by Robin Fields

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Vincent Gaynor remembers, almost to the minute, when he realized his part in birthing the breakthrough gene therapy Zolgensma had ended and the forces that turned it into the world’s most expensive drug had taken over.

It was May 2014. He and his wife were sitting in the cafeteria at Nationwide Children’s Hospital in Columbus, Ohio.

Elsewhere in the hospital, an infant — patient No. 1 in a landmark clinical trial — was receiving an IV infusion that, if it worked, would fix the genetic mutation that caused spinal muscular atrophy, a rare, incurable disease. At the time, children born with the most severe form of SMA swiftly lost their ability to move, to swallow, to breathe. Depending on the disease’s progression, most didn’t live to their second birthdays.

The Gaynors’ daughter Sophia had been diagnosed with SMA five years earlier. Since then, they’d raced to fund research to save her. Their charity, Sophia’s Cure, was covering a substantial portion of the costs of the trial.

They’d helped raise about $2 million for a program at Nationwide run by Brian Kaspar, a leading researcher. Gaynor, a New York City construction worker, had forged a tight bond with Kaspar, speaking frequently with him by phone, sometimes deep into the night.

But their relationship had started to fray when — with success in sight — Kaspar became part owner of AveXis, a biotech startup that had snapped up the rights to his SMA drug. Billions of dollars were at stake.

When Kaspar walked into the cafeteria that day, Gaynor said, the scientist didn’t acknowledge him or his wife before sitting down a short distance away. Neither did the man with him, the startup’s CEO.

“It was like they didn’t know us,” Gaynor recalled.

When Zolgensma hit the market five years later, it was hailed as a miracle drug. Some babies treated with it grew up able to run and play. It helped reduce U.S. death rates from SMA, long the leading genetic cause of infant mortality, by two-thirds.

That leap forward came at a sky-high price: more than $2 million per dose, making Zolgensma then the costliest one-time treatment ever.

How did a drug rooted, like many, in seed money from the U.S. government — that is, American taxpayers — and spurred by the grassroots fundraising of desperate parents, end up with such a price tag?

The story of Zolgensma lays bare a confounding reality about modern drug development, in which revolutionary new treatments are becoming available only to be priced out of reach for many. It’s a story that upends commonly held conceptions that high drug prices reflect huge industry investments in innovation. Most of all, it’s a story that prompts, again and again, an increasingly urgent question: Do medical advances really have to be this expensive?

ProPublica traced Zolgensma’s journey from lab to market, from the supporters there at the beginning to the hired guns brought in at the end to construct a rationale for its unprecedented price.

We found that taxpayers and private charities like Sophia’s Cure subsidized much of the science that yielded Zolgensma, providing research grants and opening the door to federal tax credits and other benefits that sped its path to approval.

Yet that support came with no conditions — financial or otherwise — for the for-profit companies that brought the drug over the finish line, particularly when it came to pricing.

Vincent Gaynor with his daughter Sophia (Photo courtesy of Vincent Gaynor)

Once Zolgensma’s potential was clear, early champions like the Gaynors were left behind as the private sector rushed in. AveXis’ top executives and venture-capital backers made tens or hundreds of millions of dollars apiece when the startup was swallowed by the pharmaceutical giant Novartis AG in 2018.

Wall Street analysts predicted Novartis’ new prize drug would be the first therapy to smash the million-dollar-a-dose mark. The Swiss colossus crafted a sophisticated campaign to justify more than double that amount, enlisting a team of respected academics, data-modelers and pricing strategists to help make its case.

“This was a case where the charities and the government did everything to get this thing commercialized, and then it just became an opportunity for a bunch of people to make transformative, generational wealth,” said James Love, director of the public advocacy group Knowledge Ecology International.

In a statement to ProPublica, Novartis said Zolgensma’s price reflects its benefits to children with SMA and to society more broadly.

“Zolgensma is consistently priced based on the value it provides to patients, caregivers and health systems,” the company said, adding that the drug may reduce the burden of SMA by replacing “repeat, lifelong therapies with a single treatment.”

Zolgensma’s price quickly became the standard for gene therapies. Nine of them cost more than $2 million. A tenth, approved in November, is predicted to run about $3.8 million, just shy of the most expensive, also approved last year, which costs $4.25 million a dose.

“Drug companies charge whatever they think they can get away with,” said David Mitchell, the founder of Patients For Affordable Drugs. “And every time the benchmark moves up, they think, ‘Well, we can get away with more.’”

Parents of children with SMA say their concerns about costs pale in comparison to the hope offered by such cutting-edge therapies. “I mean, it’s a child’s life,” said Hailey Weihs, who battled her health plan to get Zolgensma for her daughter. “Anybody would want that for their own child.”

The seven-figure costs of Zolgensma and other gene therapies add to the nation’s ballooning bill for prescription drugs, absorbed by all Americans in the form of rising insurance premiums and taxes for public programs like Medicaid.

Breakthroughs like Zolgensma are often framed as wins for all: Patients get life-saving new therapies. Drug companies and biotech investors make enough money to incentivize even more breakthroughs.

But not everyone’s a winner, Gaynor noted.

No one wanted Zolgensma to succeed more than he did, or understands better what it has meant for families like his. Yet his years behind the scenes of the drug’s development left him and his family disillusioned.

“I learned it’s all about money,” Gaynor said. “It’s not about saving people.”

When Vincent and Catherine Gaynor started their married life in 2006, they knew one thing for certain: They wanted children.

They learned well into Catherine’s 2008 pregnancy that they were both carriers for SMA, meaning there was a 25% chance their child would be born with the muscle-wasting disorder.

They were concerned but clung to the larger chance the baby would be born healthy.

When Sophia was born in late February 2009, at first they just marveled at her sweet disposition and bright, expressive eyes. How she loved being snuggled. How she sighed after she burped.

But it didn’t take long for Vincent, who’d grown up with younger siblings, to sense something was off. Sophia didn’t lift her legs. They flopped outward like a frog’s when he changed her diaper.

Their pediatrician assured them Sophia was fine. Then a different doctor suggested testing her for SMA. While they waited for the results, the family went to a nearby park, and Catherine pushed Sophia’s stroller around a pond. “I remember walking behind her with the video camera and knowing in my heart this was the last day we were all going to be happy,” Vincent recalled.

After Sophia’s diagnosis, Catherine quit her office job to care for the baby full time. Vincent started gulping down studies and going to conferences, desperate to find a way to save his daughter.

At the time, there were no treatments to slow or stop SMA. By the time Sophia was 4 months old, she needed a machine to help her breathe overnight. At 6 months, she could no longer take a bottle and needed a feeding tube. Each time she lost ground, their urgency to find a treatment grew.

The Gaynors didn’t have deep pockets or wealthy friends. He was a steamfitter with Local 638, from a family of steamfitters. They began raising small amounts of money by hosting golf tournaments and throwing Zumba parties. As the volume of donations grew, they founded Sophia’s Cure, emerging as serious players in the small world of SMA charities.

I learned it’s all about money. It’s not about saving people.

—Vincent Gaynor, who raised funds for medical research to help his daughter with spinal muscular atrophy

Vincent met Brian Kaspar at a cocktail hour for high-yield fundraisers. Kaspar was among the small group of top researchers working to find treatments for SMA, competing fiercely for recognition and funds. (Kaspar declined an interview request from ProPublica and didn’t respond to written questions.)

