Did Mylan Just Cut the Price of the EpiPen? Not Really

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EpiPen auto-injection epinephrine pens manufactured by Mylan NV pharmaceutical company are seen in Washington

© Jim Bourg / Reuters

Eric Pianin

August 25, 2016

Mylan pharmaceutical company is engaged in deep damage control in response to complaints by Democratic presidential nominee Hillary Clinton, senior U.S. senators and tens of thousands of irate consumers about its marketing practices that boosted the list price of the popular EpiPen nearly six-fold since 2007.

For decades, EpiPen, an easy-to-use medical injection device, has been a lifesaver for millions of people who suffer severe allergic reactions to nuts, bee stings and other allergens that can cause swelling and make breathing difficult. But since Mylan acquired the patent nearly nine years ago, the list price for a pack of two EpiPens steadily rose — from about $100 to over $600 this year.

Related: EpiPen Maker Enters the Pharmaceutical Industry’s Hall of Shame

After Clinton denounced the company’s action on Wednesday as “just the latest troubling example of a company taking advantage of its consumers,” Mylan swung into action, announcing a new discount and adding consumer assistance to help cover the soaring cost of the drug injector device.

“We responded this morning, first and foremost, ensuring that everybody that needs an EpiPen has an EpiPen,” Mylan CEO Heather Bresch said in an interview with CNBC.

EpiPen

The offer includes new EpiPen coupons covering up to $300 for patients in health plans who face high out-of-pocket costs for the auto-injector treatment. For consumers who were previously paying the full amount of the company’s list price, the coupons would effectively reduce their out-of-pocket cost by 50 percent, the company said.

Mylan also said in a press release that it would bolster its assistance program for consumers struggling to cover the drug costs by doubling the income level at which families would still qualify for assistance, to 400 percent of the federal poverty level. That means that a family of four with income of up to $97,200 won’t have to cover any out-of-pocket costs for EpiPen.

Related: Two Big Reasons Prescription Drug Prices Are So Much Higher in the US

Mylan said it would also continue its program of distributing thousands of free EpiPen sets in 65,000 schools nationwide.

But if anyone was expecting Mylan to announce a rollback of its exorbitant list price, they can forget it. Mylan’s sales of EpiPen reached $1.2 billion in 2015, according to Bloomberg. The popular drug has become a cash cow for the company, one that has richly rewarded shareholders and managers; CEO Bresch makes nearly $19 million a year in salary and perks. The company has no plans to reduce the list price.

Mylan frequently boasts of its discounts and consumer assistance programs. But many other major pharmaceutical companies have similar programs that help them burnish their public image. They also help distract from the fact that the companies are charging exorbitant prices for their products that drive up the costs for patients, health insurance companies, government health care providers and others.

The reality is that Mylan, a global drug behemoth, holds a virtual monopoly on EpiPen and is free to charge whatever the market will bear. At the time the company acquired the rights to EpiPen in 2007, the injector device was the only one of its kind in the market, and Mylan promptly began to raise the price.

Related: Ignoring Warnings, Drug Companies Hike Prices By 10 Percent

The EpiPen dispenses epinephrine, a drug that alleviates or reverses the worst of allergic reactions, such as the swelling of legs, necks and chests and the abrupt closing of air passages. Many parents buy multiple sets of EpiPens and keep them at home, in their cars and at their children’s schools.

As The New York Times reported, the company settled a lawsuit in 2012 by agreeing to allow a generic competitor to enter the market by 2015, offering the hope that the price would begin to moderate or come down in the face of new competition. Mylan began jacking up the price of EpiPen in annual increments of as much as 30 percent in anticipation of the eventual entry into the market of a competitor.

But the competition never arrived. The drug manufacturer Teva Pharmaceutical Industries planned to provide a less expensive generic alternative, but it was unexpectedly rejected by the Food and Drug Administration. And a non-generic alternative called Auvi-Q, produced by Sanofi, was removed from the market last year because of problems with the dosing.

Those developments left Mylan in the catbird seat, free of competition and able to continue jacking up the price for a drug dispenser device that has undergone few, if any real, improvements in nearly a decade, according to experts.

Related: As Valeant’s CEO Apologizes, the Rest of the Industry Keeps Hiking Drug Prices

Bresch, the daughter of Democratic Sen. Joe Manchin of West Virginia, was dismissive today of questions by a CNBC reporter about why she didn’t order a reduction of the prices if she is so concerned about the plight of consumers.

Insisting that “no one is more frustrated than me” about the pricing controversy, Bresch sought to blame the rising cost of EpiPens on a health care system that is out of control and insurance policies that impose onerous out-of-pocket costs on many consumers.

“I am hoping that this is an inflection point for this country,” she said. “This bubble is going to burst … That’s why Congress and the leaders of this country need to quit putting their toe in this topic and really fix the system. We have an outdated, inefficient system. The patient is paying twice – they are paying full retail price at the counter and they’re paying higher premiums on their insurance.”

When pressed to explain why she refused to lower the retail price rather than offer more discounts, Bresch said: “Here’s the perverse thing. Had we reduced the list price, I couldn’t ensure that everyone who needs an EpiPen gets one. So we went around the system.”

Related: Extreme Rise in Some Drug Prices Reaches a Tipping Point

Since the start of the “EpiPen4Schools” initiative in 2013, more than 700,000 free auto-injects have been distributed in more than 65,000 schools. The company provides free EpiPens to others as well.

John Rother, president and CEO of the National Coalition on Health Care, which advocates for lower prescription drug prices, said today that he’s “not buying” Mylan’s tactics for deflecting “well-deserved criticism about their pricing.”

“Not that many people actually benefit from patient assistance programs, even though they look good,” he said in an email. “The ‘realities of marketing’ excuse doesn’t pass the laugh test. Their expenses haven’t changed much over the years, but price hikes have been numerous and compounded.”

“The estimated cost of the actual drug [is] about $1 per injection,” he added. “Because of delays at the FDA due to limited budgets, there is little competition even though there is a generic drug. The only distortion I can see is the moral distortion of price gouging which puts children at very serious risk.”

Mylan’s blatant price gouging was reminiscent of other recent pharmaceutical controversies, including Gilead Sciences charging as much as $1,000 per pill or $100,000 for a full regimen of Sovaldi and Harvoni, two biometric drugs used to treat the often deadly Hepatitis C virus. 

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