The Lesson of EpiPens: Why Drug Prices Spike, Again and Again

By Elisabeth Rosenthal, The New York Times | September 2, 2016

Today that same tiny, lifesaving bolus of epinephrine — used mostly to treat severe allergic reactions — is delivered via sometimes elaborate devices called auto-injectors. Though the medicine itself hasn’t changed, the delivery devices have been protected by patents, enabling drug makers to charge ever escalating — sometimes prohibitive — prices for one of the oldest drugs in medical use.

Though Mylan, the maker of the EpiPen auto-injector, had been raising prices by 20 percent annually in recent years without much blowback, it set off political outrage last month by raising the price to over $600 for two pens just before parents were buying new EpiPens for their school-bound children. Heather Bresch, the chief executive of Mylan, suddenly found herself in the same penalty box as Martin Shkreli, the pharma bad boy, who last year raised the price of an old drug for parasites, Daraprim, by over 5,000 percent. Members of Congress called for hearings. Hillary Clinton denounced Mylan on Twitter.

To mitigate the widespread outrage, Mylan first announced that it would give insured patients $300 coupons to offset the higher price and then, last week, that it would make a cheaper generic version of its own product. Patients may have, once again, won a battle. But they are losing the war on high drug prices.

Ms. Bresch was in many ways acting in accordance with a core strategy in the pharmaceutical industry’s playbook — take something old and repackage it to make it new and patentable — and then see what price the market will bear. Sometimes extortionate prices are a predictable outcome. Yet the government has no real tools to curb them.

Many other old medications have been delivered in new packages in recent years, with startling price increases. Basic asthma inhalers, which once cost under $15 (and still do in many countries), cost $50 to $100 in the United States. A portion of the big price rises for insulin in recent years is attributable to new types of injectors to deliver the medicine. Long-off-patent emergency rescue drugs delivered by auto-injector — not just epinephrine, but also glucagon to ward off diabetic coma and naloxone to reverse opiate overdose — have seen particularly perplexing price escalations.

New devices can make it more convenient and safer to deliver a lifesaving drug during a medical crisis. But when is new packaging — often accompanied by bells and whistles of uncertain value — worth an exponential rise in price? That’s something a nation struggling with a $3 trillion health bill must consider, and it merits a response beyond a few days of executive public shaming.

 

Like so much in our overpriced medical system, today’s EpiPen debacle evolved from a laudable idea: Though shots of epinephrine have been used for over a century, the EpiPen — invented in the mid-1970s and approved by the Food and Drug Administration in 1987 — allowed a patient or a parent to easily administer the proper dose in an emergency. When an unlocked EpiPen is pressed against the thigh, a needle emerges to inject the medicine, even through clothes.

In recent decades it has become an increasingly attractive idea commercially as well: Research suggests that the incidence of allergies has been growing (a trend relentlessly publicized by Mylan). Also, “the social frenzy around allergies has spurred substantial demand,” said Dr. Aaron Kesselheim, an associate professor at Harvard Medical School and an author of an influential recent article about combating high drug prices, noting that many families buy multiple kits, for school, home and car. Schools and camps bought in — it was easier (and legally prudent, perhaps) to have auto-injectors at the ready, rather than to draw epinephrine into a syringe.

A dose of epinephrine, also known as adrenaline, costs about $1. But paying for a smoother delivery system might have seemed eminently reasonable when EpiPens retailed for $50, as they did in 2004. The cost-benefit calculation has become increasingly less rational as prices escalated — especially since the vast majority of EpiPens are thrown away when they expire after about 12 months, requiring another purchase.

Mylan has cleverly exploited market opportunities since it acquired the rights to the EpiPen in 2007. At first, it moved somewhat tentatively, slowly raising the price to about $250 by 2013.

That year, a start-up called Kaleo won approval for a talking injector, called Auvi-Q. “Now hold in place for five seconds,” the voice intoned before giving a countdown. Its price was about $400.

Perhaps as a response, in late 2013, Mylan began a series of more aggressive price increases for the EpiPen kit, so what was then about $250 is now $600, and includes two EpiPens and a training device. Other companies tried to sell other injectors at a slightly lower price, but competing with Mylan was tough, since the EpiPen seemed synonymous with the drug. One injector, Adrenaclick, costs $450, and as low as about $140 with a coupon for a two-pen kit.

“Doctors say, ‘My patients know how to use the EpiPen.’ Parents say, ‘They’re my kids, I trust this brand,’ ” said Doug Hirsch, the chief executive of GoodRx, a website that helps consumers shop for cheaper drugs. “People don’t think there’s a choice.”

That perception became nearly gospel in 2015, when Auvi-Q was withdrawn from the market because of concerns about unreliable dosing. Mylan could almost set the price wherever it wanted.

Mylan has tried to calm the waters by offering many patients $300 coupons to cover increased co-payments. But that is a Band-Aid — and a deceptive, high-priced one at that: While we consumers may be insulated from the charge at the pharmacy counter, our insurers are paying the increased rates, leading to premium rises next year. And our schools buy EpiPens with our tax dollars.Mylan’s intention to make a generic EpiPen, though it will help some patients, is likewise a calculated maneuver. If Mylan is prepared to offer a $300 generic injector, made in the same factories with the same components, why doesn’t it just sell the EpiPen for the lower price? The answer is all business and no medicine: Mylan can hang onto the market for doctors and patients who demand the trusted brand name, while cornering an incipient generic market.

There are many better solutions to price spikes: For example, Dr. Kesselheim suggests, the government could regard extreme prices as it does drug shortages, allowing for emergency imports of cheaper products. The United States patent office and the F.D.A. could be stingier in handing out market exclusivity for patents on drugs and delivery devices that offer little or no benefit. A national body could set price ceilings for essential medicines (as occurs in other countries), or review rate increases levied on products that are unchanged.

But hearings and a few days of uncomfortable interviews for Ms. Bresch (who makes $18 million a year) will not solve the underlying problem. The next EpiPen crisis is no doubt in the making, with patients already suffering from inexplicable rising prices for a much-needed drug, until that trip line of outrage is once again crossed.

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