Because his drug was a gene therapy, public grant money and private philanthropy played an especially central role, with the National Institutes of Health alone putting over $450 million into science related to SMA. Drug companies at the time approached these treatments with more skepticism, waiting longer to invest and letting universities and academic hospitals do the heavy lifting, said Ameet Sarpatwari, an assistant professor at Harvard Medical School who studies the pharmaceutical industry.

Drug companies sponsored only 40% of the U.S. gene therapy trials active in January 2019, according to a study Sarpatwari co-authored.

“The narrative of industry is, ‘We’re doing the hard, expensive part of drug development,’ and, at least for cell and gene therapies, the most risky part is actually being done by public or federally supported labs,” Sarpatwari said, calling Zolgensma a “poster child” for the study’s findings.

By the time of the cocktail party, Kaspar had turned early research into a promising drug therapy that he was beginning to test on animals — the precursor to a human trial. Gaynor remembered him as humble and almost classically nerdy, happy to spend hours on the phone explaining how motor neurons work.

More established SMA charities tended to hedge their bets, spreading money around to multiple programs. But Sophia was already around 18 months old, and Gaynor had no time for that. In September 2010, when Sophia’s Cure won a $250,000 grant from the Pepsi Refresh Project by amassing votes online, he steered the money to Kaspar’s program. The following June, the charity signed an agreement promising Kaspar up to $1 million more, for which it had launched a drive to recruit 200 people to raise $5,000 apiece.

As the money flowed in, Gaynor and Kaspar became close friends. The Gaynors stayed overnight at Kaspar’s house on their drive to an annual charity event. Kaspar did a Q&A for the Sophia’s Cure YouTube channel from the Gaynors’ dining room and proofread posts Vincent wrote for the charity’s website.

Gaynor said they often talked about how getting the drug through the development process would require way more money and muscle than the various SMA charities could muster. Kaspar shared his conversations with venture capital firms and even asked Gaynor to talk to a potential investor.

Yet Gaynor said he was blindsided when Kaspar told him he’d formed a relationship with a Dallas startup called BioLife Cell Bank that had been focused on stem cell research.

The CEO, John Carbona, then 54, had run medical device and equipment companies, but he had no background in drug development. In an interview, Carbona told ProPublica that he took the reins at BioLife in the aftermath of his mother’s death, determined to do something “significant” to fulfill her hopes for him. After an associate’s twins were born with SMA, he said he became convinced that Kaspar’s gene therapy was the answer.

Carbona remade BioLife into AveXis: Av for adeno-associated virus serotype 9, the engine of Kaspar’s drug; ve for vector; X for the DNA helix; and Is for Isis, the goddess of children, nature and magic.

Still, for much of the next year and a half, money from charities and more than $2.5 million from the National Institutes of Health remained Kaspar’s bread and butter. In late 2012, Sophia’s Cure agreed to provide another $550,000 for a Phase 1 clinical trial. The Nationwide Children’s Hospital Foundation, an affiliate of the hospital, agreed to match it.

Kaspar singled out Sophia’s Cure for the extent of its support in a Nationwide press release.

“Sophia’s Cure Foundation has been the lead funder of this program and their incredible investment in this lab has accelerated our program by many years,” he said.

The trial protocol called for Kaspar’s therapy to be tested on infants up to 9 months old. It was a pragmatic decision: The company had limited funds and capacity to produce the test doses, which would be smaller for children who weighed less. Plus, the youngest children were likely to show the most dramatic results since they’d be treated before SMA inflicted its worst damage.

That left out Sophia, as well as most of the kids whose parents made up Gaynor’s fundraising network.

Gaynor’s dream of saving his daughter had tapered into determination to stop the disease’s progression and preserve the strength she had left. Sophia could no longer move her whole hand, but she could still tap with her right pointer finger. She could use an eye-gaze computer to click open screens and attend school remotely. She could communicate a bit, blinking once for yes and twice for no.

Early on, Gaynor said, Kaspar had promised a trial for older kids. But Gaynor felt Kaspar’s commitment wavered as his ties to AveXis grew and his reliance on funding from Sophia’s Cure diminished.

Carbona struck a deal with Nationwide Children’s in late 2013, getting AveXis the exclusive right to develop an SMA treatment using the hospital’s inventions, including Kaspar’s, in exchange for stock. A few months later, Kaspar signed a contract that granted him an even larger stake in the company. The company also landed its first major investor, Paul Manning of PBM Capital.

Over this period, Gaynor said, the phone calls and updates from Kaspar slowed. The Gaynors were invited to Nationwide Children’s for the start of the clinical trial by the family of the child receiving the first dose.

After the initial awkwardness in the cafeteria, the Gaynors said, Kaspar and Carbona eventually came over and sat with them. Carbona remembers it differently, saying that he recalled seeing the Gaynors that day and the mood was friendly, even celebratory.

Tension surfaced two months later when they all converged in Lancaster, Wisconsin, for Avery’s Race, an annual SMA fundraiser benefiting Sophia’s Cure.

The event brought together dozens of families from across the country for an awareness walk, an auction and a rubber ducky race in a nearby creek. In the finale, parents posed questions to Kaspar, Gaynor and Carbona, almost all of them about the clinical trial.

In video footage captured by a documentary filmmaker, Catherine Gaynor asked bluntly whether testing the drug only on infants meant the FDA would approve the treatment only for the youngest patients while “everyone else is left hanging out to dry.”

Kaspar acknowledged this was possible. He described expanding the treatment to older children as “step two” but made clear that funds for testing would have to come from Sophia’s Cure.

That’s what the money raised at Avery’s Race would support, Vincent Gaynor said, adding pointedly that his nonprofit would focus on the work others would avoid “because it’s not going to push stock prices up.”

Neither Kaspar nor Carbona responded directly to the dig. Carbona, noting the company had other funding needs, said they would expand testing when they had proof the drug worked.

I mean, they all have their hearts in the right place, but they’re being run by people who are looking for a return on investment.

—John Carbona, former CEO of AveXis

By early 2015, AveXis had raised millions from deep-pocketed biotech investors, adding members of several venture-capital funds to its board. Their participation would be critical in bringing the drug to market, paying for licenses to patented technology needed to make and administer it, for example. It also meant that Zolgensma had to do more than save lives — its promise had to make AveXis’ investors a profit.

Almost immediately, Carbona said, the board pushed to take the company public.

“I mean, they all have their hearts in the right place, but they’re being run by people who are looking for a return on investment,” he said.

As AveXis moved toward an initial public offering, some on the board questioned whether Carbona should continue running it, he said. He’d been accused years earlier of fraud and breach of fiduciary duty by a former employer, who won a $2.2 million court judgment against him. Carbona had denied any wrongdoing and the judgment was reversed in part and reduced on appeal, but the case left lasting damage. “It hurt me immensely,” he said.

Later that year, the board replaced Carbona with a new chief executive, Sean P. Nolan, who had a decadeslong record at pharmaceutical and biotech companies.

