EpiPen maker Mylan has become the new boogeyman of the pharmaceutical industry.
Following complaints from consumers that the company had hiked the price of the emergency auto-injector by $100 in recent months for no obvious reason, members of Congress are calling for an investigation. The price has increased 450 percent since 2004, when a dose cost $100 in today's dollars, to its current price of more than $600. Many consumers hadn't noticed the gradual rise in price, however, because the company often only added in 9 to 15 percent each time and insurance companies had made up the difference. But with recent changes in the deductible structure and co-pays for some health plans that have put more of the cost for drugs on consumers, many families have been hit with sticker shock.
Amie Vialet De Montbel, for instance, found that the two 2-packs of EpiPens she needed for her son with a milk allergy would cost $1,212. “I don’t even pay that much for my mortgage," she told Stat News. She left without buying the medicine. Likewise Jackie Davis of Newport News, Va. was quoted $1,500 for three 2-packs of EpiPens -- and that price includes a discount, according to USA Today. "For any kind of necessary medicine, you shouldn't have to pay anything," Davis said.
The prescription-only EpiPen delivers a rapid shot of epinephrine, a medication that can counteract a severe allergic reaction. It is standard issue for millions of Americans. Many school systems stockpile it, and any parent who has a child with a peanut allergy usually has several stashed at their homes and in various purses and backpacks.
The medication itself isn’t expensive. Analysts calculate that the dosage contained in a single pen is worth about $1. It’s the company’s proprietary pen injector that makes up the bulk of the cost. A few years ago, it looked as though there might be something better out there — Sanofi’s Auvi-Q, which talks (yes, literally talks!) to you and walks you through how to administer the product in real time — but the company got caught up in a recall about whether its devices were actually delivering the right dosage.
The recall was voluntary and prompted by reports of suspected device malfunction. None of the incidents was confirmed but Sanofi said it was concerned enough to urge consumers to report any issues to the Food and Drug Administration and take the products off the market.
Another company, Adamis Pharmaceuticals, recently tried to enter the market with a lower-cost option. But Adamis said in June that its pre-filled syringe product is on hold with the FDA, which has requested additional studies.
So now there’s only the EpiPen and Adrenaclick, a generic version. The Adrenaclick is much cheaper. Consumer Reports says it found the device for $142 at Walmart and Sam’s Club with a coupon, as opposed to the current $600 to $700 price for EpiPens.
But many doctors are reluctant to recommend the generic version because the steps you have to take to inject the drug are different, and most people, including teachers and nurses, are trained on EpiPens. You wouldn’t want them fumbling around for directions in an emergency when seconds could matter.
So this is why Mylan now finds itself in the same position that Martin Shkreli, the “pharma bro” formerly of Turing Pharmaceuticals, was in almost a year ago when lawmakers made his company an example of everything that has gone wrong with drug pricing. As chief executive of the company, Shkreli had raised the price of the drug Daraprim, which is used to treat a parasitic infection in patients with conditions such as HIV/AIDS and cancer, from $18 to $750 — or more than 4,000 percent, virtually overnight.
Among the members of Congress who have weighed in this time are Sen. Charles E. Grassley (R-Iowa), who wrote in a letter that the cost is so high that it has forced “some first responders to consider making their own kits with epinephrine vials and syringes.”
“I am concerned that the substantial price increase could limit access to a much-needed medication. In addition, it could create an unsafe situation for patients as people, untrained in medical procedures, are incentivized to make their own kits from raw materials,” he said.
Separately, Sen. Amy Klobuchar (D-Minn.) has called on the Federal Trade Commission to look into the company’s competitive practices. Sen. Bernie Sanders of Vermont tweeted his outrage:
There's no reason an EpiPen, which costs Mylan just a few dollars to make, should cost families more than $600. https://t.co/rVWUlMxD0Q— Bernie Sanders (@SenSanders) August 18, 2016
The market for EpiPens has been expanding since Mylan purchased the rights to the product in 2007, and shareholders have credited chief executive Heather Bresch.
A profile in Fortune in 2015 described her rise in colorful terms:
Bresch, a 46-year-old who’s spent more than half her life at Mylan, has steered the company’s transformation from a quirky outfit run out of a West Virginia trailer to a global operator with 30,000 employees in 145 countries. Born into politics — her father, Joe Manchin, is a longtime West Virginia Democratic stalwart who’s now a U.S. senator — Bresch has mastered the regulatory world. Since becoming CEO in 2012, she’s overseen a major revenue increase; Mylan projects sales of up to $10.1 billion this year, up from $6.1 billion in 2011. …
Under Bresch’s leadership, Mylan has also stumbled through a series of ethically messy mishaps and public relations gaffes. Mylan’s inversion took place just as uproar over the tactic reached a fever pitch on Capitol Hill. (Among the politicians who denounced the move was Bresch’s own father, though he later changed his mind.) Critics have called out the company for unusually high executive pay packages, questionable use of company jets, and murky relationships with board members. Then there’s “the Heather Bresch situation,” as she herself calls it, a scandal surrounding her executive MBA credentials — when you Google her name, the episode still ranks even higher than her official Mylan bio.
It was Bresch who also expanded the company’s lobbying efforts in Washington — a move that paid off with favorable legislation. This includes an FDA recommendation in 2010 that the EpiPen devices be packaged in pairs, presumably because they were so important that there had to be a second in case the first jammed or otherwise malfunctioned. This is why you can’t just buy one EpiPen at the drug store anymore but have to get a two-pack. Then there were the grants to states issued in 2013 to help public school systems purchase them in bulk so they would be available in case of emergency.
Mylan hasn’t commented specifically about its pricing strategy but said in a statement that it is “proud of the programs which we have implemented over the past years to help support access to treatment,” such as savings cards and assistance programs for patients and schools.
“With changes in the healthcare insurance landscape, an increasing number of people and families are enrolled in high deductible health plans, and deductible amounts continue to rise. This shift has presented new challenges for consumers, and they are bearing more of the cost. This change to the industry is not an easy challenge to address, but we recognize the need and are committed to working with customers and payors to find solutions to meet the needs of the patients and families we serve,” the company said.
This post has been updated.