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EpiPen Maker Endures Public Backlash After Recent Drastic Price Hike

August 27, 2016

By Mendy Hecht, Hamaspik Gazette

Congress, AMA Urge Cost Cuts; Mylan Partially Blames Insurers, Others

If you haven’t heard of an epinephrine auto-injector, that’s because that’s not EpiPen, the name by which most people know it.

The life-saving medical device, an item the size and shape of your average marker, is comprised of a dosage of liquid medication, a button-activated injector mechanism, and a needle.

For someone going into anaphylactic shock, a life-threatening allergic reaction to anything from bee stings to food, a rescuer need only uncap an EpiPen, press its tip against the upper arm or thigh, push the button—and the auto-injection mechanism does the rest.

A single EpiPen device cost about $57 in 2007.  It costs about $600 today.

Right drug, right place, right time

The ubiquitous EpiPen—something every ambulance, school nurse’s office and parent of a child with a severe allergy (including your Gazette editor) has on hand nowadays—is made by Mylan, a company formerly based in the United States but now headquartered in the Netherlands.

In 2007, Mylan bought the EpiPen drug/dispenser combo, and several other medications, from pharmaceutical giant Merck.

In a series of savvy business moves over the coming years, Mylan turned a product that had been giving Merck some $200 million in revenue into a device that’s synonymous with allergic-reaction first-response, much like Kleenex became synonymous with facial tissues.

But unlike facial tissues, which are produced and sold by many companies other than Kleenex, only Mylan makes epinephrine auto-injectors.  EpiPen has virtually no competition—giving Mylan a practical monopoly on its life-saving drug and delivery device. 

That fact is one of several that have allowed Mylan to currently generate about $1 billion in annual revenue from EpiPen.

Mylan’s industry monopoly was also protected by its patents on EpiPen, preventing any other company from offering the public an alternative.  (While those patents have since expired, viable competitors have yet to come forward—more on that later.)

At the same time, years of strategic national marketing and public-relations campaigns convinced the American public that the danger of people, particularly children, going into anaphylactic shock is greater than it actually is—hence creating a greater demand for the EpiPen devices that weren’t necessarily needed everywhere and still aren’t.

(A good part of that PR campaign included paying a well-known public figure with an allergic child to serve as the face of an awareness campaign entitled “Anaphylaxis for Reel”.)

Those campaigns took a quantum leap forward after a watershed rule change by the FDA back in 2008.

Until then, then FDA only allowed Mylan to market EpiPen to people with medically documented anaphylaxis—in plain English, to people who would have life-threatening reactions to allergens.  Post-2008, the federal regulatory agency allowed Mylan to market EpiPens to people who might have life-threatening reactions—opening floodgates of alarmist pitches and resulting national sales.

Another FDA decision that drove up EpiPen sales was its 2010 guideline update that allergy patients prescribed epinephrine for emergency preparedness should also be prescribed two doses of 0.3 mg, not one—meaning that pharmacies should supply patients with two EpiPens, not one.

The change prompted Mylan to start selling EpiPen exclusively in packs of two each.

And the fact that President Barack Obama, himself the father of the peanut-allergic Malia Obama, signed H.R. 2094 (a.k.a. the School Access to Emergency Epinephrine Act) into law in November of 2013—not to mention the public’s still-prevalent perception that EpiPen is far more critical than it actually is—only further cemented that monopoly.

That law ushered in several watershed changes.

Firstly, it encouraged public schools to have EpiPens on hand in case of allergy emergency.  Until then, EpiPens would only be in nurses’ offices if a student had a known severe allergy.

Secondly, it allowed anyone, not just first responders and nurses, to use the fairly foolproof devices—and protected them from any legal fallout should they have used them in good faith.

All of the above, especially the 2013 EpiPen school law, were aided and abetted by the fact that EpiPen has a roughly 12-month shelf-life—meaning that after a year, you have to throw out that old EpiPen and get a new one.

Fueled first by access to vast new markets and then by exclusive access to America’s vast public-school system, Mylan’s EpiPen sales and profits kept rising—along with the auto-injector’s price.

Paying the price

While EpiPen’s cash price without insurance was already high, and got even higher with Mylan’s latest increase, the company has long provided eligible consumers with a number of discounts and “specials.”

Mylan offers free EpiPens to patients who are both low-income and uninsured.  It offers a $100 discount card for eligible patients with private insurance.  But members of Medicare and Medicaid aren’t eligible for that card.

Mylan also has a program that distributes free EpiPens to schools.

According to the company, its EpiPen4Schools program, which launched in 2013, has distributed over 700,000 free EpiPens to over 65,000 schools nationwide, or about half of all U.S. schools.

But the people most feeling the sting of the latest EpiPen price hike are those who have the lower-quality private insurance plans that feature high-deductibles—meaning, in plain English, that you have to pay quite a bit out-of-pocket for wide range of medications and medical services before your insurance plan starts paying the rest.  Among those things are EpiPens; people on high-deductible plans are still likelier to pay over $500, even with a Mylan discount card.

Compounding that problem is the fact that the number of high-deductible private insurance plans has risen significantly since 2006.  While just four percent of employees with workplace-provided health insurance had high-deductible plans in 2006, that number was 20 percent by 2014 and 24 percent in 2015.

And it is that growing segment of the private-insurance market that is most feeling the EpiPen pinch of late—and saying “ouch!”

Public response

August 2016 was not good month for Mylan—at least not PR-wise.

The end of the month featured numerous national headlines reporting several public setbacks resulting from the company’s latest EpiPen price hike.

Sen. Amy Klobuchar of Minnesota, who actually co-sponsored the school EpiPen bill President Obama signed in 2013, released a statement reading, in part, that “This outrageous increase in the price of EpiPens is occurring at the same time that Mylan Pharmaceutical is exploiting a monopoly market advantage that has fallen into its lap.”

Sen. Klobuchar also called for an immediate lowering of EpiPen pricing, and an investigation by the Federal Trade Commission (FTC) within 90 days.

On August 24, American Medical Association (AMA) president Andrew W. Gurman, M.D. issued a scathing critique.

“With Americans across the country sending their children back to school this month, many parents and schools are encountering sticker shock over the cost of EpiPens,” read his official statement.  “With many parents required to buy two or more sets of EpiPens just to keep their children safe, the high cost of these devices may either keep them out of reach of people in need or force some families to choose between EpiPens and other essentials.”

The next day, Anaphylaxis for Reel’s longtime spokesperson officially severed her ties with Mylan.

August 25 also saw Mylan scrambling for a defensive stance, conceding that it hasn’t been doing enough to help people afford the emergency medication.

It announced that it would raise the discount offer to $300 off the price of an EpiPen pack and double the eligibility threshold of its patient assistance program to 400 percent of the federal poverty level.  That means a family of four making up to $97,200 would pay nothing out of pocket.

In the same announcement, though, Mylan partially blamed pharmacy benefit managers, insurers, wholesalers and pharmacies—saying that they are responsible for 55 percent of the $608 current list price for an EpiPen two-pack that consumers would pay without any insurance or financial assistance.

It’s not clear what economic calculus Mylan used to arrive at that specific figure.

But what is clear is that, until something drastic changes, EpiPen will be dangerously out of reach for too many parents of children with severe allergy.