On the Epipen Débâcle

 

I live in the Pittsburgh area, and so does Mylan Labs, the evil company that is selling life-saving Epipens at $600 a pop, forcing families with allergic members to choose between eating regular food and watching their loved ones die, or buying Epipens and dining on cat food. (Pro tip — I’m a doctor, and I recommend Fancy Feast.)

What with my friends and neighbors organizing large protests outside the Mylan facility, and wishing to appear supportive to these people, some of whom live close enough to soap my windows or in some other way directly express their disapproval, far be it from me to suggest that Mylan is anything other than the spawn of Satan. So stipulated.

But so much attention has been focused on this issue, at least locally, that I have been moved to discover whether there might be some other general lessons we might learn from it. (Other than, of course, that drug companies exist only to cause pain, death and bankruptcy for their customers.)

Here is what I have come up with:

1) Monopolies cause high prices, especially if you create a great demand for the limited product. Other companies have developed auto-injectors for epinephrine, but for one reason or another the FDA has not seen fit to approve them (or, having approved one, subsequently took it off the market). It is possible that by limiting competition, the FDA has furthered the goal of public safety — I have no access to the data, so cannot say. What is a sure thing, however, is that the FDA has maintained a clear path for Mylan to behave as a monopoly, and that Mylan has acted (as companies are wont to do) according to the incentives thus provided.

2) The utter complexity of pharmaceutical pricing is destined to create some surprises, perhaps even to the actors involved. I don’t pretend to understand the nuances of drug pricing. But drug prices in the US are determined by complex interactions between drug companies, the government, insurance companies and pharmacy benefit managers (PBMs). To get a drug on the formularies of the two great PBMs (Express Scripts and CVS Caremark), drug companies are forced to offer both discounts and rebates to the PBMs. Because of the discounts and rebates it must offer (which, in other industries, might be called a bribe), Mylan says it actually gets “only” about $275 of the $600 list price.

In the old days there would not have been much blowback from such artificially high list prices. This is because in the old days (say, 2014), most insured consumers paid only a co-pay for their drugs. But, thanks to the new-style insurance plans brought to us by Obamacare, consumers no longer have a co-pay. They have a high-deductible instead, which now averages over $1000 per year per individual. So many more customers are being hit with the full $600 for their Epipens. From the deer-in-the-headlights look displayed by Sen. Manchin’s daughter, it seems likely to me that the CEO of Mylan was as surprised by this realization as was Ryan Lochte when he found out that even Brazil has lots of video cameras.

The entire system of drug pricing, reliant as it is on discounts and rebates to PBMs, demands very high list prices. For the first time, those high list prices are making a real difference to regular people.

3) The media in general, and doctors who like to talk to the media in particular, tend to lose perspective when given the opportunity to exaggerate a crisis. The crisis they have exaggerated in this instance can be summarized as: The Epipen is a life-saving product, and by arbitrarily increasing the price, Mylan is condemning allergic kids to a painful death.

Actually, it’s epinephrine that is a life-saving product, and a cheap one at that. The Epipen is a delivery system that makes administering epinephrine more convenient in an emergency. But the life-saving can still take place without the Epipen. I am an Old Fart, and during most of my practice life there was no Epipen. People who had life-threatening allergies carried epinephrine syringes with them that they pre-filled themselves. Most people can be trained to do this in about 5 minutes. The whole system used to cost about $1 a dose. (With inflation, that might now be as high as $5 a dose.)

If I had a life-threatening allergy I would rather have an Epipen, but again, that’s a matter of convenience, not a matter of life and death. Is the added convenience worth $600? Maybe, maybe not. If most people were to answer “maybe not,” and if Mylan did not have a monopoly, and if the media and their go-to docs would place things into better perspective, odds are that the price of the Epipen would come down.

But the way things stand now, why should it?

There are 47 comments.

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  1. Kozak Member
    Kozak
    @Kozak

    DrRich: 1) Monopolies cause high prices, especially if you create a great demand for the limited product.

    Coupled with laws that encourage ( with grant money) or demand (state laws) that every school stock epi pens driving up demand yet more…..

    • #1
  2. DrRich Inactive
    DrRich
    @DrRich

    Agreed. These new laws largely resulted from an ambitious and expensive PR campaign funded by Mylan. The rising prices of the Epipen over the years has been “necessary” to pay for this campaign. The monopoly will not last forever, so the high prices today are undoubtedly an attempt to cash in on this long-term PR investment while it still can.

    • #2
  3. Kozak Member
    Kozak
    @Kozak

    DrRich: The Epipen is a delivery system that makes administering epinephrine more convenient in an emergency. But the life-saving can still take place without the Epipen. I am an Old Fart, and during most of my practice life there was no Epipen. People who had life-threatening allergies carried epinephrine syringes with them that they pre-filled themselves. Most people can be trained to do this in about 5 minutes. The whole system used to cost about $1 a dose. (With inflation, that might now be as high as $5 a dose.)