In September, a company representative offered the Gaynors a meeting with Nolan, saying Kaspar had stressed how instrumental Sophia’s Cure had been to the work on the drug. The Gaynors traveled into Manhattan for the meeting at a hotel bar. They told Nolan about their concerns, including that older kids wouldn’t have access to Kaspar’s drug since it hadn’t been tested on them. They said Nolan was cordial but never followed up. (Nolan didn’t respond to emailed questions from ProPublica.)

Nasdaq posted a video to Facebook with the caption, “Getting ready to ring the #Nasdaq opening bell with AveXis, Inc!” (Excerpt from archived live video clip obtained from Nasdaq/Facebook)

Watch video ➜

Early the following year, AveXis went public. Nolan celebrated by ringing the NASDAQ opening bell as Kaspar, other company executives and members of the board whooped and clapped.

The IPO and subsequent stock sales raised hundreds of millions of dollars, but little of the money went toward additional trials on Zolgensma, an analysis by KEI, the public advocacy group, concluded.

The drug’s trials were small, often involving two dozen patients or fewer. AveXis, and later Novartis, spent less than $12 million up to the point of the drug’s approval — surprisingly little — to prove the therapy was safe and effective, the group estimated, based on information obtained through Freedom of Information Act requests, from studies and in Securities and Exchange Commission filings. (Novartis did not respond to questions from ProPublica about trial costs.)

The companies spent more than 10 times that amount to license intellectual property from others, KEI found. It’s not the clinical trials, Love, the director, said, that “makes developing gene therapies more expensive than it has to be.”

By the time of AveXis’ IPO, the Gaynors had decided to wind down Sophia’s Cure and step back from the SMA community. In 2015, Sophia began having seizures that became more frequent over time. She was 6 years old and growing weaker. Her SMA had progressed too far for Kaspar’s drug to help her.

Vincent’s sense of failure was crushing. In September 2016, after years of pent-up anger, he took a last stab at getting Kaspar and AveXis to acknowledge that the charity and its donors had essentially been a partner in developing Zolgensma.

Sophia’s Cure sued Kaspar, Carbona, Nolan, AveXis, Nationwide Children’s Hospital and its affiliated research institute and foundation for breach of contract. They’d relied on the charity’s money to advance the treatment, the lawsuit alleged, then violated the terms of donation agreements by cutting it out of credit and ownership rights once the drug was headed for success. The suit sought damages of $500 million.

Many larger disease foundations have launched venture philanthropy programs that invest in biotech companies and projects, getting royalties and other financial considerations if their gifts help fund new treatments. In court filings, Nationwide Children’s called the notion that the tiny Sophia’s Cure had any right to the drug “simply not true, or even plausible,” and AveXis called it “wholly unsupported.”

Carbona said he was “disappointed and surprised” by the lawsuit. Nationwide didn’t respond to questions about the matter.

In November 2017, as the litigation went on, the results of the clinical trial that the charity helped fund were published.

They were remarkable. At 20 months, all 15 children who’d been treated remained alive, and none relied on a ventilator to breathe. Eleven of 12 infants who received a higher dose of the therapy were able to sit unassisted, speak and be fed orally. Two could walk on their own.

Based on preliminary trial data, the FDA had designated Zolgensma a breakthrough therapy, one of three special designations that helped it race from human trials to regulatory approval in five years. Once the full trial results came out, AveXis became a red-hot acquisition target.

In April 2018, Novartis beat out another bidder, agreeing to buy the company for $8.7 billion.

The sale delivered massive windfalls to those with the biggest stakes in AveXis.

Kaspar alone took in more than $400 million. He swapped his longtime family home in New Albany, Ohio, for a 9-acre estate in San Diego County, California, that had been listed for just over $8 million. It featured a dine-in stone wine cellar, a horse ring and stables.

Nolan, who’d led AveXis for less than three years, walked away with over $190 million; according to a financial filing, his payout included a golden parachute worth almost $65 million. Manning, the startup’s first big investor, made more than $315 million, multiplying his original investment by about 60. (Manning didn’t respond to calls or emailed questions from ProPublica.)

Carbona, too, made a bundle — he declined to say how much. Since he’d already left the company, his payout wasn’t disclosed in SEC filings. “It didn’t matter,” he said of the money. The 20-hour days he’d put into AveXis had helped advance a lifesaving drug. “This was a significant impact on humanity.”

After watching AveXis’ executives and investors cash in, the Gaynors were dealt another painful setback. In early 2019, a U.S. district court judge in Ohio dismissed Sophia’s Cure’s lawsuit against all parties, concluding there had been no breach of contract.

Their last hope for recognition of the charity’s role in bringing Zolgensma to the world was extinguished.

Once Novartis acquired AveXis, it turned to setting a price for its much-anticipated gene therapy.

Unlike other nations, the United States allows companies to charge whatever they want for new drugs. This often means Americans pay the world’s highest prices, particularly during the period when only the original manufacturer can market a drug. Research by PhRMA, the trade group for drug companies, suggests unfettered pricing buys Americans faster access, as long as insurers will pay: New medicines most often launch first in the U.S.

Novartis’ deliberations took place at the end of a decade in which launch prices of new drugs had risen exponentially, drawing ire from patient advocacy groups and Congress. The median annual launch price for a new drug jumped from about $2,000 in 2008 to about $180,000 in 2021, one study found.

In part, the increase reflected that a growing proportion of new drugs treated rare diseases. Drug companies have argued these therapies should cost more because their markets are smaller, making it harder to recoup expenses.

Cell and gene therapies also drove prices higher. The first three such treatments were approved in 2017, launching at prices of $370,000 or more. Luxturna, a gene therapy for a rare disorder that causes vision loss, costs $425,000 per eye.

Industry insiders assumed Zolgensma would cost more than Luxturna. But how much?

There was what I would call pressure from Wall Street. This was going to set a precedent. Investors wanted to see a high price here.

—Dr. Steven D. Pearson, founder of a nonprofit that assesses drug prices

How drug companies pick prices for their products is among their most closely held secrets.

Beyond its statement, Novartis didn’t respond to questions from ProPublica about how it set or justified Zolgensma’s price. We reached out to more than three dozen people who were at the company or consulted for it at the time; most didn’t respond or declined to comment. A couple said they were bound by nondisclosure agreements.

The most visible portion of Novartis’ work was an effort to put a dollar value on how much Zolgensma would extend and improve SMA patients’ lives and offset the costs of caring for them.

This approach, known as value-based pricing, was originally championed by insurers and consumer watchdogs hoping to rein in drug prices. Other nations use economic assessments to decide whether to cover drugs and at what price, often paying far less than the U.S. for the same treatments.

But pharmaceutical companies have learned to use these techniques to their advantage.

Novartis brought together experts from academia and top consulting firms to work with its internal health economics team to publish research framing Zolgensma as a good value even at a high price.

One of the academics was Daniel Malone, then a professor at the University of Arizona’s College of Pharmacy. The target audience was mainly insurers, he said in an interview.

“We’re trying to influence the thousands of pharmacy and therapeutics committees around the country that are going to be looking at this therapy and whether they are going to provide it,” he said.

At the company’s direction, Malone said, their model mainly compared Zolgensma to the only other SMA treatment then on the market, a chronic treatment called Spinraza. It, too, was pricey, costing $750,000 in the first year and $375,000 every year after; over a decade, the tally would come to more than $4 million. (This was hypothetical; the FDA had approved Spinraza in December 2016, so no one had ever taken it for that long.)

