News From Our Perspective

Navigate the Healthcare System with Ease

Aug 2016

The New Gold Rush: Pharmaceuticals


I am not sure why we are waking up in 2016 outraged at the price of drugs. I watch enough TV to realize that the pharmaceutical industry spends more advertising money on commercials than the gross national product in the vast majority of industrialized countries. I can just hear the old Western 49er crying, “There be money in them pills.”

While watching sports on my family’s flat screen, I have sat uncomfortably in my chair listening to the side-effect dangers of the blue pill, as well as learning of medical conditions curable by a drug that I never knew existed (stand up you proud restless-leg-syndrome folk). Those commercials do not come cheap, especially during primetime. That costs has to be passed along to somebody. That somebody is the consumer. The recent drug-price uproar is all the more mysterious as it is for a product I have never seen on a television commercial.

Mylan, the maker of EpiPen, is in the crosshairs of the media, politicians and public with complaints from consumers that the company hiked the price of the emergency auto-injector by $100 in recent months. The reason for the hike? Well, that is fueling the fire. It appears the price spike is for no obvious reason.

This is causing widespread outrage, as the EpiPen often means life or death for its users. The prescription-only EpiPen delivers a rapid shot of epinephrine to counteract a severe allergic reaction, such as to a bee sting or peanuts. For that reason, the EpiPen is standard issue for millions of Americans with severe allergies. Many public school systems stockpile the device. Parents who have a child with a severe allergy usually keep multiple EpiPens at their homes and in various purses, vehicles and backpacks.

Story after story is being heard on social media about EpiPen purchases costing $1,212 to $1,500 for one or more 2-packs of EpiPens. Even more troubling, according to a Washington Post article, is that EpiPen’s price has increased a staggering 450 percent since 2004.

OK, so how did that happen on our watch? First, Mylan only added a nine- to 15-percent increase each time, with the person’s insurance company often making up the difference. Second, the recent changes in the deductible structure and co-pays for many health plans have shifted more of the drug cost to consumers, leaving many families with recent sticker shock.

But the medication itself isn’t expensive. Drug analysts have calculated that the dosage contained in a single EpiPen is worth about one dollar. It is Mylan’s pen injector that makes up the bulk of the cost.

A few Congress members, according to The Washington Post, have weighed in on the controversy. Senator Charles E. Grassley (R-Iowa) wrote in a letter that the EpiPen cost is so high that it has forced “some first responders to consider making their own kits with epinephrine vials and syringes.” Senator Amy Klobuchar (D-Minn.) even called on the Federal Trade Commission to sniff around the company’s practices.

So where is the Pepsi to challenge EpiPen’s Coke? A few years ago, it appeared there might be a worthy gunslinger by the way of Sanofi’s Auvi-Q. This product would actually talk a person through administering the product. So what happened?  A blip occurred when that company became caught up in a recall as there were questions as to whether the devices were actually delivering the right dose.

Adamis Pharmaceuticals, another challenger, tried to enter the market with a lower-cost option. Then in June of this year, Adamis announced its pre-filled syringe product is on hold with the FDA. This is where it gets interesting as the FDA has requested additional studies.

That leaves just the EpiPen and Adrenaclick, which is a generic version. While the Adrenaclick is much cheaper (as little as $142 at Walmart and Sam’s Club with a coupon per Consumer Reports), many physicians are reluctant to prescribe the generic version as the majority of people, especially teachers and nurses, are trained on EpiPens. In a life or death situation, doctors do not want injectors struggling and fumbling with directions.

The market for EpiPens has been expanding since Mylan purchased the rights to the product in 2007. Wall Street has credited Mylan CEO Heather Bresch, a 46-year-old who rose through the company ranks as the company grew from a West Virginia trailer to an international, Dutch-owned monster with 30,000 employees in 145 countries.

Critics point to politics as playing a large role in Mylan’s rise to financial success. Bresch’s father, Joe Manchin, is a West Virginia U.S. senator. Perhaps with a bit of inside help, Mylan mastered the U.S. regulatory world. Since Bresch rose to CEO in 2012, Mylan’s revenue has exploded as the company now forecasts $10.1 billion in sales this year, which is up from $6.1 billion in 2011.

Bresch even expanded the company’s lobbying efforts in D.C. It paid dividends with favorable legislation. First, the FDA approved the EpiPen devices being packaged in pairs on the safety theory that a second EpiPen should be at the ready in case the first one gets jammed or does not work. This is why you can’t buy just one EpiPen. Second, President Barak Obama signed a bill in 2013, using federal grants to push public school districts to buy EpiPens.

Now, the recent firestorm has pushed Mylan to announce the company would start offering coupons that could cover as much as $300 of the cost for patients with higher out-of-pocket costs, and that the company would raise the eligibility for assistance for families of four or more. This means a family with income up to $97,200 will not pay out of pocket. The issue here is that the $97,200 family in West Virginia is not the same as the California family with the same income.

What needs to happen now is more competition for EpiPen in order to force the market to correct itself and bring the life-saving drug back to affordability. What the D.C. politicians did, or failed to do, may be corrected by allowing the EpiPen challengers to move forward with their product

Our Partners Have a Combined Legal Experience of Over 100 Years

Meet our experts