    The only drawback here is Epi is notoriously unstable due to light and temperature. Studies have shown it degrades more then 10% in 2 weeks  at room temp   when exposed to light. If protected from light exposure (and high temps) it has about a 3 month shelf life.   So definitely better then nothing, but something to be aware of.

    • #3
  4. She Reagan
    She
    @She

    What a great (first?) post.

    While I can’t quite throw a brick out the window and hit the Mylan headquarters, I’m not far off, myself, and you are right, there has been some furor there the last couple of days.

    Are there storage issues (refrigeration?) with a bottle of epinephrine in the scenario you propose, or could people just carry it around with them?

    • #4
  5. She Reagan
    She
    @She

    Maybe Kozak, #3 answered by question about the shelf life of epi, so I have another one.

    How many bottles of epi can you buy for $600?

    • #5
  6. DocJay Inactive
    DocJay
    @DocJay

    I just bought, as in my nurse is on the phone right at this very second with a supplier, 50 vials of  1 mg a piece ( 2-3 doses) for 128 dollars.

    • #6
  7. DocJay Inactive
    DocJay
    @DocJay

    Nice article.

    • #7
  8. Mendel Inactive
    Mendel
    @Mendel

    DrRich: But, thanks to the new-style insurance plans brought to us by Obamacare, consumers no longer have a co-pay. They have a high-deductible instead, which now averages over $1000 per year per individual.

    This isn’t a bad thing, per se. People should be more exposed to the actual costs of their health care, instead of having a third party hide the real prices through a flat-rate co-pay. In any reasonably free-market system, most people would be paying for their EpiPens out of pocket.

    DrRich: The entire system of drug pricing, reliant as it is on discounts and rebates to PBMs, demands very high list prices. For the first time, those high list prices are making a real difference to regular people.

    The big problem is that the poor individual consumer is competing with huge payers (like insurance companies and schools) for the same products. If over half of the cars in the US were bought at retail by a small number of huge companies, we would also expect their list price to go up as a bargaining tool, leaving the individual consumer in the lurch.

    This is the exact problem with hospital bills – the patient paying out of pocket easily pays 2-3x what the insurance company would have paid for the same services.

    The root problem here is the fact that we have a hybrid system in which some people are paying primarily as individuals, while others are still sheltered under third-party-payer artifices. Level that playing field, and the prices will normalize.

    • #8
  9. Mendel Inactive
    Mendel
    @Mendel

    Oh yeah, and great post!

    Except for the “é” and “â” part. You really want us to believe you’re from Pittsburgh?

    • #9
  10. She Reagan
    She
    @She

    Mendel:The big problem is that the poor individual consumer is competing with huge payers (like insurance companies and schools) for the same products. If over half of the cars in the US were bought at retail by a small number of huge companies, we would also expect their list price to go up as a bargaining tool, leaving the individual consumer in the lurch.

    This is the exact problem with hospital bills – the patient paying out of pocket easily pays 2-3x what the insurance company would have paid for the same services.

    The root problem here is the fact that we have a hybrid system in which some people are paying primarily as individuals, while others are still sheltered under third-party-payer artifices. Level that playing field, and the prices will normalize.

    This is so true.  I despair of it being fixed before the move is made to single payer, though.  As far as I can see, there’s no-one in Washington who understands or cares about this at all (maybe a couple of Representatives and/or Senators who may be doctors, perhaps a couple of others), no one is interested in conveying it in simple terms to the voters, and the idea of a ‘health-care free market’ is about as scary to most people as the idea of ‘privatizing’ some part of Social Security.  As a person who worked in the health care industry (not on the clinical side) for almost a quarter-century, I find the willful ignorance and determined incompetence about this at the federal level simply infuriating.

    • #10
  11. DrRich Inactive
    DrRich
    @DrRich

    Mendel: Except for the “é” and “â” part. You really want us to believe you’re from Pittsburgh?

    Even people in Pittsburgh can have fancy spell checkers.

    • #11
  12. DrRich Inactive
    DrRich
    @DrRich

    Mendel: This isn’t a bad thing, per se. People should be more exposed to the actual costs of their health care, instead of having a third party hide the real prices through a flat-rate co-pay.

    I entirely agree with this sentiment. People deserve the truth. My only quibble is that people aren’t being exposed to “actual costs” or “real prices.” Who knows what those may be? What we’re being exposed to instead is the sausage-making that gives us the many artificial layers of the artificial prices. As you say, that in itself is a good thing. The question, for me, is: when Americans grasp the utter horror of how these things are determined, will they demand a true market-driven solution that will (as you say) allow prices to “normalize” — or a single-payer system? I fear we will be handed over to a few decades of the latter before we’re ready to give the former a try.

