#EpiGate: The EpiPen Scandal

By Jill Zorn

Stealing money from the pocket of his jeans

People are “shocked, shocked!” once again that pharmaceutical corporations are ripping off the American people.

This time, the story is about Mylan, the company that sells the EpiPen.  The EpiPen is an easy-to-use injection device purchased by people with severe allergies to have on hand in case they have an extreme allergic reaction.  The epinephrine in the device only stays effective for one year, so every year, a new EpiPen (actually they are only sold in packages of two!) must be bought.

Having an EpiPen available is not optional – it is literally a life-saver.  And currently there are no other easy-to-use alternatives to the EpiPen on the market.

So, what has Mylan done, with its EpiPen monopoly?  It has raised the price of this crucial medication 400% since it purchased the product in 2007.

Even with insurance, people with serious allergies that have coverage with high deductibles and co-pays are really feeling the pinch.  And all of us end up paying again when insurers raise their premiums due to high medication prices.

Here at the Universal Health Care Foundation, we call out profiteers like Mylan on a regular basis. Corporate greed of this magnitude is one of the reasons health care costs are growing much faster than wages, making it harder for people to afford access to the quality coverage and care we all need and deserve.

Without strong consumer protections and government oversight, drug company monopolies, insurance company monopolies and hospital system monopolies are all bad for our physical AND financial health.

But this particular story hits close to home.  That is because one of our staff members carries an EpiPen.  I have made sure I know where she keeps it, in case she has a dangerous allergic reaction while she is at work.  She has a $50 co-pay when she replaces her EpiPen, which she must do annually.  And the inflated cost of the prescription is one of the many reasons that our organizations’ small group insurance premiums will likely increase in 2017.

So I’m happy to report that, with their reputation plummeting almost as much as their stock price, Mylan announced today that they at least will improve their assistance programs to help people with their co-pays and deductibles.

That could certainly help our staff member by giving her some relief from the cost of the co-pay for her EpiPen.  But will it help our insurance rates?  Probably not, because Mylan is not dropping the list price.  That means the cost of the drug to our insurance company is not likely to change, since whatever discount they may have negotiated with Mylan, is based on a percentage of the list price.

In fact, drug companies right now are generally rewarded for hiking their prices, as price increases generally lead to higher profit margins.  In fact, while the health industry overall is quite profitable, major drug companies are the most profitable, with average profit margins of 21 percent.

With Medicare unable to negotiate drug prices by law, and individual insurance companies lacking the clout to gain sufficient negotiating power, often the “sky is the limit” for setting drug prices in the United States.  Drug companies raise prices because they CAN.

So, these “shocking” pharmaceutical corporation scandals will continue to come our way.  A few months ago it was Martin Shkreli of Turing Pharmaceuticals, then Valeant Pharmaceuticals and now this week it is Mylan.  But until we have the political will to make big changes to how we regulate medication prices in the United States, Big Pharma is going to continue to do the “rational” thing:  enrich their executives and their stockholders at the expense of the American people.

 


To learn more

Here are a few articles that look at our drug price conundrum through the lens of the EpiPen debacle:

The EpiPen, A Case Study in Health System Dysfunction

Mylan Raised EpiPen’s Price Before the Expected Arrival of a Generic

EpiPen’s 400 Percent Price Hike Tells us a lot About What’s Wrong with American Health Care

Mylan Price Hikes on Many Other Drugs Eclipsed EpiPen Increases

Here are several explainers about high drug prices and the challenges we face to bring them under control:

Government Protected ‘Monopolies’ Drive Drug Prices Higher

Drug Prices Keep Rising Despite Efforts to Reduce Out-Of-Pocket Costs

The Complex Math Behind Spiraling Prescription Drug Prices

 

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