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Hold on. Ready For It? EpiPen May Actually Still Be Too Cheap!!!

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Pick up a newspaper or surf the web and you’ll find story after story taking Mylan to task for EpiPen pricing practices. The list price of a 2-pack has soared from about $100 to $600 over the past decade. The price is deemed too high and the rate of increase is considered particularly unconscionable.

Let me offer a brief counterargument:

EpiPen is worth the price. A $300 pen regularly rescues children from anaphylactic shock that would otherwise be fatal, offering them the chance to live to 100 instead of dying at 10. (About 20% of patients need a second dose, which is why these devices are sold in 2-packs.) Meanwhile drug makers charge hundreds of thousands of dollars per year per hemophiliac, tens of thousands or more to give a cancer patient a shot at a couple or few more months of life, and thousands per year to modestly lower the chance of a heart attack. Within that context, and in absolute terms, EpiPen is indeed a bargain.

People are complaining that they pay hundreds of dollars per year –or more if they have multiple packs– for something they hope never to use. But they should acknowledge that they are actually using EpiPen even when they never dispense the drug. EpiPen is what lets them send their children on playdates and be comfortable with them away at school and summer camp, go out to restaurants, and take hikes in the woods.

EpiPen is worth a lot more than its current and former competitors. According to the Washington Post, Twinject left the market in 2012 and was considered clumsy and unappealing compared to EpiPen. Auvi-Q was recalled last year because it could administer the wrong dose. Teva’s autoinjector was rejected by FDA this year for “major deficiencies.” How many parents would be willing to trade down to save a few dollars on these? Anybody?

The failure of Adrenaclick to catch on despite a lower price, distribution through Walmart and a good review from Consumer Reports demonstrates that Mylan has done a lot with EpiPen over the past decade to earn its price premium and high market share. In particular, EpiPens are now close to ubiquitous in schools thanks to clever marketing, effective lobbying, and public health campaigns. School nurses know how to use them, babysitters know how, and so do siblings. When an emergency strikes and seconds count, the familiar tools are at hand, and people are ready to act. It doesn’t really feel like the moment to learn about Adrenaclick for the first time!

In effect, Mylan has created a public health support system around EpiPen. I’ll go ahead and make myself even more unpopular by saying that this system justifies the big price increases. When you buy EpiPen in 2016 you’re not just getting the product like you were in 2007, you’re benefiting from the whole system. Although the product itself hasn’t changed, EpiPen is more valuable now than it used to be, and Mylan has justifiably reaped the rewards.

EpiPen is far from perfect. For example, it needs to be stored within a tight temperature range and protected from light.  The pens have to be replaced annually. Other companies are working on EpiPen alternatives, and I’d like them to have a financial incentive to do so. A cheaper EpiPen could be nice, but I’d rather see something that’s better (easier to use, more effective, more stable), even if the price is higher. The current attacks on EpiPen are unfortunate because they discourage investment in these types of innovation.

Before you dismiss these arguments and call me an industry hack, I’ll point out that I have advocated for drug price regulation since 2006. But EpiPen is not the place for the government to intervene.

David E. Williams is a health care consultant and blogs at The Health Business Blog.

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dhPeterdbalboaSteven Findlaytrleith Recent comment authors
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dh
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dh

Do you think the same way about water? I mean I don’t think you can live without it. The only reason this drug or any drug is outrageously priced is because there is minimal competition for it and the companies selling them have access to the deep pockets of insurance companies from which it gets it primary revenue stream. Of course my insurance premium has also seen the result of that situation. Because of its most recent attention in the news, several organizations are developing alternatives which they expect to sell at less than $50. I have to wonder if… Read more »

Peter
Member
Peter

$100 in Canada – regulated drug prices. It’s not that hard.