    • #12
  13. PHCheese Inactive
    PHCheese
    @PHCheese

    I met Milan Pushar in the seventies. He was practically selling stock door to door in those days. I didn’t buy any but my mother did, she made a bunch of money on it. Milan would be turning over in his grave. BTW , Cannonsberg is one of the three most radioactive sites in the world. I lived 4 miles from it. Maybe that has affected their reasoning.

    • #13
  14. DrRich Inactive
    DrRich
    @DrRich

    She: I find the willful ignorance and determined incompetence about this at the federal level simply infuriating.

    I agree. The large majority of our elite leaders have no idea of how to think about the healthcare system. The ones that do understand that they can create unsupportable chaos, successfully blame it on the greedy (doctors, drug companies, insurance companies, etc.), and lead Americans to the only possible conclusion — that a single payer system is not only the right answer, it’s the only answer.

    I like to remind people who tell me this is a good thing that, under a single payer system, when you’re a 75 year-old who needs a hip replacement and the feds say you are too old for it, you will NOT have the option of paying for it yourself. That would be two payers. Not to mention, it would be grossly unfair to those who can’t afford to pay for their own medical services.

    • #14
  15. 1967mustangman Inactive
    1967mustangman
    @1967mustangman

    Cat food is expensive man.

    • #15
  16. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    DrRich: Actually, it’s epinephrine that is a life-saving product, and a cheap one at that. The Epipen is a delivery system that makes administering epinephrine more convenient in an emergency. But the life-saving can still take place without the Epipen. I am an Old Fart, and during most of my practice life there was no Epipen. People who had life-threatening allergies carried epinephrine syringes with them that they pre-filled themselves. Most people can be trained to do this in about 5 minutes. The whole system used to cost about $1 a dose. (With inflation, that might now be as high as $5 a dose.)

    Are American Drs still willing to prescribe this?

    • #16
  17. Midget Faded Rattlesnake Contributor
    Midget Faded Rattlesnake
    @Midge

    Kozak: The only drawback here is Epi is notoriously unstable due to light and temperature. Studies have shown it degrades more then 10% in 2 weeks at room temp when exposed to light. If protected from light exposure (and high temps) it has about a 3 month shelf life. So definitely better then nothing, but something to be aware of.

    I picture a stylish styrofoam enclosure for the pre-filled syringe, to keep out the light and mitigate temperature swings.

    • #17
  18. DocJay Inactive
    DocJay
    @DocJay

    1967mustangman:Cat food is expensive man.

    District 9 baby.

    • #18
  19. DocJay Inactive
    DocJay
    @DocJay

    DrRich:

    She: I find the willful ignorance and determined incompetence about this at the federal level simply infuriating.

    I agree. The large majority of our elite leaders have no idea of how to think about the healthcare system. The ones that do understand that they can create unsupportable chaos, successfully blame it on the greedy (doctors, drug companies, insurance companies, etc.), and lead Americans to the only possible conclusion — that a single payer system is not only the right answer, it’s the only answer.

    I like to remind people who tell me this is a good thing that, under a single payer system, when you’re a 75 year-old who needs a hip replacement and the feds say you are too old for it, you will NOT have the option of paying for it yourself. That would be two payers. Not to mention, it would be grossly unfair to those who can’t afford to pay for their own medical services.

    We’re all in this together.  Oof.

    I am curious how Hill dog is going to pull off getting / forcing providers to be in the system and letting her elite pals get their own private care?

    • #19
  20. She Reagan
    She
    @She

    DocJay:

    DrRich:

    She: I find the willful ignorance and determined incompetence about this at the federal level simply infuriating.

    I agree. The large majority of our elite leaders have no idea of how to think about the healthcare system. The ones that do understand that they can create unsupportable chaos, successfully blame it on the greedy (doctors, drug companies, insurance companies, etc.), and lead Americans to the only possible conclusion — that a single payer system is not only the right answer, it’s the only answer.

    I like to remind people who tell me this is a good thing that, under a single payer system, when you’re a 75 year-old who needs a hip replacement and the feds say you are too old for it, you will NOT have the option of paying for it yourself. That would be two payers. Not to mention, it would be grossly unfair to those who can’t afford to pay for their own medical services.

    We’re all in this together. Oof.

    I am curious how Hill dog is going to pull off getting / forcing providers to be in the system and letting her elite pals get their own private care?

    The U.K. has a parallel, private system to the odious National Health Service.  Have they (supposedly) ruled out such a thing here?

    • #20
  21. 1967mustangman Inactive
    1967mustangman
    @1967mustangman

    Midget Faded Rattlesnake:

    Kozak: The only drawback here is Epi is notoriously unstable due to light and temperature. Studies have shown it degrades more then 10% in 2 weeks at room temp when exposed to light. If protected from light exposure (and high temps) it has about a 3 month shelf life. So definitely better then nothing, but something to be aware of.