A paper Malone co-authored concluded that Zolgensma, at prices up to $5 million, was a better buy than its rival, delivering more therapeutic benefit at a similar cost.

Company executives publicly floated multimillion-dollar prices for Zolgensma using data points from Malone and others.

“Four million dollars is a significant amount of money,” Dave Lennon, then president of Novartis’ AveXis unit, told Wall Street analysts on a call in November 2018. But “we’ve shown through other studies that we are cost-effective in the range of $4 million to $5 million.”

Such talk normalized “prices that would’ve been inconceivable a generation ago,” said Peter Maybarduk, director of access to medicines at the nonprofit consumer advocacy group Public Citizen. “It has a desensitizing effect.”

Novartis’ team of experts also helped the company prepare for Zolgensma’s evaluation by the Institute for Clinical and Economic Review, a nonprofit that assesses whether drugs are priced fairly.

Unlike agencies in Europe that do similar evaluations to set drug prices for national health systems, ICER’s recommendations aren’t binding, but they’ve become increasingly influential among public and private payers when it comes to coverage decisions.

Dr. Steven D. Pearson, the nonprofit’s founder, said that as ICER began its review, he was aware that investors were pushing for a big number.

“There was what I would call pressure from Wall Street,” he said. “This was going to set a precedent. Investors wanted to see a high price here.”

At first, it looked like ICER would resist. Its December 2018 draft report said Zolgensma would be overpriced at $2 million.

Novartis pushed back. Another consultant, University of Washington professor emeritus Louis Garrison, submitted public comments echoing a forthcoming AveXis-sponsored journal article he’d co-authored. It argued that drugs like Zolgensma, which treat rare, catastrophic conditions, deserved higher prices, in part to “incentivize appropriate risk taking and investments” by their developers.

Garrison said AveXis reviewed the article prior to publication, but he had the final say on its content. “I thought I could make a value-based argument that they would welcome and that I believe in,” he said. He said he was not directly involved in the company’s pricing decision.

Nonetheless, ICER’s final report in April 2019 concluded Zolgensma would need to be priced under $900,000 to be cost-effective, though it acknowledged the drug was still being tested on infants who hadn’t yet shown symptoms of SMA. If they also benefited, the report suggested the drug’s value might increase.

On May 24, the FDA approved Zolgensma to treat children under 2 with all forms of SMA.

Novartis finally revealed the treatment’s U.S. launch price, $2.125 million, framing this as a 50% discount on Spinraza and what the company’s research showed the gene therapy was worth.

It also pocketed yet another taxpayer-funded benefit: a voucher from the Food and Drug Administration redeemable for accelerated review of another drug. Such vouchers — designed to encourage companies to invest in pediatric rare-disease treatments — can be sold, typically bringing prices of around $100 million apiece.

That same day, ICER released an update. New data showing Zolgensma’s substantial benefits for presymptomatic children made the drug cost-effective at prices up to $1.9 million by one benchmark and up to $2.1 million by another, it said.

Pearson acknowledged the scale and timing of the switch were unusual, but said it was driven by the data, not outside pressure. “We weren’t trying to fit into somebody’s preexpectation of where the number would be, believe me,” he said.

He immediately caught flak from insurers.

“I got a lot of phone calls saying, ‘Why on earth did you say $2.1 million was a fair price? How could that possibly be the case? We’re going to get swamped with this,’” he recalled.

The Gaynors, linking to news coverage on Zolgensma’s launch, wrote on the Sophia’s Cure Facebook page that they were “ecstatic” for children newly born with SMA, but that helping create the world’s most expensive drug “is certainly not what we had in mind.”

Malone said he thought it was mostly the potential for blowback that had prevented Novartis from demanding even more for Zolgensma. He’d recommended charging the full $5 million.

“Obviously it didn’t stick,” he said. “They decided not to price the product there, I think, because of the political backlash they would’ve gotten being the first out of the gate at that price point.”

In the months after Zolgensma hit the market in the U.S., parents of children with SMA frequently ran into resistance from health insurers that refused to pay for it.

Between late 2019 and mid-2022, Chicago attorney Eamon Kelly represented at least seven parents battling health plans across the country, helping them appeal denied claims or representing them at state Medicaid hearings.

Hailey Weihs came to Kelly when her insurer, a Medicaid-managed care plan in Texas, wouldn’t pay for Zolgensma for her infant daughter Aniya. As the coverage dispute dragged on, Aniya developed tongue tremors and lost the ability to bear weight on her legs.

Kelly won the case, as he had all the others, but Aniya’s five-month wait to get the drug was terrifying. “Every day kids with this disease lose motor neurons,” Weihs said. “When you lose them, you cannot get them back.”

Now state Medicaid programs and most employer health plans cover Zolgensma, but they often limit which patients get access. Some require doctors to get approval in advance before providing the treatment or impose restrictions on who’s eligible that go beyond what’s on the drug’s label, such as requiring an SMA specialist to prescribe it.

Though fewer than 300 American children are born each year with SMA, treatments for the disease annually rank among the top 20 drug classes for Medicaid spending. From 2019 through 2022, Medicaid spent $309 million on 208 Zolgensma claims, an average of almost $1.5 million per claim. (Under federal law, Medicaid doesn’t pay list price for drugs, getting substantial rebates; other payers also negotiate discounts.)

Globally, more than 4,000 children have been treated with Zolgensma, Novartis said. The drug topped $1 billion in annual sales in its second full year on the market. Through 2024, the company had reported over $6.4 billion in revenue from Zolgensma sales.

Novartis is working to expand use of the drug in older children, in part by seeking approval for a second version of the drug, administered by spinal injection, for children with less severe SMA.

“We are unwavering in our commitment to the SMA community and will continue to advance efforts to ensure access to Zolgensma for SMA patients who may benefit from this transformative, one-time gene therapy,” the company said in its statement.

Still, more than five years after Zolgensma’s approval in the U.S., the drug remains out of reach for children in many low- and middle-income countries.

Love, KEI’s director, said he’s heard from families in countries like India and South Africa, where it’s a struggle to obtain not only Zolgensma, but also other SMA treatments available in the U.S.

“It’s maddening to me,” he said.

After setting aside their charity work, the Gaynors refocused their energy on Sophia and her two younger siblings, who don’t have SMA.

The Gaynor family (Photo courtesy Vincent Gaynor)

They’ve taken the clan to Disney World and to the Bahamas to swim with dolphins. Their youngest, who’s 8, lies beside Sophia on her bed and watches movies with her.

Now 15, Sophia had her longest-ever hospitalization in early 2024 when a virus caused her blood sugar to plummet and triggered frequent seizures. She didn’t wake up for two weeks. Since then, she’s been weaker, her affect flatter.

Her parents say they don’t think about the future. “Our focus is that she’s happy, that there’s love all around her,” Catherine said. “It’s just day to day.”

The Gaynors have taken solace in the idea that, through Sophia’s Cure, their daughter has made a difference for all the children with SMA who came after her. “That was kind of our consolation prize,” Catherine said.

One of those kids turned out to be her cousin, Vincent’s sister’s son, who was diagnosed with SMA in 2023 and then treated with Zolgensma. He walked at 10 months and now races around. “That helped me, in part, feel better about what we did,” Vincent said.

