For the video version, click here.
In 2007, Mylan pharmaceuticals purchased the rights to the Epipen from Merck, and the rest, as they say is history:
With prices skyrocketing, Mylan was called to task by congress , where CEO Heather Bresch withstood four hours of questioning about her company’s business practices:
Highlights from that interview included disclosure of the fact that Bresch’s 18 million dollar compensation package made her the sixth highest paid biopharma CEO in the world and that her pay had increased 671% as the price of Epipen rose. She also reported that Mylan makes only a $50 profit on Epipen sales, though the number turned out to be significantly higher than that.
Now it’s hard to find hard numbers on how much Epipen costs to make, but I can tell you that epinephrine was first synthesized in 1906, and I can buy a gram of it from Sigma-Aldrich for about $20 bucks, making the 0.3 milligrams in an Epipen dose cost about six tenths of a penny.
But despite the public shaming, we haven’t seen an about-face on Epipen prices from Mylan.
So you’re a pharmaceutical company facing considerable public outrage about your pricing of a life-saving medication. You have a couple of options.
First, you could reduce the price of the drug. But that might cut into profit margins.
Second, you could get someone else to pay for the drug.
In the great American medical tradition of transferring costs to other people, Mylan is making a play to get insurance companies to pay for the entirety of the epi-pen. Without copays.
First, I wanted to look at the out-of-pocket cost for Epipen. As of this video, it’s about $600.
What about with insurance? Obviously, it will vary, but you can see from this table that most high-deductible plans, at least, classify Epipen as tier 2 and many don’t reimburse it at all.
Also, remember that many plans require individuals to pay the full cost of drugs until they meet their annual deductible.
But there is one way to get the insurance company to bear the full cost no matter what, a little loophole introduced in the Affordable Care Act, and Mylan is in the process of trying to squeeze through it.
A well-intentioned part of the ACA was a requirement that insurance companies cover, without copay preventive medicine services given an “A” or “B” recommendation by the United States Preventive Services Task Force. Here I give you the entirety of medications that meet this definition.
You get the picture, right? There are only four, and two of them are aspirin.
Does the Epipen deserve to be elevated to these lofty preventive heights? Is the Epipen a preventive medication?
Two papers take two different sides on the issue.
The first, led by Leonard Fromer but written by Mylan contractors, appears in the American Journal of Medicine.
The article can be broken down into a few points.
One: Epipen saves lives. This is really undeniably true. Of course, lots of things save lives – open-heart surgery comes to mind – and we wouldn’t call them preventive.
Two: Epipen is too expensive for many people to pay for. This is also undeniably true. Here are the abandonment rates, provided kindly by Mylan.
Three: If the USPSTF classified Epipen as preventive, insurance companies would be forced to pay for it, and more people would get it. Again, I agree.
Four: Epipen is preventive. It prevents anaphylaxis.
And here’s the rub. This all rests on the USPSTF stating that Epipen is as much a preventive medication as aspirin is.
On the other side of the rink is this paper, appearing in Annals of Internal Medicine:
The basic point made here is simple: Epipen is no more a preventive medicine than appendectomy.
The larger point is this: Let’s not let pharmaceutical companies get away with predatory pricing by transferring that cost to insurance companies – as in the end, that raises premiums for all of us.
Look – by some definitions, all medications are preventive. We give penicillin for Strep throat to prevent rheumatic fever. We give omeprazole to prevent gastric reflux. These things work, and hey – maybe they should be free to everyone. But transferring costs to insurance doesn’t actually make anything free.
This is my sister (on the right):
She needs an Epipen due to a history of anaphylaxis. She currently pays $600 every 12 months for this since they expire every year. For her sake, I’d love her insurance company to cover this cost entirely. But by proxy, I’m asking all of you to pay more.
What we are seeing here is a new business strategy – one in which drug costs reflect not the research and development or even marketing dollars that go into them, but simply what the market will bear. Life-threatening situations are not where we want to test how well the invisible hand functions.
For now, if this new strategy upsets you, you should talk to the Federal Trade Commission, as the FDA has no authority to regulate drug prices. Neither does the FTC actually, but at least they can call out anticompetitive practices. It may be time for physicians to inject some adrenaline into this debate.