    I picture a stylish styrofoam enclosure for the pre-filled syringe, to keep out the light and mitigate temperature swings.

    The effect of light can be mitigated fairly easily.  If I remember correctly my sister’s EpiPens came in a dark yellow plastic container.

    • #21
  22. DrRich Inactive
    DrRich
    @DrRich

    DocJay: I am curious how Hill dog is going to pull off getting / forcing providers to be in the system and letting her elite pals get their own private care?

    Probably the same way they do it in Cuba, where the single-payer system features one or two modern, gleaming facilities for the elites, which can be featured when Michael Moore shows up with cameras.

    • #22
  23. DrRich Inactive
    DrRich
    @DrRich

    She: The U.K. has a parallel, private system to the odious National Health Service. Have they (supposedly) ruled out such a thing here?

    That, of course, is to be determined. My own view is that American Progressives are going to have to be much more ruthless about enforcing real single payer (except, of course, for the healthcare the elites get) than their counterparts in Great Britain turned out to be.

    As an aside, I have some great ideas for black market healthcare.

    • #23
  24. DrRich Inactive
    DrRich
    @DrRich

    Midget Faded Rattlesnake: Are American Drs still willing to prescribe this?

    Yes, unless they feel too put upon to take the 5 minutes needed to demonstrate how to do it, how to store and carry it, etc.

    • #24
  25. DocJay Inactive
    DocJay
    @DocJay

    DrRich:

    Midget Faded Rattlesnake: Are American Drs still willing to prescribe this?

    Yes, unless they feel too put upon to take the 5 minutes needed to demonstrate how to do it, how to store and carry it, etc.

    Well there’s two here who do it so this is how revolutions begin.  Comrades unite!

    • #25
  26. Fake John/Jane Galt Coolidge
    Fake John/Jane Galt
    @FakeJohnJaneGalt

    I am a contrary sort of guy.  If I was running this company and was protested I would be inclined to shutdown production and let the protesters have their way.  I would get a list of name of organizations and people involved in the protest and publish them with the note that if anybody died because our product was pulled please sue these folk.  It is their fault your loved one choked gasping for breath because of his allergy.  Please film their death so you can get maximum sentences in the legal system.

    • #26
  27. Bob W Member
    Bob W
    @BobW
    DrRich Post author

    She: The U.K. has a parallel, private system to the odious National Health Service. Have they (supposedly) ruled out such a thing here?

    That, of course, is to be determined. My own view is that American Progressives are going to have to be much more ruthless about enforcing real single payer (except, of course, for the healthcare the elites get) than their counterparts in Great Britain turned out to be.

    As an aside, I have some great ideas for black market healthcare.

    There already exists a thriving business in providing US citizens with healthcare in other countries. Right now it is mainly certain procedures that say are not covered with medicare or other reasons. I would see a big increase in these services and an expansion of facilities to meet the demands.  Right now most prescription drugs (non narcotic) can be had at fraction of there cost here.

    • #27
  28. Admiral janeway Inactive
    Admiral janeway
    @Admiral janeway

    I have worked for myself for years, and always have paid a lot for bad insurance. Prices have gone up 6-8% every year since at least 2002.

    One day we will have single payer healthcare like the rest of the developed world. Illness is not a “market”

    Truthfully though,  I have been thinking my left kidney is a bit unattractive. Maybe I should get a new one.

    • #28
  29. She Reagan
    She
    @She

    Admiral janeway:I have worked for myself for years, and always have paid a lot for bad insurance. Prices have gone up 6-8% every year since at least 2002.

    One day we will have single payer healthcare like the rest of the developed world. Illness is not a “market”

    Perhaps when the US nationalizes medicine (aka, single payer) we will do it ‘right,’ and it will be marvelous.  You know, just like socialism, which has never worked for anybody else, will finally work for us when get around to it because we will actually do it right. . .

    Although I have no idea why I think this, when the VA hospital system is out there as an exemplar of how government-run healthcare will be implemented in the US.

    Just an incurable optimist, I guess.

    PS:  If you’re planning a trip to the UK, I’d suggest you skip the dates of Sept 12-16, 2016.  50,000 ‘junior doctors’ (similar to US ‘residents’) are planning a nationwide strike, five days in a row, from 8AM to 5PM.  100,000 operations, and 1,000,000 appointments are expected to be canceled.  Patients?  Be damned.

    Developed world, here we come!

    • #29
  30. Randy Webster Member
    Randy Webster
    @RandyWebster

    Schools seem to be a particularly unsuitable market for epipens.  Don’t most schools have school nurses, i.e., someone trained in giving shots?

    • #30

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