Lawmakers will get their chance to vent their fury at the executive who oversaw the EpiPen price hike, Mylan CEO Heather Bresch, at a congressional hearing this afternoon.
The emergency allergy injection has become the latest target of the public's simmering frustration about rising prescription drug prices. Today's hearing by the House Committee on Oversight and Government Reform will provide an outlet -- and a stage -- for politicians' exasperation.
Mylan hiked the list price of EpiPen from less than $100 a two-pack in 2007 to more than $600 today. Those increases helped transform the lifesaving drug that was approved by regulators nearly three decades ago into what's known in pharmaceutical parlance as a "blockbuster" -- a billion-dollar drug.
Congress wants to know why EpiPen's price increased, how that rise contributed to Mylan's profits and what can be done to solve the problem. That will mean untangling what the "price" of the drug really is -- a deceptively complicated question -- and understanding why competition has, so far, failed to materialize in a seemingly lucrative market. They're also likely probe the way Mylan grew its sales, including questions about how involved Bresch's mother, Gayle Manchin, was in pushing states to require schools to stock emergency allergy drugs when she led the National Association of State Boards of Education, which helped inflate EpiPen's bottom line.
Congress has launched investigations into Mylan's pricing practices, and states have followed suit. The New York Attorney General's office is investigating possible antitrust issues with the way Mylan wrote contracts with schools that purchased discounted versions of EpiPen. On Tuesday, the West Virginia Attorney General petitioned a court to enforce a subpoena against Mylan as part of its investigation into whether the state's Medicaid program overpaid for the drug.
The House committee has made a formal request for documents detailing EpiPen's sales data and Mylan's lobbying history and profits. Also appearing before the committee will be Doug Throckmorton, deputy director of the Center for Drug Evaluation and Research at the Food and Drug Administration.
"We look forward to receiving answers next week from Mylan about its dramatic price hike for this life-saving medication. We also plan to examine ways to encourage greater competition in the EpiPen market and to speed FDA’s approval of acceptable new generic applications,” Rep. Jason Chaffetz (R-Utah) and Rep. Elijah Cummings (D-Md.) said in a joint statement when they announced the hearing.
Here's a quick guide to the issues:
1) No one will agree on what a "price" even means
Pharmaceutical companies commonly point out that the list price of a drug is a fiction. The sweeping curve above disguises rebates and discounts that third-party companies called pharmacy benefit managers negotiated with Mylan in secret on behalf of insurers. Of that negotiated amount, patients only pay a portion through a copay or coinsurance under many health plans.
In prepared testimony submitted to the committee, Bresch said that after rebates and fees, Mylan receives a little less than half of the list price for a two-pack: $274. The profit, she said, adds up to about $50 a pen.
She also said that a majority of patients pay less than $50.
But list prices have become all too real to people in high deductible plans or without insurance. As the list price has gone up, the average patient cost for EpiPen has ticked up, too -- increasing by 40 percent, from $57 in the first quarter of 2014 to $79 in the second quarter of 2016, according to an analysis of health care claims by Decision Resources Group, a health care analytics firm.
Although the dollar amounts may not seem that much, Brigham Hyde, chief data officer at Decision Resources Group, said that a 27 percent increase in out-of-pocket patient costs in the second quarter, year-over-year, was "seismic."
“I would say that what is probably going on is that for the about 15 to 25 percent of people on a high deductible plan (or high copay) have seen a massive increase and that is dragging the average up so significantly,” Hyde wrote in an email.
Mylan introduced a coupon and expanded a financial assistance program to help these patients -- and has also pointed a finger at insurers and pharmacy benefit managers for shifting the drug price on to patients.
"Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full WAC [list] price or more," Bresch said. "We never intended this."
Mark Merritt, the president of the Pharmaceutical Care Management Association, the trade group for pharmacy benefit managers who negotiate drug prices on behalf of insurers, said that blaming middlemen for patients' increased burden is backwards. Higher drug prices and medical costs are driving changes to how benefits are designed that result in increased patient cost-sharing for those higher prices, he argued.
2) Critics will say "EpiPen laws" gave Mylan a market advantage
Although laws encouraging epinephrine to be stocked in schools were not supposed to favor a specific brand, EpiPen has been so dominant that it has benefited tremendously. The laws do not name a product, but are frequently called "EpiPen laws", even in a White House news announcement. Mylan's market penetration and its free EpiPen giveaway program for schools meant it was the primary beneficiary of the laws that it lobbied to support.
The House committee almost certainly will ask Bresch about a story published Tuesday by USA Today, which raised questions about the role her mother, Gayle Manchin, played in helping to boost sales at Mylan when she served as head of the National Association of State Boards of Education. The story said Manchin "spearheaded an unprecedented effort that encouraged states to require schools to purchase medical devices that fight life-threatening allergic reactions."
Mylan said the story was factually incorrect and noted that there have been other epinephrine auto-injectors on the market.
"Our work with the National Association of State Boards of Education and the National Education Association focused on initiatives to raise awareness and understanding of anaphylaxis and encouraged policies that supported greater access," the company said in a statement.
3) Speeding up competition may not be simple
Often, critics of high drug prices say the antidote is competition. Investigations are determining whether Mylan's contracts with schools helped lock out competing products. But planned testimony from Throckmorton, the FDA official, points out that there are and have been competitors. FDA has four epinephrine auto-injectors that are currently approved, although only two are currently being marketed.
In addition to the EpiPen, there is an authorized generic of a product called Adrenaclick currently available -- at a list price of $396 for a two-pack. Another called the Twinject has been discontinued, and a talking autoinjector called the Auvi-Q was voluntarily recalled and has not returned to the market yet. Mylan has also announced that it will create an authorized generic of EpiPen, with a list price of $300 for a two-pack.
"We’ve been investing significant dollars to expand our capacity to bring more product out to market. We’ve been selling everything we can manufacture and release and we’re trying to expand that," said Douglas S. Boothe, president of the generics division at Impax Laboratories, which makes the authorized generic of Adrenaclick.
Earlier this year, Teva Pharmaceutical Industries' generic EpiPen was rejected by FDA for "certain major deficiencies." Mylan had filed a citizen petition to argue against the product being approved as a generic. While one solution may be to get even more products on the market, Throckmorton said that would not come at the expense of safety.
"While FDA is working to lay out a roadmap to support efficient development of complex products like drugs delivered using an auto-injector, consistent with FDA standards, we cannot and will not allow a substandard product, in this or any product area, to come onto the market," Throckmorton said. "For these epinephrine auto-injector products, a patient suffering a life-or-death allergic reaction must be able to pick up and effectively use that device without a moment's hesitation."