He still bristles at the drug’s price, which he blames on the payouts hauled in by those at AveXis and now Novartis.

“All those people, they all came in at the 12th hour once the trial was funded and you had the breakthrough,” he said. “Once it was taken from us, it was all about greed.”

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Kirsten Berg contributed research.

This post was originally published on ProPublica.

by Jeremy Kohler

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

Three months after Missouri voters enshrined reproductive rights in the state constitution, abortion remains unavailable as the state’s main provider fights legal hurdles to resume offering the procedure.

At the same time, opponents of abortion in the state Legislature, stung by the passage of Amendment 3 in November, have filed a raft of bills aimed at thwarting implementation of the measure or undercutting its goals while they try to find a unified strategy to prevent the return of abortion services.

This week, state lawmakers held a hearing on a conservative-backed plan to put a new amendment on the ballot that would block most abortions. If passed by the General Assembly, the measure could go to voters as soon as this year.

The proposed amendment would ban abortion except for in medical emergencies, when a fetus has abnormalities, or in cases of rape or incest, with rape or incest cases requiring a police report and subject to a 12-week limit. It would also prohibit public funding for abortions. What’s more, it would ban providing surgeries, hormones or drugs to assist a child with a gender transition, procedures that are already illegal in Missouri.

At a hearing on the proposed amendment before the House Children and Families committee on Tuesday, its sponsor, state Rep. Melanie Stinnett, a Republican from Springfield, acknowledged that some might say she was trying to subvert the people’s will. But Stinnett said she’d heard concerns about the language in Amendment 3 and that this was an attempt to clarify the state’s abortion laws.

Stinnett said voters might not have understood what they were voting for.

Some members of the committee pushed back.

“Did voters know what they were voting for when they voted for you?” asked state Rep. Marlene Terry, a Democrat from the St. Louis suburbs.

The delay in providing abortion access after the election was “a very positive turn of events” that gave conservative legislators time to strategize, state Rep. Brian Seitz, a Republican from Branson, said in an interview. He said it gave his party “time to chip away at certain aspects of Amendment 3.”

Missouri had heavily restricted abortion access long before the U.S. Supreme Court eliminated the federal right to abortion by striking down Roe v. Wade, with the state’s strict regulations leaving only one clinic — Planned Parenthood in St. Louis — operational by 2018. In 2019, the state passed a trigger law that would ban abortion entirely if Roe fell, except in cases of medical emergencies but with no exemptions for rape or incest. That ban took effect in 2022.

Planned Parenthood stopped performing any abortions in Missouri at that time, and many people traveled to neighboring states to access abortions. In 2023, about 2,850 Missourians obtained abortions in Kansas, while about 8,750 sought the procedure in Illinois, according to the Guttmacher Institute.

In response, a massive campaign gathered hundreds of thousands of signatures to put abortion rights on the ballot. Amendment 3 — which established a fundamental right to reproductive freedom, including in making decisions about prenatal care, childbirth, postpartum care, birth control, abortion care, miscarriage care and respectful birthing conditions — passed by a 51.6% to 48.4% margin.

The amendment guaranteed the right to abortion up to the point of fetal viability, which it defined as the stage at which, in the judgment of a treating physician, a fetus could survive outside the womb without extraordinary medical measures. While the amendment allowed the state legislature to regulate abortion after viability, it required that any such regulations not interfere with abortions necessary to protect the life or health of the pregnant person.

After the amendment took effect in December, Planned Parenthood said it was ready to begin providing abortions at three locations across the state but that it felt limited by Missouri’s ban and other regulations targeting abortion providers, which are designed to make it harder for clinics to operate. It sued.

In December, a state court judge in Kansas City temporarily blocked the ban and most of the rules, including the mandatory 72-hour waiting period and bans based on gestational age. The final outcome will be determined at trial, which is scheduled to begin in January 2026.

The state court ruling left several abortion restrictions in place. Those include strict structural requirements for clinics — such as specific hallway, room and door dimensions — and a mandate that providers perform invasive pelvic exams before prescribing abortion medication.

Abortion rights advocates argue these regulations are medically unnecessary and create barriers to care. At a hearing last week in Kansas City, a lawyer for Planned Parenthood asked the judge to reconsider, emphasizing that the restrictions make it impossible for clinics to resume offering full services.

Planned Parenthood’s lawyer argued that it was because of the licensing requirement that abortion access had been confined to one location in St. Louis in the final years of Roe, and that “such extreme restriction on abortion access is not the result contemplated” by those who voted for the amendment.

The state’s solicitor general, Josh Divine, argued that Planned Parenthood could have requested waivers for the regulations instead of challenging them in court. He noted that the state has granted such waivers in the past, but Planned Parenthood did not submit a request. The judge gave both sides until the end of this week to submit further briefings before her ruling.

The delay has had another effect: fueling division among abortion rights supporters. Some of them opposed Amendment 3, arguing it didn’t go far enough and gave the state too much power to regulate abortion. They note that while the amendment guarantees the right to abortion before fetal viability, it also cements the state’s authority to impose restrictions afterward, giving abortion foes a foothold. (Supporters say they settled on the language as a compromise they believed would appeal to a broad majority of voters, and that an amendment offering unrestricted access to abortion would not have succeeded.)

Representatives for Planned Parenthood did not respond to requests for comment.

The effort to tie abortion to transgender rights mirrors the preelection campaign, where abortion opponents deliberately conflated the two issues on billboards and in radio ads. Critics said this strategy was a distraction — an attempt to shift focus from abortion rights, which had strong voter support, by exploiting voter unease over transgender rights.

Jamille Fields Allsbrook, a professor at Saint Louis University School of Law and a former policy analyst for Planned Parenthood Federation of America, sees Republicans taking a two-pronged approach in response to Missouri’s abortion amendment. With President Donald Trump back in power, she expects them to push familiar strategies, like cutting off Medicaid and Title X funding to clinics that provide abortions.

She said she had expected the Republicans to attack abortion rights in “sneaky, more maneuvering ways” like redefining fetal viability or pushing fetal personhood laws, measures that might sound reasonable to voters but still effectively restrict access.

But she said she was surprised by the Republican effort to simply gut Amendment 3.

“Seems naive politically to try to advance the exact same thing that voters rejected,” she said. “Either they don’t believe that voters have already spoken out loudly and clearly or they think that voters are not smart enough to recognize what they’re trying to do, which is undermine the will of the people.”

This post was originally published on ProPublica.

by Mary Hudetz, ProPublica, and Hannah Bassett, Arizona Center for Investigative Reporting

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

At least 40 Native American residents of sober living homes and treatment facilities in the Phoenix area died as state Medicaid officials struggled to respond to a massive fraud scheme that targeted Indigenous people with addictions.

The deaths, almost all from drug and alcohol use, span from the spring of 2022 to the summer of 2024, according to a review of records from the Maricopa County Office of the Medical Examiner. Over half died as officials ignored calls to address lax oversight later shown to have contributed to thousands of patients being recruited into sham treatment programs.

Patients continued to die even after Arizona officials in May 2023 announced a sweeping investigation of hundreds of facilities. By then, the fraud was so widespread that officials spent the next year seeking to halt Medicaid reimbursements to behavioral health businesses accused of wrongdoing.