Steven Findlay
Member
Steven Findlay

UPDATE Mylan on Aug 29 announced it would sell its own generic version of EpiPen for half the price of the generic–around $300 instead of $600. As has been widely reported, that’s very much in the company’s interest, and in the interest of wholesalers, PBMs and pharmacies. All take a bite out of the price of every drug. It keeps the money flowing into Mylan’s coffers and does not anger the supply-chain companies. It also may stall other generic companies—one is known to be waiting in the wings—from bringing an EpiPen competitor to market. It’s a clever and understandable move.… Read more »

dbalboa
Member
dbalboa

The uproar isn’t about the value of the drug, it’s about the ethics of the company. A life saving drug has infinite value and that’s fact. Mylan just announced a generic Epipen that is half the price. This means that the option has always been available to them – how else could they announce it so quickly? It also means the price point is sustainable for them. But despite that, they chose to increase the cost double digits annually even when they already have a virtual monopoly on the product. This is blatant greed.

Steven Findlay
Member
Steven Findlay

My blog on the EpiPen controversy is below this blog on THCB’s home page. Like the other commenters, I believe Mr. Williams has this one quite wrong — for the reasons cited in my piece and by those below.,..but most especially because various news organizations have profiled consumers who could not afford the higher price and deferred buying the pen. The price must come down. Consumer Reports has launched a citizen’s petition to pressure the company and policymakers to lower the price.

trleith
Member
trleith

The value the patient derives from the purchase of an EpiPen is not Mylan’s to sell. To behave as if it is, is fraud. Yes, I am a little old fashioned.

Don Levit
Member

What ever happened to charging what the market can bear?
Even if covered by insurance, medical costs are higher than what the market can bear
I know that because 85 percent of the participants on public exchanges receive subsidies and only 15 percent can pay the full freight
When insurance premiums are more than the market can bear, we really have a problem
Think of homeowners premiums were too high, that the average person could not afford a mortgage?

Allan
Member
Allan

You are right in that the Epi-Pen has a high value, but so does a GFI switch near the sink and shower. Should the GFI switch cost $600? The question is how that price came to be and whether it is a legitimate price. Pfizer, I believe, sells the same thing in Canada so the consumer can buy one for about $100. GFI’s probably have a similar price both here and in Canada. Somewhere along the line, something is interfering with competition. Perhaps, one of the problems has to do with insurance. Insurance spreads the risk so that the insurer… Read more »

Steve2
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Steve2

By this argument, vaccines are even more underpriced. Oxygen is underpriced. Nothing changed about epinephrine in the last ten years to make it harder to produce or more valuable. Auto injectors are old tech.

Steve

Peter
Member
Peter

Yes Steve, I’ll second that. Wonder what David Wiliams would pay to get drinking water from the local municpality – after all we could all dies without water.

fixthebus
Member

One way to bring the cost down is to separate innovation from manufacturing in our patent process. So, when you develop a new drug or method of delivery you must sell that innovation to all manufacturers at a preset price which will cover your R & D costs. By not granting exclusive right to manufacture, we bring price down. Plus we allow others to build upon that innovation and re-sell that in the same manner. Does that make sense? You can read my other ideas on my web site at http://www.fixthebus.com And/or we can view vital drugs as a utility… Read more »

Niran Al-Agba
Member

I love it when a health care consultant feels the high price of medicine is justified to “save” a child’s life, yet has no sympathy when families have to choose between food and medicine for their child. You are so cavalier about charging $600 for something that costs $3, but this kind of mark-up is just unethical. Plain and simple.

George Dawson, MD, DFAPA
Member

Plenty of arguments against charging whatever you want for raw material that is worth pennies. That is probably why health care costs are essentially the second largest tax that people pay. All courtesy of Congress favoring businesses over the average guy on the street. This case is so extreme that some members of Congress are viewing it as an anti-trust issue. The comparison with chemotherapy would not seem to apply on a raw materials basis. A research article referenced in my blogpost below quote the price of a 1 ml bottle of 1:1000 epinephrine at $3.00. http://real-psychiatry.blogspot.com/2016/01/asthmatics-held-hostage.html

William Palmer MD
Member
William Palmer MD

Just because something is valuable doesn’t mean that the manufacturer deserves to charge what he thinks he or it deserves. E.g. water. Our always-limited resources are most efficiently allocated by thousands of votes from people willing to sell for a certain price in tension with people willing to buy for a certain price. This is called taking a price, not making a price. You take the price that this complex dance emits as an emergent number.

When something is efficiently allocated it means that the public is benefited by having its capital wisely spent without dead-weight losses.