When even “pharma bro” Martin Shkreli compares your company to vultures and wonders what drives its moral compass, you may have an image problem.
Shkreli is the CEO of Turing Pharmaceuticals, the hedge fund posing as a drugmaker that last winter jacked the price of a drug used to treat malaria and HIV patients by 5,000 percent. Shkreli directed his comments late last week at Mylan, the makers of the EpiPen.
The EpiPen, for those who don’t have a child with allergies, is a device that can quickly deliver a precise dose of epinephrine to adults or children who are suffering an allergic reaction from insect bites or stings, food or other causes. The epinephrine in the EpiPen relaxes muscles in the airway to ease breathing and tightens blood vessels, allowing time for further medical treatment.
Patients with allergies typically carry one or two EpiPens with them at all times, or in the case of school children, leave a pen with a school nurse. But last week, several stories circulated with criticism for Mylan over the steadily increasing costs for EpiPens. A story in Forbes said the cost of a two-pack of the pens was about $57 when Mylan acquired the rights in 2007 to the delivery device for the medication.
Current prices, according to NBC News, put it at $365 for a two-pack, with the price having stepped up 15 percent every quarter since 2007, an increase of more than 500 percent. Epinephrine is a generic drug and would otherwise cost about $1 a dose. So patients are mostly paying for the pen, which must be replaced if not used within a year.
Mylan has defended its price increases as necessary to “better reflect important product features and the value the product provides,” but it might have also included the costs of marketing and advertising, which have helped make it the dominant epinephrine delivery device on the market, and nearly the only option.
A generic “pen,” Adrenaclick is available for $142 for a two-pack, according to Consumer Reports. But another device, the Auvi-Q, was pulled from the market last fall after a recall over dosage problems. Patients also can administer the drug via a syringe, although that doesn’t offer the safety, prompt delivery and measured dosage of a pen. And doctors’ prescriptions are tied to the device, meaning patients can’t substitute one device for another if the doctor has specified the EpiPen.
In a report on The Huffington Post, Mylan noted that it had donated more than 650,000 of its products to about half of U.S. schools nationwide and also offers a savings card that knocks about $100 off the price for eligible patients. But for patients whose insurance charges a high co-payment in exchange for a lower premium, the EpiPen’s costs are forcing some families to take risks, including carrying pens that are past their expiration date or not carrying one at all.
Mylan also attempted to shifts focus off the high cost of its EpiPen by noting the rise in high-deductible and high-copay insurance coverage.
No doubt, insurance companies bear responsibility for increasing health care costs, but pharmaceuticals are not blameless. And the problem goes beyond the EpiPen.
U.S. prescription drug spending had leveled off between 2009 and 2013, and had even decreased as a share of health care spending during that period. But the increases have recently resumed.
Prescription drug spending rose 12.6 percent in 2014, and is now expected to exceed $350 billion in 2017 and represent more than 11.5 percent of all health care spending.
Better transparency into how drugmakers price their drugs is being suggested as one way to bring the fever down.
In an online discussion hosted by the Wall Street Journal this spring, an insurance industry CEO and a former AARP official both criticized a lack of candor in how drugs are priced.
Marilyn Tavenner, chief executive of America’s Health Insurance Plans, compared drug pricing to a black box, particularly when health insurers attempt to negotiate prices and then see drug costs increase 20 percent to 30 percent without explanation.
John Rother, the former AARP official who now heads the Campaign for Sustainable Rx Pricing, said transparency would empower consumers. “Now patients and purchasers don’t have any hard data about research-and-development costs, performance or outcomes for a drug. With more information, patients could better decide the right treatment for their family and what price the are willing to pay.”
Another participant in the Journal discussion, Stephen Ubl, chief executive of the Pharmaceutical Research and Manufactures of America, dismissed the call for transparency as a “thinly veiled attempt to build a case for price controls.”
With drug costs again on the increase, Congress and state legislatures should consider legislation that would provide better insight into how drugs are priced and require some explanation for increases beyond pat responses that point too generally to the costs of research and development.
And greater transparency into pricing might help drugmakers avoid a nasty allergic reaction to price controls.