The state’s Medicaid agency, the Arizona Health Care Cost Containment System, acknowledged the fraud cost taxpayers as much as $2.5 billion. But it has not accounted publicly for the number of deaths tied to the scheme.

Many of the deaths in sober living homes reviewed by the Arizona Center for Investigative Reporting and ProPublica happened as officials — in at least five instances across Republican and Democratic administrations — failed to act on evidence that rampant fraud was imperiling Native Americans whose care was paid for by the agency, according to court documents, agency records and interviews.

A class-action lawsuit filed last month by families who allege the state’s inaction harmed or killed loved ones seeking addiction treatment names three people who died outside of sober living homes or treatment programs. Their deaths are not among the 40 fatalities tied directly to the facilities in medical examiner records.

Gov. Katie Hobbs, a Democrat who took office in January 2023, blamed her Republican predecessor, Doug Ducey, for failing to relay the scale of the scheme that persisted for years under his leadership. However, AZCIR and ProPublica found that the leader Hobbs appointed at AHCCCS also stalled a key reform the agency would later credit with helping to stem the fraud.

In a brief statement, Daniel Scarpinato, a Ducey spokesperson, did not comment on missed opportunities to detect and stop the fraud under his administration. But he said that the former governor went to great lengths to ensure a smooth transition for Hobbs and that members of Ducey’s staff continued to make themselves available to her administration after he left office. “All they needed to do was pick up the phone,” Scarpinato said.

AHCCCS declined to comment or to make Director Carmen Heredia available for an interview because of the ongoing class-action lawsuit.

Reva Stewart, a community advocate who started a nonprofit to help victims and their families, estimates the crisis led to hundreds of deaths, extending beyond those that occurred in sober living facilities. She said many people recruited into programs were reported missing and some lost access to treatment or became homeless when the state’s crackdown led to the abrupt closure of facilities that housed people.

Stewart and others fault AHCCCS for not acting sooner.

“I had family members who died in these group homes,” said Lorenzo Henry, a member of the San Carlos Apache Tribe who said he was recruited into multiple inadequate treatment programs before finding a facility that helped him. “I would like to see at least AHCCCS take accountability for their actions, for how they let this fraud go on for so long.”

Among the victims was Jeffrey Hustito, a 43-year-old uncle, brother and son from Zuni Pueblo in New Mexico. He had been a caretaker for his father when he was on dialysis and awaiting a kidney transplant. In the fall of 2021, Hustito sought treatment for alcoholism in Arizona, his family said. His father, an Army veteran and custodian for the local Indian Health Service hospital, was relieved to learn about his son’s decision. The two were close, living in the family’s home in a historic tribal village surrounded by high desert and mesas.

But in Phoenix, the younger Hustito became difficult to keep track of. He was caught up in a murky network of treatment programs, according to interviews with his family, social media posts, and state and county records. Sober living home operators always seemed to be moving him, his father said.

“We were really thrilled when he decided to get treatment,” said Anders Hustito, who is slender and soft-spoken. “He just got worse over there.”

Jeffrey Hustito died in a sober living home on Dec. 27, 2022.

A person walks past the location where, according to Anders Hustito, white vans stopped to collect people and bring them to sober homes in Arizona. (Adriana Zehbrauskas, special to ProPublica) Skyrocketing Reimbursements and Fraud Allegations

The fraud flourished for years under the state’s American Indian Health Program, a Medicaid insurance option for tribal citizens that allowed providers to set their own reimbursement rates. This fee-for-service model, established as a result of federal requirements, aimed to ensure coverage for Native Americans living in areas not typically served by insurance companies. But with no limit on how much they could bill, some behavioral health providers claimed tens of thousands of dollars for a single counseling or treatment session.

The first uptick in behavioral health reimbursement claims came in 2019. That same year, Ducey appointed Jami Snyder, a deputy director at AHCCCS and former head of Texas’ Medicaid agency, to serve as director of AHCCCS. She pursued new initiatives, like additional mental health services and housing options for Medicaid recipients. She also had a more hands-off approach to agency operations, including fraud prevention, than her predecessors, according to former AHCCCS employees.

During the pandemic, Snyder enacted changes to increase access to care. One allowed the state Medicaid program to bypass background checks for providers and in-person inspections of facilities. Another let providers continue collecting Medicaid payments after their health department licenses lapsed, meaning AHCCCS no longer had updated information on clinics’ certifications or ownership. The changes were not communicated beyond Snyder’s senior leadership team for nearly two years, according to documentation provided by an AHCCCS spokesperson.

Snyder declined requests for an interview or comment for this story.

Medicaid, which provides essential health care for lower-income people, was known to be susceptible to fraud, in part because of the breadth of services offered; the American Indian Health Program especially was at higher risk because providers could set their own rates with no cap. But the failure to communicate licensing changes to staff made the agency and program even more vulnerable. Markay Adams, former assistant director of the division within AHCCCS that administers the American Indian Health Program, said that had she known about the changes she could have advocated for more audits or staff to safeguard against fraud.

(Managed care organizations, which oversee services to 90% of Medicaid members, also were unaware of the changes.)

Between 2020 and 2021, spending on the American Indian Health Program skyrocketed from roughly $690 million to nearly $1 billion, according to internal documents.

Behavioral health outpatient clinics drove the most significant increase, with officials later saying that many of these facilities were part of the multilayered scheme to defraud Medicaid. The clinics would often coordinate with unregulated sober living homes to house patients eligible for the program. The clinics would then pay the homes for supplying patients, using a cut of the outsize profits they made billing the American Indian Health Program.

AHCCCS did not appear to grasp the scope and complexity of the fraud scheme for another year, despite red flags and the spike in payments to treatment programs, Adams said. The Arizona Republic last year also reported that a medical director at the agency became concerned in 2021 about unsafe behavioral health settings.

In June 2021, AHCCCS terminated its contract with a facility that had unlicensed staff, overbilled for services and housed patients in a decommissioned hotel, a matter that Snyder was notified about in internal emails. However, the extent of the agency’s probes, conducted by its Office of Inspector General, weren’t fully shared with other AHCCCS divisions, and the executive team did not effectively coordinate or communicate its response within the agency, Adams said.

Mark Brnovich, then Arizona’s attorney general, announced indictments in October 2021 of 13 people and 14 businesses accused of defrauding AHCCCS by billing excessively for treatments and claiming to treat patients never served by their behavioral health operations. (All entered plea agreements, except for L&L Investments, which was found guilty at trial last year.)

Meanwhile, word spread on social media that white vans were appearing on reservations and people with addiction were disappearing, said state Sen. Theresa Hatathlie, a Democrat from Coalmine Mesa on the Navajo Nation. Hatathlie said the behavioral health facilities’ tactics of sending vans to tribal communities grew increasingly aggressive as they recruited clients with promises of free food, housing and clothing. Police intervened but didn’t yet fully understand what was happening, the state senator said.

“I Thought Everything Would Be OK”

Jeffrey Hustito decided to seek treatment in Phoenix based on a recommendation from friends at Zuni Pueblo. In the fall of 2021, he entered a program paid for by Medicaid that offered a room at a sober living home, his father said. Hustito believed treatment would provide a stepping stone to steady employment, maybe as a welder or a cook.

