There is no arguing with the return on investment for Alkermes Inc. (ALKS) - Get Report : Sales of its primary drug are up 84% in the past two years, and they're poised to grow more thanks to the Trump administration.
The Dublin-based pharmaceutical company makes injectable naltrexone, better known as Vivitrol, a once-a-month drug that knocks out the impact of opioids by blocking the brain's opioid's receptors. In the White House's opioid plan rolled out last week, one of its moves is to screen all incoming federal prisoners for opioids, and to guide those with issues into treatment. The prisoners would be treated exclusively with Vivitrol for a month before moving into the next phase of recovery.
Alkermes shares were up 3.7% on Monday, March 26, to $60.42. The stock has added 10.4% in 2018.
Vivitrol originally received Food and Drug Administration approval for treating alcoholism in 2006. After submitting study results in 2010 for treating opioid addiction, the FDA gave it the nod. The cost of Vivitrol can be as high as $1,000 a dose, and critics charge that while it's more expensive than other treatments such as Suboxone or methadone, it isn't any more effective in treating addicts, and it may even be less effective.
Alkermes' positioning in the federal prison system for Vivitrol mimics a pattern the company has produced in state penal systems, with Indiana, Massachusetts and California among them. It has aggressively presented its products to states looking to deal with the growing opioid epidemic, and it has made political donations as well. The result is the company has 450 programs in 39 states, according to Alkermes.
According to the Center for Responsive Politics, the company spent $238,296 on individual contributions in the 2016 election cycle and another $53,274 in political action committee contributions. It would appear to be money well spent. The Comprehensive Addiction and Recovery Act passed in 2016 calls for treatment centers to offer all FDA-approved drugs, which of course include Vivitrol. The act's co-sponsors were Democratic Senator Sheldon Whitehouse of Rhode Island and Republican Rob Portman of Ohio. The pair pulled down $43,000 from Alkermes during the 2016 cycle, though Portman received the lion's share at $38,000.
But that was spare change compared to what Alkermes shelled out for lobbying costs. In the same cycle, the company paid $4.5 million to make sure those in Washington as well as officials in statehouses across the county got the company's message.
The company went beyond talking to politicians by pitching drug court judges and law enforcement. In one instance, the company donated $4,600 to the campaign of a Massachusetts's sheriff.
The company also sought to give Vivitrol a higher profile and create buzz with an ad campaign. In magazines as well as billboards and other advertising spaces, the company asked the question, "What is Vivitrol?" According to securities filings, the company spent $34.4 million on advertising in 2017, but not all of that cash was spent on Vivitrol.
It also has spent time and resources communicating with doctors across the country about Vivitrol and has made use of a "speaker's bureau" as a tool for getting the word out about the drug.
Last May, then-Health and Human Services Secretary Tom Price visited Alkermes' plant in Wilmington, Ohio, to demonstrate the Trump administration was aware of the opioid crisis. Price's appearance was before his departure from the cabinet for spending too much cash on charter aircraft.
The result of all of the Vivitrol promotion is that sales in 2017 totaled $269.3 million, up from $144.4 million in 2015, a jump of 86.5%. The company projected sales of $300 million to $330 million in 2018, with that figure jumping to $1 billion by 2021, according to an investor presentation.
Not all the news is good for Alkermes, though. Last November, Sen. Kamala Harris, D-Calif., sent a letter to the company telling CEO Richard Pops to buckle up, saying she intended to take a close look at how the company had marketed Vivitrol; at the same time, she knocked down the use of alternative treatments such as methadone and buprenorphine. She said as a result of Alkermes' lobbying and marketing, cheaper, more studied treatments have "been stigmatized and marginalized."
Harris, who has developed a following since taking over for Barbara Boxer, means business. She demanded 11 documents from the company including sales materials, a list of jails where the company allegedly gave away free Vivitrol as well as a tally of the donations the company made to addiction-related nonprofits.
Alkermes issued a boilerplate statement at the time talking about opioids and the company's dedication to battling the scourge. Its direct response to Harris was limited to just one sentence: "Alkermes strongly disagrees with the comments of Senator Kamala Harris, which were made public today." The company followed up with a letter two days later saying it intended to cooperate with Harris's inquiry and explaining that it did hand out free samples of Vivitrol to vetted jails that requested the drug in writing.
The company did not respond to a request for comment. Efforts to reach Harris were unsuccessful.