Mylan Pharmaceuticals, facing widespread pressure this summer from consumers and political leaders, just announced that it is expanding discounts for its highly profitable EpiPen product.
The EpiPen is an auto-injecting device prescribed to people with allergies. It injects a dose of epinephrine when jabbed against the thigh, thereby warding off the life-threatening anaphylactic shock that can occur when, say, someone with a nut allergy unknowingly ingests a cookie with some ground-up almonds inside.
After coming under fire from parents, consumer groups, and high-profile politicians for gouging customers with outrageously expensive EpiPens, Mylan announced on Thursday that it is expanding a discount savings card program. The card, which used to offer a $100 savings on an EpiPen two-pack, will soon be valid for a $300 savings. EpiPen retail prices vary, but generally run around $600 a pack, so the new promotion basically amounts to a 50% discount.
The move comes after weeks in which the media (including yours truly) has been calling attention to how outrageously expensive EpiPens have gotten— prices are up more than 500% in less than a decade, with retail prices now at $600, even $700 for a pack of two. Families generally need two packs for each allergy sufferer (one for home, one to leave at school), and the cost is a huge burden. Some parents reported that they would spend more than $2,000 this year on EpiPens, and this is not a one-time expenditure because EpiPens expire annually.
“It’s gouging parents about their children’s lives. It’s not like letting them sniffle. It’s life or death,” a mom named Naomi Shulman said to the New York Times this week concerning EpiPen prices, speaking on behalf of parents everywhere.
One result of the outrageous state of EpiPen prices is simply that many people haven't been getting EpiPen prescriptions filled—even though it's clearly a life or death issue. They hope that they'll never need to use one, or they hope that their expired devices (you're supposed to get a new one annually) do the trick in a pinch. My family has been buying EpiPens for over a decade now (our 12-year-old has a nut allergy), and our family pediatrician and allergist have both told us they have patients who go without EpiPens because prices are out of hand. This is unsurprising considering what we've paid out of pocket for EpiPens has risen from $0 to $1,300 this year.
Among others, U.S. Sen. Richard Blumenthal (D-CT) demanded this week that Mylan lower the price for the EpiPen, a product "which has not been improved upon in any obvious or significant way" in years. Democratic presidential candidate Hillary Clinton joined the Mylan critics on Wednesday, issuing a statement calling on the company to reduce EpiPen prices because "there is no apparent justification in this case" for the dramatic cost increase to patients. "It’s wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them," Clinton said.
In its announcement on Thursday, Mylan stressed that it is "expanding already existing programs" to help people save and get EpiPens to all those in need. Instead of admitting that the price cut is basically an acknowledgement that EpiPen prices were unreasonable, Mylan CEO Heather Bresch—the daughter of a U.S. Senator who has seen her pay increase nearly 700% (from around $2.5 million to nearly $19 million a year) while EpiPen prices rose over 500%--is implying that Obamacare is to blame.
"We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter," Bresch said in a statement. "As the health insurance environment has evolved, driven by the implementation of the Affordable Care Act, patients and families enrolled in high deductible health insurance plans, who are uninsured, or who pay cash at the pharmacy, have faced higher costs for their medicine."
What's unclear is what the justification was for EpiPen's price hikes in the first place. The profit margin on EpiPens is reportedly extraordinary, with markups easily over 50%. In other countries like Canada, an EpiPen pack sells for under $100, and it's a safe bet Mylan isn't losing money on the sales. In America, the shifting health care landscape hasn't been the cause of Mylan jacking up EpiPen prices, which has been taking place long before Obamacare. It's just that the rise of high-deductible plans has merely shed light that the price hikes have happened. The price increases that used to be borne by insurers (and ultimately, the customers paying the premiums) have more recently fallen directly to the families paying out of pocket for EpiPens.
On CNBC this morning, Bresch pointed to "a broken system" as the culprit for out-of-control drug costs. She failed to mention that the company's quest for higher profits may have been a factor as well.
Mylan has tried to make a case that there are reasons for the EpiPen's price hikes. The company says it has spent millions on anaphylaxis and allergy awareness campaigns, and that it has given away 700,000 EpiPens in 65,000 schools since 2012. Mylan might refer to these efforts as "outreach." However, you might think of them by another term: "marketing." The point of these campaigns, like the millions Mylan has spent annually on advertising and lobbying, is to create an atmosphere in which it can maximize EpiPen sales. Mylan is trying to say that its product's price is so high because the company spends so much money trying to sell it to people.
Mylan also claims that nearly 80% of people with commercial insurance have been paying nothing whatsoever for their EpiPens, thanks to the special savings card mentioned above. This is hard to believe. The card had been limiting one's saving to $100 per EpiPen two-pack. Considering that the retail price of the EpiPen is over $600, and that the average American worker nowadays has a high-deductible health plan that requires him to pay out of pocket before insurance kicks in, it's hard to see how the majority of EpiPen users have been getting them for free. What's more, if most people have been receiving their EpiPens for free, there would be no real reason for Mylan to suddenly feel compelled to expand the discounting program.
(We've reached out several times to Mylan to get clarifications on its claims about people getting EpiPens for free, as well as general comment on its prices and policies, and have gotten no response.)
It's not hard to find examples of the deadly consequences of someone having a severe allergic reaction when an EpiPen isn't handy. But an unknown number of the estimated 43 million American allergy sufferers don't have EpiPens because they cost so much. Hopefully, Mylan's decision to lower EpiPen prices means that more lives can be saved, and hopefully, the move marks a broader trend in the pharmaceutical and health insurance industries.
Some critics aren't remotely impressed with Mylan's price tweak. “This step seems like a PR fix more than a real remedy, masking an exorbitant and callous price hike. This baby step should be followed by actual robust action,” Sen. Blumenthal said in a statement released Thursday. “The only fair and effective relief is a substantial price reduction for everyone who needs access to this life-saving drug, not just a special break for people who are in particular health plans and have the extra hours in their work day to navigate a bureaucratic labyrinth of discounts. I will continue to push for a federal investigation and Congressional action.”
Dying due to an allergic reaction is tragic enough. But dying because Big Pharma and insurance companies are so greedy they make life-saving drugs unaffordable? That's unconscionable.