At home, he liked to make pasta and enchiladas, and he often had dinner ready in the evenings after his father’s custodial shifts at the local Indian Health Service hospital.

“He was always helpful,” Anders Hustito said.

The family knew they would miss him when he enrolled in the Phoenix treatment program. But they also knew he needed help.

The place where he stayed in Phoenix, a two-story house with a hot tub and swimming pool, looked like a mansion in the photos that Jeffrey Hustito shared in text messages, his sister, Katherine Hustito, said. She was pleased he seemed happy, though she was surprised the treatment program operators had helped him get an Arizona identification card and sign up for Medicaid in the state.

“He was taking pictures of himself in the pool,” his sister said. “I thought everything would be OK.”

Hope eventually faded. Around February 2022, Hustito called home scared, thirsty and unsure of his whereabouts, she said. His family believed he may have been kicked out of his sober living home, leaving him with no place to stay. By the time his father drove the four and a half hours to Phoenix, Hustito had figured out he was in Maricopa, a bedroom community more than 30 miles south of the city.

“That’s way out of Phoenix,” Anders Hustito said. “When I finally saw him, boy, I was so glad. We hugged.”

He said he took his son home, only for him to go back to Phoenix a month later and enter a new treatment program.

Anders Hustito did not yet know about the fraud in Arizona or that the programs might be enabling his son’s drinking, rather than helping him quit. But according to public records, there were signs of trouble within facilities and problems with providers’ licenses.

In early February 2022, Brnovich’s office received a 107-page memo from a private citizen that spelled out alleged schemes of more than 30 sober living homes in the Phoenix area believed to be targeting Native Americans and billing for treatment services that were not provided. (Three of the four individuals named in the memo, including a state health department employee, would be indicted by Brnovich’s successor, Kris Mayes, a Democrat, in September 2024.)

At AHCCCS, staff received news in March of a death inside a residential treatment program, Adams said. In an interview, she could not recall details of the death or the facility where it occurred. But she said a health and safety committee reviewing the death discovered the facility did not have a health department license, a key detail that would repeatedly appear in later investigations.

Adams, who was present for the review, questioned how the provider could collect Medicaid payments without a license that’s required of every health care provider. Soon after escalating the issue with senior leadership, a top AHCCCS manager disclosed the changes that allowed unlicensed providers to remain in AHCCCS’ enrollment system. The agency would later find more than 13,000 unlicensed providers eligible to receive Medicaid reimbursements, though only a fraction were behavioral health or accused of wrongdoing.

The Office of Inspector General undertook a manual review of behavioral health residential facilities’ licenses, Adams said, and Snyder began meeting that spring with AHCCCS’ top managers to identify weaknesses that fraudsters could exploit.

Evening on the edge of Zuni Pueblo in New Mexico (Adriana Zehbrauskas, special to ProPublica) “They Didn’t Really Teach Us Anything”

By the summer of 2022, Jeffrey Hustito was enrolled in Beyond4Wallz Health and Wellness. The new outpatient treatment program held classes in an office building in north Phoenix and placed its clients in houses throughout Phoenix, according to the owner.

State records show the business, which received a state health department license in April 2021, was reimbursed $3.5 million from Medicaid that year. The next year, Beyond4Wallz’s Medicaid claims more than tripled, to $11.1 million.

At the same time, state health inspectors were discovering that Beyond4Wallz failed to supervise staff, according to state health department records. Inspectors also said the company could not provide proof that its counselors were qualified to work with clients.

A former client, who said she was enrolled in the program at the same time as Hustito, recalled some clients smoked fentanyl in the treatment center’s bathroom. (She asked not to be named out of fear of retaliation from the business’ owner.)

She said she slept on a mattress on the floor of a rundown house and didn’t get the treatment she needed. “They didn’t really teach us anything. It was just like a room-and-board thing,” she said. Eventually, she left.

In a brief phone interview, Darielle Magee, the owner of Beyond4Wallz and a hairstylist, said she opened the business after losing loved ones to drugs. She built her clientele by asking people on the street and at her salon if they needed help recovering from addiction. “Some people would say no; some people would say yes,” Magee said, adding that she worked with property owners to find shelter for clients and also bought property to house them. Her former clients were “entitled to their own opinions” about the program, she said.

Magee didn’t comment on accusations of substance use among clients in her program or the health department citations, which records show were initially resolved with plans to correct each violation. She also would not comment on Hustito’s time at Beyond4Wallz, citing the “sensitive nature of the topic.”

A Google listing for the business shows photographs of Hustito in a carpeted office with other clients, his husky, 6-foot frame wedged in a small classroom desk. Other photos show him on a trip to California in July 2022, wearing a neon green T-shirt that says “The Sober Life.”

Hustito’s sister described the trip as a high point for him that year. She keeps photos on her phone that he sent from the beach in Los Angeles. In one, he’s wearing the “Sober Life” shirt and beaming with the ocean behind him.

“That’s the Jeffrey we know,” Katherine Hustito said. “Always smiling.”

But as the days passed in California, he no longer appeared to be sober in the photos he sent home. His father wondered if the trip was just a “big old party.”

Photos of Jeffrey Hustito at the beach in California (top row and bottom left) and the Grand Canyon in Arizona (bottom right), photographed on the Hustitos’ dining room table in Zuni Pueblo (Adriana Zehbrauskas, special to ProPublica) Resistance to Reforms

Even as AHCCCS struggled to stop the schemes, it was clear the behavioral health care industry was aware of fraudulent billing, according to agency documents.

That summer, AHCCCS staff were wrestling with how to keep providers from reaping huge profits with a single billing code meant for serving people in need of intensive outpatient help for addiction, including counseling. Reimbursement claims had ranged from roughly $150 to $2,500 for the same service, according to interviews and internal records. Staff would later find one provider charged AHCCCS $60,000 for one treatment session with a single client.

In July 2022, AHCCCS publicly posted a proposal to set a reimbursement rate of $138 per claim for intensive outpatient addiction treatment. The team responsible for setting rates had determined that amount was in line with industry standards.

Yet Snyder heard concerns from more than 10 facility operators, some of whom acknowledged certain clinics were abusing billing rates but said capping reimbursements could put them out of business and trigger a surge in homelessness.

The Arizona Council of Human Service Providers, a group with influential board members, complained the proposed rate change was “premature” and “insufficient” to cover costs of treatment. Among them: Heredia, CEO of Valle del Sol, a behavioral health and primary care organization. She would later replace Snyder as head of AHCCCS, with the agency touting her experience with the two nonprofits.

The agency scrapped the rate change.

Cottonwood trees tower over the gravel road leading to Anders Hustito’s home. (Adriana Zehbrauskas, special to ProPublica) “Are You Sure You’re in a Safe Place?”

In the fall of 2022, Hustito spent a week at home in Zuni Pueblo. His sister recalled asking him to stay in New Mexico for good. But he was anticipating another California trip with his treatment program, she said.

A white van pulled up to the Hustito family’s house to take him back to Phoenix. Anders Hustito couldn’t believe the driver had the nerve to show up at the family’s home, shaded by a cottonwood tree along a quiet gravel road.

Things didn’t go as Hustito hoped. The California trip didn’t happen. He was cited for shoplifting. He left Beyond4Wallz, according to the owner. She did not say why.

