EpiPen cost increase shows worst parts of US government, healthcare
Joe Raedle/Getty Images Noah, a 2-year-old from Middlefield, Connecticut, is starting daycare next month.
His mother, Carolyn Janis, is anxious.
Noah is allergic to eggs, peanuts, and other nuts. It's compounded by severe asthma.
Janis has four EpiPens for her son that are past their expiration date, and one with its expiration coming up soon. He needs a new one for daycare, but she's not sure if she can afford it.
Janis's health insurance changed recently. She and her family are on a high-deductible healthcare plan. She's already exhausted her health savings account this year, and she's still paying off emergency-room visits from a year and a half ago.
Add to that the fact that the list price of the EpiPen has exploded to more than 0 over the past decade.
Janis is one of thousands of people who are unsure about whether they'll be able to have on hand the life-saving medication they need for themselves or their loved ones. It's a result of some of the worst parts of the government and the US healthcare system coming together over the past decade.
"I'm a nervous wreck," Janis said. "I know that this is all part of society. But so much of me wants to just hold him back."
Let's start off with a disclosure: Like it is for Noah, an EpiPen is one of the most important features of my life.
I'm allergic to peanuts. If I happened to eat something that contained a peanut, peanut butter, or peanut oil, I would go into what's known as anaphylactic shock. Basically, my airways would start to close. And the first line of defense would be an EpiPen.
The EpiPen is a pen-shaped device that delivers epinephrine, otherwise known as adrenaline. In a proper dosage, epinephrine makes your heart pump faster and, most importantly, opens up your airways.
For that reason, a two-pack of EpiPens comes with me everywhere I go. I have a routine: I check for my phone, my keys, my wallet, and EpiPens before I leave my home or work. Having both is potentially a matter of life or death.
That's why it's distressing to see the egregious price-gouging effort that has surrounded the product over the past few years. It has drawn the attention of presidential candidates, with Hillary Clinton calling the price explosion "outrageous."
Epinephrine, the actual medicine in EpiPens, is cheap. According to public-health nonprofit Management Sciences for Health, epinephrine's 2014 price in some parts of the developing world was less than a milliliter. One EpiPen auto-injector from Mylan contains about one-third of a milliliter.
When Mylan acquired the auto injectors as part of a 2007 deal, they were priced at about , according to Truven Health Analytics.
Today, the list price for a two-pack is 8. What happened?
Mylan CEO Heather Bresch. Reuters
In the years after Mylan purchased the Epi-Pen, the company did a lot of good.As CEO Heather Bresch attempted to explain on CNBC Thursday, Mylan enhanced the product. It raised awareness. It put more life-saving devices in places like schools, where children had died in tragic events because of an incomprehensible lack of coordination.
But Mylan also exploited the political process for big profits. The EpiPen is nothing new — it is a decades-old device. But when Mylan acquired the product, it saw an opportunity. It began marketing to concerned parents of children with allergies— my mother, a rightful worrier, among them — and turned less than worth of medicine into a billion-dollar business.
In 2010, a change in federal guidelines made it possible for Mylan to sell twice as many EpiPens with each device. That change recommended that two EpiPens be included in each package — hence, the familiar two pack. Doctors have never made me question the better-safe-than-sorry nature of the new guidelines. They say if you can't get to a hospital within 30 minutes of your first injection, you should probably inject the other one.
That, and other changes provided a significant financial benefit to Mylan. At the time, about 35% of prescriptions were for a single injector, but Mylan scrapped that packaging in favor of the dual injectors. The US Food and Drug Administration also altered label guidelines to allow the product to be marketed to anyone at risk of anaphylactic shock, rather than those who had already experienced it.
"Those were both big events that we've started to capitalize on," Bresch said in 2011.
Andy Kiersz/Business Insider
Two years later, there was another seismic event — President Barack Obama signed a lawthat aimed to increase the availability of epinephrine in schools. I wrote about, and cheered, the passage of that law, which encourages schools to stock emergency epinephrine in order to receive certain grants.
The development of that bill was a bit more complicated than meets the eye. Bresch is the daughter of US Sen. Joe Manchin, a Democrat from West Virginia. Mylan, along with patient groups, pushed Congress to pass the legislation — which, along with pushing schools to stock up on life-saving devices, provided the company latitude to again raise the price of the EpiPen by increasing demand for its product.
For various reasons, Mylan has had virtually no competition in the arena. One competing product was recalled last fall, and another, Adrenaclick, is cheaper but uses a more difficult injection system and is not a favorite of doctors. (Mine included.)
White House press secretary Josh Earnest was asked Wednesday whether Obama had any "regret" over signing the bill. And while he dismissed any notion of remorse, as well as the suggestion of a correlation between the Manchin family and the bill's passage, Earnest acknowledged concern over the EpiPen's price explosion.
"I'm not going to second-guess the specific pricing decisions of companies. They'll obviously have to make those kinds of decisions on their own," he said.
"But there have been other pharmaceutical companies that have gotten a lot of unwanted attention for their pricing practices, and it certainly degrades their efforts to build a reputation for themselves as an organization that's committed to developing and providing lifesaving medicine."
Manchin's office declined to make the senator available for an interview. But it provided a statement in which the senator expressed shared concern over the company's price increases without mentioning its CEO.
"I am aware of the questions my colleagues and many parents are asking and frankly I share their concerns about the skyrocketing prices of prescription drugs," he said in the statement. "Today I heard Mylan's initial response, and I am sure Mylan will have a more comprehensive and formal response to those questions."
US Sen. Joe Manchin. Thomson Reuters
Mylan's initial response left much to be desired. In essence, it provided a discount for patients with commercial insurance. The savings card that carries the increased discount, however, won't apply for people on government insurance programs or those without insurance, leaving some of the most poor and vulnerable potentially at risk.
"It is certainly more a PR fix than a real remedy. It provides no price reduction for everyone who needs it. And it's a response to the mounting outcry and outrage, but it's a very small step," Sen. Richard Blumenthal, a Democrat from Connecticut, who sits on a committee that has investigated drug price increases, told Business Insider.
What we have now is a perfect storm.
Epinephrine is a must-have, life-saving medication for thousands of people. Because it is quick to expire, those people need to purchase it every year, no matter the price, or risk their lives.
Options for bringing down the price are limited. Mylan has a stranglehold on the EpiPen market that isn't going anywhere — the barriers to enter the market are enormous. Further, the company can raise the price of the life-saving medication again and again without any rejection, because it's allowed to.
The government has set up incentives for the life-saving medication to be everywhere, yet has made no effort to control its cost. Insurance protects patients from some of the cost, yet the current system has left the most at-risk the most prone to gigantic out-of-pocket costs.
"It shows the failings of government," Janis, the mother of Noah, said. "At some point, it becomes a crusher of the American dream."
The EpiPen is just the latest nightmare in the long history of the still-impaired US healthcare system. And people like Carolyn Janis are going to remain anxious until it's fixed.
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