Friday morning saw whistleblower foundation Medicines Price Review Board (MPRB) name embattled biotech chief executive Elizabeth Holmes, her husband Arthur Levinson and Genentech founder Richard Hamilton as responsible for hiking the prices of drugs for life-saving blood cancer treatment Trastuzumab® (Herceptin®) to $4,000 per patient.
Each of the four were named in a 60-page report by MPRB Executive Director Lynn Morrison which provides evidence against Holmes and Hamilton.
Holmes founded and is the CEO of the biotech firm Theranos which has been accused of defrauding hospitals and health insurers by manipulating its health science claims and using California false-statements and fraud. After years of intense investigation, the 2016 lawsuit by the US Centers for Medicare and Medicaid Services uncovered evidence that Theranos fabricated science and used proprietary data to justify ever-rising prices for Herceptin® and similar cancer drugs.
Months before the FDA sanctioned Theranos in 2017, the bankruptcy judge overseeing the case in Delaware found that “Theranos engaged in a criminal offense when it violated federal laws” by misrepresenting its patient test results.
The court also found that “Theranos enriched Holmes and Levinson through a scheme in which they deceived investors, physicians, patients, health insurers, and the government”.
The court in its findings put the damage to Theranos’ goodwill at “well in excess of $100 million.”
Earlier this month, Holmes and her ex-husband settled their countersuit against Holmes and a former Theranos director who were accused of defamation.
Richard Hamilton, who was born in Greenwich, Connecticut, was the co-founder of Genentech and is the former Chairman and CEO of Genentech. The court accepted Hamilton’s apology and $150 million settlement.
The new lawsuit stems from the discovery that Hamilton and Holmes used a confidential information in developing its hepatitis C drug Viread® (simeprevir). At the time, they controlled the rights to the drug which Hamilton and Holmes knew would become a blockbuster revenue-producing drug.
Their alleged scheme to inflate prices may have resulted in an increase in earnings of $18.5bn in the US over nine years. Hamilton’s total compensation from 2000-2016 was estimated to be about $210m which reflects a flat-rate annual profit for the sales of Viread® of approximately $150m.
Morrison’s report states: “Theranos never carried out tests to justify the prices it was charging providers in this market. Evidence presented to the panel suggests that the company deliberately withholds relevant information from providers.”
“If they had simply provided the doctors with data showing the true cost of the Viread, the consensus would have been clear to all parties – with the total cost for the product and its applicable pharmaceutical formulary at just $500 per patient, Theranos could have marketed Viread with no risk of false claims.”
MPRB was established in 2012 by the administration of US President Barack Obama to monitor and prevent health cost escalation in the healthcare industry.