The Epipen Saga
America’s Health Care Is Sick
It has been going on for years. The difference is that now the media is hopping on the story. Now America is paying attention.
In 2015, the price of doxycycline, a generic antibiotic, was up to $5 per pill, an increase from $0.03 in 2014. The antibiotic is the gold standard treatment for Lyme disease.
In 2015, the price of Daraprim (pyrimethamine), was up to $750 per pill, an increase from $13.50. The antiparasitic medication is used to toxoplasmosis, an infection acquired in people who have HIV/AIDS.
In 2016, the price of the EpiPen was up to $600 for a two-pack, an increase from $100 in 2007. The medication is used to treat life-threatening allergic reactions.
How can the pharmaceutical industry justify this?
Patenting a Cure
Our healthcare system is easy, right? People take care of themselves. When they develop symptoms, they rely on doctors to diagnose and guide them and on pharmaceutical companies to produce the medications that will treat them. People feel better and everyone is happy.
If only it were that simple.
The pharmaceutical companies have another endpoint in mind. They develop drugs, perform clinical trials, and get those drugs approved by the Food and Drug Administration (FDA) for use in the general population. More importantly, they get a patent on that drug that allows them to be the only company that can produce it for a period of time.
Drug patents last up to 20 years in the United States! That timeline includes the time the drug is in clinical trials as well as the time it takes to get through the FDA approval process. While that could eat up six to eight years of the patent’s life, that still leaves a large chunk of time when the pharmaceutical company has the market share of that drug all to themselves. They can charge you whatever they want because they are the only name in the game.
Until generic drugs come into play …
In the Name of Competition
A brand-name drug is expensive because it is the only one of its kind on the market. Once its patent runs out, however, other pharmaceutical companies can produce the same drug as a generic. Enter good old fashioned capitalism.
In theory, market competition is supposed to keep costs down. The more pharmaceutical companies that produce a given drug, the less expensive the drug will be. After all, buyers are always looking for the best bargain.
Things do not always work out as planned.
Sometimes, makers of generic drugs stop producing them because they are not making enough profit. With fewer pharmaceutical companies in the mix, there is less competition and with less competition, higher prices. When there is only one company in the ring, watch out! Turing Pharmaceutical’s CEO Martin Shkreli (no longer with the company) showed the ugly side of the industry with his obscene price hike on Daraprim by more than 5,500 fold overnight!
Sometimes, there is a manufacturing issue, and there is simply less of a drug to go around. Even with market competition, supply and demand take over and prices can go up. This is what happened with doxycycline from 2014 to 2015. The average price of the drug is now down to about $1 per pill, still a considerable increase from where it started out.
In the Name of Greed
The pharmaceutical industry runs on dollars and cents. That is made clear by the latest fiasco with Mylan Pharmaceuticals and the Epipen. The 400-fold increase in cost for the life-saving drug (people actually die from bee stings and exposure to nuts!) has been met with outrage and for good reason.
While industry insiders estimate each Epipen costs no more than $30 to make, each pen now goes for $300 or more. Let’s not forget that each Epipen is sold in a two-pack, adding up to a whopping $600 in upfront costs.
Mylan is hoping that insurers will pick up the tab, but not all insurers are on board. Some people may have insurance plans with high deductibles that make it unaffordable. Some people have no insurance at all. Could you imagine choosing between a medication that could save your life or food to eat?
For a little perspective, 3.6 million Americans were prescribed an Epipen in 2015.
The company, of course, tries to deny that it is doing anything wrong. Mylan keeps trying to shift blame onto the middlemen, saying that they are the ones who ultimately determine the final cost. I will call that for what it is – B.S.
Why would a drug that costs so little to make require such a hefty price tag? One could ask Mylan’s CEO Heather Bresch that question. From 2007 to 2016, her salary increased by 671% to nearly $19 million, and yes, her serendipitous raise falls in line with Epipen’s price gouging.
Mylan has spent an exorbitant amount of money over the years on public campaigns, raising awareness about allergies and life-threatening anaphylaxis. Now practically every school and emergency room have an Epipen on hand. Their marketing strategy has paid off, literally. It hardly matters that Mylan has so generously (yes, that is sarcasm) offered to produce a generic version of the EpiPen for sale at $300 for a two-pack. Too late and quite frankly, not enough. This is still a tremendous price hike from the cost when Mylan acquired the drug in 2007, especially when you consider how little it costs to make.
In the Name of Morals
A Mylan brand Epipen two-pack in Canada would cost you only $260. Why in America is it more than twice that amount?
The problem in the United States is that there is no regulation of the pharmaceutical industry. For example, Medicare cannot negotiate for lower drug prices. Though Mylan Pharmaceuticals has been forced to pay the government $465 million for overcharging Medicaid, its profit margins remain out of control.
Until something changes, the pharmaceutical companies have all the power, and they are wielding their scepters like greedy tyrants. The public outrage over Martin Shkreli’s antics did not stop Mylan Pharmaceuticals from instigating their own price hikes. What is to stop another company from doing the same in a few months time?
Lives are at stake.
This is a moral issue.
The pharmaceutical industry’s hold on our health-care system is making us sick in every way possible. We need reform and we need it now more than ever.
Update: In March 2017, there was a recall of 13 lots of Epi-Pen and Epi-Pen Jr due to a failure in the devices to activate. That’s a way to build our confidence, Big Pharma! Charging excessive amounts of medications that don’t work in emergency, life-threatening situations.