Hustito listed three addresses that fall, a medical examiner reviewing his health records said. One was a gray one-story house on the far west edge of Phoenix. Anders Hustito said his son gave the impression that the different sober living homes he stayed in were run by the same family, though he did not say who they were.

In November, Katherine Hustito noticed a warning on Facebook from the Zuni Police Department. It said to beware of scammers from Arizona who were trying to recruit tribal members into sham treatment centers. She sent it to her brother. “Are you sure you’re in a safe place?” she recalled asking. “I just want to know you’re OK.”

Jeffrey Hustito responded that he was fine, though that fall he also cried on a phone call with his sister and told her that he hated where he was. He was homesick and said he wanted to return home for an annual tribal ceremony. When that event came and went, he said he would be home by Christmas. He continued sending his sister texts each day to say good morning. She wondered what he wasn’t telling her.

A medical examiner would later note that in his final weeks, Hustito made multiple emergency room visits. One trip to Banner Desert Medical Center was on Dec. 9, a day after he turned 43. Authorities said he drank a half bottle of rum and smoked fentanyl at his sober living home. He was treated and released.

Two days later, he needed medical treatment again, for alcohol poisoning. He was taken to another hospital and released to his sober living home.

On Dec. 23, AHCCCS published for the first time an alert on its website warning of fraudulent sober living homes recruiting Native Americans from reservations.

“We Let Them Drink a Little Bit to Calm Down”

Anders Hustito last heard from his son on Christmas. Jeffrey Hustito was upset about not getting to see the NFL’s Arizona Cardinals play that day, even though he believed his behavioral health provider planned to give him tickets. His family said they sent him money for the game, only for him to learn he was being disciplined and wouldn’t attend the game after all.

His father couldn’t reach him after that.

According to police, Jeffrey Hustito checked into another sober living home on Dec. 26, this one in the suburb of Glendale. He later smoked fentanyl with another resident and laid down to sleep around 1 a.m. People in the house found him unresponsive 45 minutes later, police said. In addition to the drugs, he had alcohol in his system.

Authorities called Anders Hustito on Dec. 27 to tell him his son had died. He blamed himself for not driving to Phoenix a day earlier to search for his son.

But he was also angry with the sober living home owner. When Anders arrived to collect Jeffrey’s belongings with his oldest son and daughter-in-law, Anders asked a man who came to the door how residents could have access to alcohol while seeking treatment.

The answer infuriated him. “He said, ‘Since they have an alcohol problem, we let them drink a little bit to calm down,’” Anders recalled.

Anders Hustito last heard from his son on Christmas in 2022. (Adriana Zehbrauskas, special to ProPublica) “It Was Obviously a Systemic Issue”

Jeffrey Hustito was one of at least two Native Americans to die in sober living homes in December 2022 as AHCCCS tried to root out fraud by suspending payments to providers. At least 10 behavioral health providers, including Beyond4Wallz, received suspension notices from AHCCCS that month.

In a letter sent the day after Hustito died, officials accused Beyond4Wallz of billing excessively for services that could not have been provided to patients. Magee, the Beyond4Wallz owner, said she tried to address the state’s allegations and stay open, but eventually closed. Despite the timing, there’s no indication the letter was spurred by Hustito’s death. Magee said she had no ties to sober living homes Hustito entered after he was no longer her client, including the one where he died. And Magee is not facing charges related to the defrauding of AHCCCS.

“So many people were being closed, and we were just one of the first,” said Magee.

Meanwhile, Native Health and Native American Connections, two well-established providers in Phoenix, pressed authorities to do more. As Hobbs took office in January 2023, the organizations held a meeting with other community health centers, law enforcement, AHCCCS and state health officials to discuss human trafficking and Medicaid fraud.

“It was obviously a systemic issue,” Walter Murillo, chief executive officer of Native Health, said in an interview. “I assume that they had to be aware of it by then.”

Snyder did not mention the fraudulent facilities several days later when she went before a legislative committee to discuss a recent audit shortly before stepping down as AHCCCS director. The audit, conducted every 10 years, is used by legislators to evaluate the future of state agencies. It determined, among other findings, that AHCCCS could have made more than $1.7 billion in improper payments between 2019 and 2020 because it did not properly determine providers’ eligibility before making reimbursements. The audit did not indicate if this was related to the growing crisis. Snyder defended the agency’s handling of Medicaid funds.

“It has nothing to do with member abuse,” she said of the payments.

The Hobbs administration began to grasp the scope of the fraud scheme in the weeks that followed, said Christian Slater, the governor’s spokesperson. Hobbs asked the health department to develop a plan to address it, and asked AHCCCS to prepare for a humanitarian response and create a list of providers suspected of fraudulently billing Medicaid.

But if Arizona’s top leaders had made a response to the fraud a priority, key staff members within AHCCCS said the recommendations they provided AHCCCS’ new director were dismissed. Adams and another former staffer, who helped prepare AHCCCS’ financial records but asked not to be named for fear of retribution, said they each presented Heredia with financial reports that showed skyrocketing spending under the American Indian Health Program. (Adams resigned from AHCCCS in April 2023.)

Heredia then briefly blocked another attempt by AHCCCS’s billing experts to cap reimbursement rates, this time at $158, records obtained by ProPublica and AZCIR show. Public responses to the proposed change, including from long-standing community health organization Native American Connections, said capping the existing rate would help curtail massive amounts of fraud and the exploitation of Native Americans.

On April 17, 2023, Heredia emailed the CEO of the Arizona Council of Human Service Providers, the industry group where she had been a board member. The proposal was “completely being pulled off the table for the time being,” she said.

“I apologize for the confusion and stress it caused,” she added in her email. “In the event that anything similar is rolled out, we will do so in collaboration with the Arizona Council and with other stakeholder input.”

At the same time, records show, the human toll of the crisis was escalating. At least five people died in sober living homes in April 2023 from drug and alcohol use, medical examiner records show. And at the end of the month, AHCCCS and health department officials found a distressing scene at a former hotel where a treatment program operator was housing dozens of patients, including children. Armed guards patrolled the exits to keep people from leaving, the governor’s office said.

In May, the cap on reimbursement rates went into effect, though it’s not clear what prompted AHCCCS to address vulnerabilities that staff had identified more than a year earlier.

Within weeks, Heredia and the governor stood with tribal leaders and law enforcement officials to announce a sweeping investigation into fraudulent facilities. AHCCCS also created a hotline that victims displaced from shuttered programs could use to request temporary housing, transportation back to their tribal communities and treatment. More than 11,700 people called it over the next year and a half, state figures show.

But many people still became homeless as facilities closed their doors with little notice or coordinated care for patients, according to advocates.

“The state of Arizona owes our tribal nations an apology,” Mayes, the attorney general, said during the May 2023 press conference. In November 2024, her office announced a $6 million grant program for tribal nations affected by the sober living home fraud. A spokesperson said only tribes and nonprofits in Arizona can apply for the money.

The Hustitos never received an apology. Nor have they received an acknowledgment of their loss — not from AHCCCS or the owners of the sober living homes where he stayed. Anders Hustito said he continues to grieve.

“I’m still hurting,” he said.

“We owe it to him to get justice for him,” Katherine Hustito said.

Mariam Elba contributed research. Nicole Santa Cruz contributed reporting.

This post was originally published on ProPublica.