when it raised the price for a pair of its life-saving auto-injectors to $600, putting it out of reach for many consumers. It has since said it will sell its own generic EpiPen for about half that price.

Kaleo, which plans to relaunch Auvi-Q on Feb. 14 following a product recall, appears to have come up with a strategy to avoid the ire of mothers whose children depend on the product and others prone to potentially deadly allergic reactions.

Consumers with commercial insurance will be able to obtain Auvi-Q at no charge, the company said. It will also make the product available for free to patients with no insurance and a household income of less than $100,000.

Auvi-Q will be sold at a cash price of $360 for those who do not qualify for the emergency treatment at no charge, the Richmond, Virginia-based company said.

However, the starting price from which health insurance companies will negotiate discounts or rebates will be $4,500. It remains to be seen how payers will respond to the strategy.

“In order to help ensure Auvi-Q is available as an option to eligible patients for $0 out-of-pocket, we set the list price at $4,500,” Kaleo Chief Executive Spencer Williamson said in an e-mailed statement.

“It’s important to note that nobody pays the list price, and that the most important price is the price to the patient,” Williamson said. “No epinephrine auto-injector, branded or even generic, will cost a commercially insured patient less out-of-pocket than Auvi-Q.”

EpiPen has had a virtual monopoly on the emergency allergy treatments with more than a 90 percent market share.

Auvi-Q was originally sold in partnership with French drugmaker Sanofi, but was pulled from the market over manufacturing problems. Sanofi has since returned full rights to Auvi-Q to Kaleo.

Reporting by Bill Berkrot