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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?
Published in General
The Monopoly in this case seems to exist only because the father of the Monopolist was able to get the competition shut down.
Where’s the outrage over that?
I carry a vial of Epinephrine and a syringe and a wipe in my black bag. I used to carry an epipen, but I used it on someone.
Illness is not a market? True. But if you want effective healthcare by high level effective organizations and people then the treating of illness should be.
I think the ADM was being sarcasitic
If you are going to make that argument with that username and avatar, you need to re-watch the Voyager episode “Critical Care” for a preview of what your marketless single payer system is going to look like once America finally becomes a part of the “developed world.”
From what Dr. Rich stated about utilizing the $1-$5 ‘old fashioned’ syringe dosage options, coupled with the fact that nearly every public school has an onsite nurse – problem solved! I smell a big crony rat.
Great article- thanks very much for taking the time to write.
You sure? You never can be too careful with these sarcastic ones. Best just to hammer them anyway before they become cynical…
Somehow, I’m sure that our political masters will try to save us from unsafe, unregulated, back-alley appendectomies.
I’m setting up in neurosurgery myself. Me and YouTube.
What could possibly go wrong?
My wife worked for 10 years in a Tennessee public elementary school, which required every employee to train in the use of Epi-pens and sign a release that they had been properly trained. (My wife was personally concerned about signing the release, btw.) Epi-pens were maintained in several strategic locations throughout the schools for emergency use. (The cafeteria being the key place.)
In addition, children with prescriptions had their own Epi-pens stored with the school nurse.
First, brilliant post, and thank you for writing it! Second, I love this quote. It really is the fundamental assumption by most of the policy makers and academic medicine people I run into, and it’s (just a bit) biased…so love seeing it called out!
The things I’ve taken away from this debacle are that $600 isn’t what Mylan wants people to pay for the product; it’s what they want insurers to pay for (or start as a bargaining price for) the product. People think this is a drug thing when it’s really a medical device thing (is the Epipen subject to the medical device tax?) And, finally, if we can get this riled up over the cost of a convenience, just imagine what it’ll be like when actual life saving things become expensive.
Remind me to visit one of you sometime!
Do you know how long it can take to wait in line to see the school nurse, whose job is mostly dressing down malingering students and handing out condoms? No, if you’re in anaphylaxis, you don’t want to be sent to the nurse’s office if you value your life.
^ That is not to disparage the competence of school nurses, just reflecting the reality of the student population that tends to visit them, at least in high school.
I’d like to know more about the other devices that we can’t get. The Auvi-Q, which was removed from the market for not providing the correct dosage was preferable to the Epi-pen because it was smaller and therefore much more likely to be carried on the at-risk teenager’s person. It fit in a pocket or small bag without protruding so I didn’t have to chase down my daughter to make sure she had it with her! The purpose of an auto-injector is to remove a barrier to use; a better designed auto-injector is more likely to be present when needed.
Did Mylan have anything to do with other designs not getting to market? Why haven’t they improved their product in the 18 years I’ve been buying it?
Well, this is an interesting study.