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EpiPenEconomics

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U.S. Patent No. 4031893, Hypodermic Injection Device Having Means for Varying the Medicament Capacity Thereof                  

Americans throw away unused epinephrine auto-injectors worth more than $1 billion annually. Or maybe it would be more accurate to say that Americans waste more than $1 billion annually on $50 million worth of epinephrine auto-injectors that are discarded unused. The devices should only cost $20 a pair. So, why do they cost $608 instead? 

First, a little background. Severe allergic reactions can result in anaphylaxis, including skin irritation, hives and a person’s windpipe can even begin to swell closed. Children allergic to peanuts or tree nuts are especially a concern since their parents are not always there to supervise them. By some estimates, perhaps 4 percent to 6 percent of children have some type of food allergy. Yet, the likelihood of children suffering anaphylaxis is low. Estimates vary, but a study from Washington State back in the 1990s found only 1 kid in 9,524 had an episode in any given year. A similar study from Minnesota found the rate was one in 1,400. The difference in the prevalence had to do with how strict a definition was used.

Although uncommon, on rare occasions anaphylaxis can turn fatal. Researchers in the U.K. claim that in any given year, the chance of a child with a food allergy dying of anaphylaxis is just under 1 in 300,000.  That is not to suggest the risk in nontrivial; perhaps up to 200 unlucky people in the United States die annually from anaphylaxis. Most of them are adults — about two-thirds. The most common causes are reactions to medications.

When anaphylaxis occurs the treatment of choice is epinephrine. It’s not like in the movies where patients have a mere 10 seconds before slipping into unconsciousness. Anaphylaxis is usually much, much slower. I talked to one person who had an anaphylactic reaction after eating shellfish, while taking antibiotics and then going for a 7-mile run. Shellfish, antibiotics and exercise are all known risk factors or triggers. Over the course of an hour she became increasingly sick but still had to make her way back to her car. She had plenty of time to treat the condition, but lacked access to the drugs. She ended up going to the emergency room by ambulance.

Every year EpiPens costing roughly a $1 billion expire unused. You no doubt agree this is a waste, but I’m not suggesting no one should buy them. Quite the contrary. Everyone should have a generic epinephrine auto-injector in their medicine cabinet. They should be available over the counter (OTC). The FDA acts like the technology is as sensitive as an implantable defibrillator. It is not. The technology is simple. An epinephrine auto-injector is about as complicated as the internal components in a retractable ball point pen. However, regulations governing the distribution means only those people with known risk factors are willing to pay $608 for a twin-pack that expires after only a year.

Why is a 40-year old technology still so expensive? Much of the blame is due to the U.S. Food and Drug Administration and the way drugs are regulated in the United States.  The backlog of generic drug applications awaiting the FDA’s approval is nearly 4,000 applications. Thus, competitors who want to enter the market cannot do so for several years.  In addition, safety improvements made to the design of the EpiPen over the years can be patented. Although the initial patent (or patents) likely expired in the 1990s, a new patent was issued on some aspect of the EpiPen in 2005, which will not expire until 2025. The FDA will not approve a generic based on an earlier model, say a 1975 auto-injector design, if the currently patent holder has identified potential problems in the earlier design and incorporated safety features that boost efficacy or safety. 

The epinephrine injected by the EpiPen is available in an ampule for less than $1. In theory any generic drug maker could merely apply to sell syringes pre-filled with epinephrine. But the FDA would likely reject that as less safe than the EpiPen.

Drug maker Mylan bought the rights to the (then) 30-year old epinephrine auto-injector in 2007. At the time, one pen sold for about $57. By August 2016, Mylan had jacked up the price to more than $300.  A generic EpiPen that was to be sold by Israeli drug maker, Teva, suffered setbacks that will delay their product by a year. The FDA recently declined to approve Teva’s version until it resolved some concerns. A talking epinephrine auto-injector made by French drug maker Sanofi was recalled because a couple dozen of its units supposedly administered inaccurate doses.  There is speculation that Sanofi may never return its Auvi-Q to the market.

To make matters worse, in 2010 the government decided one dose of epinephrine is not enough that for about 10 percent of anaphylaxis patients and advised people with serious allergies to have two EpiPens available at all times. Mylan took advantage of the government recommendation and now the only way to buy EpiPens is a twin-pack with a list price of $608. Families with serious allergies or asthma often have two EpiPens at work or school and two more for at home in case of emergency. A significant affordability problem is that epinephrine is unstable when exposed to heat and light. Thus, EpiPens expire after an expected life of only one year. Of course, most are never used before expiring. To not experience a life threatening allergic reaction is a good thing. But that also means patients are expected to throw out $1,200 worth of unused EpiPens every year and purchase new ones annually.

Doctors like to only prescribe what they trust. Many may not even know about the competing epinephrine auto-injector, Adrenaclick. According to Consumer Reports, a twin-pack can be purchased a Walmart for $145 using a GoodRx coupon. Unfortunately, regulations in most states prevent pharmacists from substituting the $145 Adrenaclick for the $608 EpiPen. Schools may not want parents to send their kids to class with an Adrenaclick because teachers and school nurses are used to the EpiPen. These are all reasons Mylan’s EpiPen enjoys an 85 percent market share. To get the cheaper version, patients must ask their doctors to prescribe the Adrenaclick or a “generic epinephrine auto-injector.”

Twenty dollars. That’s probably about how much a generic EpiPen twin-pack would cost if the FDA approved an over-the-counter version or a version pharmacists could dispense to patients without a doctor’s prescription.  Greater access could potentially save lives by making epinephrine more widely available. An OTC version would also save Americans nearly $1 billion a year.

Devon M. Herrick, PhD is a health economist and senior fellow at the National Center for Policy Analysis.

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Barry CarolPeter Recent comment authors
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Barry Carol
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Barry Carol

I would say that much of the blame in this case is attributable to Mylan’s greed. People don’t buy these products because they want to but because they have to. Investors can earn a satisfactory risk-adjusted return on their capital without drug companies driving drug prices into the stratosphere. At some point, someone has to say enough is enough. Back in the 1960’s and 1970’s companies tried to strike a reasonable balance among all of their stakeholders — customers, employees, shareholders, suppliers and the communities they operated in. Now all that matters is the stock price and establishing incentives that… Read more »

Peter
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Peter

“Much of the blame is due to the U.S. Food and Drug Administration and the way drugs are regulated in the United States.”

$100 in Canada OTC – with regulation. It’s not hard.

“Yet, the likelihood of children suffering anaphylaxis is low. Estimates vary, but a study from Washington State back in the 1990s found only 1 kid in 9,524 had an episode in any given year……Although uncommon, on rare occasions anaphylaxis can turn fatal.”

“Everyone should have a generic epinephrine auto-injector in their medicine cabinet.”

REALLY? Maybe every home should also have an expirable defibrillator.