The EpiPen’s list price has increased before. And the list price of other generic drugs had been increasing even more. A lot more as the chart below (courtesy of the wise and charming Adam Fein from his wise and charming blog Drugchannels) shows.
In general, these list price hikes reflect increased cost of production and the fact that the only way to increase revenue is to increase prices to account for federal price controls on Medicaid prices, rebates, discounts, etc.
EpiPen’s price hike was modest compared to others on the list.
Meanwhile, the spike in generic prices have abated as the FDA cleared the backlog of generic drug approvals.
So why the outrage now? And why Mylan’s EpiPen?
First, last November Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that at time looked as if it “should keep Mylan dominating the epinephrine injection field.”
Mylan already had 85 percent market share.
It’s been running ads for EpiPen ever since. In fact, Mylan ran so many EpiPen commercials during the Olympics I started to wonder if self-injection was a new competitive sport. (It’s not.)
Meanwhile CVS and Express Scripts removed another competitor, Andrenaclick, from it’s formularies. Andrenclick retails at $141 while EpiPen retails at around $600. You tell me why Express Scripts and CVS tossed it from it’s formularies.
At the same time, CVS and Express Scripts moved EpiPen from the lowest cost sharing tier to the highest cost sharing tier most likely to extract rebates from Mylan. Mylan could have said no, which led the PBMs to retaliate. Mylan could have responded by just increasing the amount of money going to patients directly to reduce out of pocket costs. And for the most part, it did as Consumer Reports points out:
“Such is the case for Tracy Bush, of Pfafftown, N.C., whose 14-year-old son relies on EpiPen for his allergies to nuts, eggs, and other foods. Bush has watched the price of EpiPen increase over the past nine years from $146 for a two-pack to more than $600. The total cost of Bush's recent prescription for three EpiPen two-packs came to $1,819.08. Fortunately for Bush, her insurance along with the co-pay coupon she gets through the drug's manufacturer, Mylan, covers a large portion of the costs.”
So what changed was the out of pocket cost of the EpiPen vs the acquisition price of the injectable which can be as low as $240 per two pak (the federal Medicaid price limit).
Mylan offers a coupon that reduces co-pays for insured patients by up to $100 per prescription (for up to a maximum of three two-pack cartons per prescription). Patients without insurance can apply to get EpiPens for free through Mylan’s patient assistance program.
So why the outrage? And why is it only directed at Mylan.
Because it fits the narrative, which is: Big Pharma has monopoly power to jack up prices as a high as they want and force people to go without life saving medicines.
And we are in a season of silliness in which economic illiterates propose price controls and patent seizures to cut costs. (See the incredibly stupid article in JAMA by a bunch of doctors masquerading as real economist entitled The High Cost of Prescription Drugs. There is a reason such crap is published by JAMA and other medical journals. Because the research and approach is so shoddy that it could never pass a peer-review threshold in a real journal of economics. But then again, the media is not interested in differentiating between real economics and propaganda. )
The truth is the EpiPen was probably priced too low to increase capacity fast enough to handle the fact that it’s main competitor’s product tanked. (I think many medicines are price too low given the unmet medicical needs and the huge investment it will take to tackle diseases with innovative medicines. ) And it was price too low in 2007 ($60) for value it delivers, namely saving a child from a potentially fatal anaphylactic shock. The prevention is a bargain for insurers too who otherwise would be required to pay for 1000 times more than the cost of an EpiPen 2-pak in hospital, rehab services.
Further, Mylan is now in the innovator pharma space. In 2014 Mylan invested in a Theravance Biopharma product called Revefenacin, a once-daily, nebulized long-acting muscarinic antagonist (LAMA) to treat chronic pulmonary obstructive disorder.
You see, the improved quality of treatment via EpiPens, reducing the use of high cost medical services and sparing parents the terror of seeing their child choke to death before their eyes. And some of the profits have gone to executive bonuses. So what? Most of it is going into new medicines.
Meanwhile, competitors have seen the market for injectable ephrinefrine explode. Other companies are developing products to compete with Mylan. FDA regulation is a bitch, requiring time and money. But eventually there will be more than one EpiPen competitor.
All this is truth. But it conflicts with the evil Pharma narrative that can be recycled again and again without any originality to generate clicks. The increasingly banal and predictable reporting at Forbes, Bloomberg, the New York Times and WSJ are cases in point. And the reporting is banal and predictable because it is not truthful. As Jonah Goldberg once observed: Journalists define the powerless and powerful based on their own preferred narratives. When the truth interferes with the narrative, the truth must be bent or jettisoned.