The price of Epi-pens.....

[GGT]

.....has escalated 400% since '09. Not because 0.3 mg of epinephrine can save a person from anaphylactic shock, but because the pharmaceutical industry is in cahoots with the insurance industry, and they're in bed with legislator/lobbyists.

[Lewkowski]

.....has escalated 400% since '09. Not because 0.3 mg of epinephrine can save a person from anaphylactic shock, but because the pharmaceutical industry is in cahoots with the insurance industry, and they're in bed with legislator/lobbyists.

Thanks Obama.

[RandBlade]

Since 2009 the President has been Obama and he had a major reform of healthcare early on so for once that throw away line looks appropriate.

[Echovirus]

I bet Manchin is happy as hell that he's not up for re-election this year.

[wiggin]

Since 2009 the President has been Obama and he had a major reform of healthcare early on so for once that throw away line looks appropriate.

It's actually very unclear to me how exactly this price hike came to be, and whether it was driven by factors related to PPACA. Mylan has given a somewhat garbled explanation for what's going on (blaming pharmacy benefit managers and insurers in particular) but the numbers don't seem to add up. It's certainly possible this is just a case of price-gouging as has happened in some cases recently. But I think there might be more to it.

Drug pricing is a very opaque process - first, the vast majority of patients aren't really exposed to the 'real' price of drugs due to small or nonexistent copays. Then, even those who don't have insurance often qualify for some sort of government assistance. Third, different methods of acquiring the drugs can have substantially different price tags.

A lot of analysis goes into appropriate drug pricing/positioning in the market, generally with an eye towards maximizing profits. But for some drugs it's kinda made up. Take the recently released cure for Hepatitis C, Epclusa, was priced at an essentially random level. No one really knows what to charge for new classes of treatments - the drugs aren't cheap to develop or make, they often have a limited population that will take them (and only for a limited time), and the benefit is enormous but hard to quantify - it's also not clear how many patients will end up taking the drug at a given price level, or how insurance reimbursements will work. Ditto for some immunotherapies that cure certain cancers and the like. Pricing is essentially a shot in the dark, and the first company to market a new class of drugs for an indication will essentially set the standard everyone else will follow.

I'm not really defending pricing practices - certainly not for the EpiPen - but I'm trying to give you a sense of the complexity and nuances involved here.

[RandBlade]

I understand the high cost on new patented drugs, not old ones.

I thought drug patents last 20 years. Epinephrine/adrenaline is a generic hormone that was isolated over a hundred years ago so both should be available generically and in fact is available as a generic medicine. A vial of epinephrine costs between 10 cents to 95 cents in the developing world, which sounds appropriate for a generic drug like that. I understand that an epi-pen is more than just adrenaline but I don't understand a price hike from <$1 to $600. A more than 60,000% markup for a delivery device seems more than a tad expensive. Why isn't generic competition causing that price to collapse?

EDIT: Looking at it there seems to be about half a dozen rival's to the EpiPen brand in the US with many more outside the US, many of which cost a fraction of the cost. So why moan about one brand's cost, why not just stop purchasing it and purchase a rival cheaper one instead at a fraction of the cost and cause Mylan to cut the cost through competition and not just campaigning?

[Ominous Gamer]

EDIT: Looking at it there seems to be about half a dozen rival's to the EpiPen brand in the US with many more outside the US, many of which cost a fraction of the cost. So why moan about one brand's cost, why not just stop purchasing it and purchase a rival cheaper one instead at a fraction of the cost and cause Mylan to cut the cost through competition and not just campaigning?

This is a stretch of the truth at best. There is almost no competition to the epipen design, and thats the kicker. Thats why they can get away with the price gouging. Mylan is marketing these things in bulk to schools and other various children heavy businesses. Oh, and they also expire after a year. I've had to use an epipen on a kid before and its basic design is what makes it important. Its safe to carry around and no one has to worry about stray syringes or taking the correct dose.

There have been options but they've either been recalled because of poor design and reliability (mylan already sells the epipen in 2 packs because of its shit reliability), unable to get FDA approval, or a previous history of Mylan leaning on insurance companies to not approve alternatives. There is no current "generic" alternative to an epipen so pharamcies' hands are tied without a doctor issuing a second prescription (another level for mylan to lean on). The whole thing is a great case in support of single payer.

Mylan bought the epipen design in 2007 and immediately started jacking the price at least once a year. So Lewk and Rand can go fuck themselves for trying to blame this one on Obama.

[RandBlade]

The EpiPen delivers $1 worth of drug and costs $600. That's fucked up no matter how you look at it. The FDA seems to me to be the culprit here, it can be ridiculously slow sometimes at approving or denying (or requiring changes) to treatments. If the FDA encourages (or tolerates) a situation whereby there is only one option, then don't be surprised if that screws up the market.

A $600 price tag on a generic drug treatment though should be encouraging all drugs companies to create their own generic version of the pen. If the FDA was better then the price could quickly collapse.

[Ominous Gamer]

At least 2 FDA approved alternatives were removed from market because of insurances refusal to cover them. The FDA is hardly the only, or even the major, problem here.

[wiggin]

I understand the high cost on new patented drugs, not old ones.

I thought drug patents last 20 years. Epinephrine/adrenaline is a generic hormone that was isolated over a hundred years ago so both should be available generically and in fact is available as a generic medicine. A vial of epinephrine costs between 10 cents to 95 cents in the developing world, which sounds appropriate for a generic drug like that. I understand that an epi-pen is more than just adrenaline but I don't understand a price hike from <$1 to $600. A more than 60,000% markup for a delivery device seems more than a tad expensive. Why isn't generic competition causing that price to collapse?

EDIT: Looking at it there seems to be about half a dozen rival's to the EpiPen brand in the US with many more outside the US, many of which cost a fraction of the cost. So why moan about one brand's cost, why not just stop purchasing it and purchase a rival cheaper one instead at a fraction of the cost and cause Mylan to cut the cost through competition and not just campaigning?

My wife helps design a lot of autoinjectors for her job, and OG is more or less correct on this one. Epinephrine is not the problem - it's the specific dose, formulation, and most importantly delivery system that has been patented and shepherded through the FDA process. And the design is indeed simple, safe, and intuitive. Companies that design autoinjectors for other applications (of which there are many nowadays given the proliferation of biologics) have to skirt around EpiPen patents, but also run into issues where patients are familiar with the EpiPen design and need to be trained on new designs to use them safely. I do disagree with OG about their reliability - they are sold in 2-packs because during continuing anaphylaxis a second dose should be delivered, not because they're afraid the first pen didn't do the trick.

Anyways, that's beside the point. I wasn't commenting on drugs being expensive because of patents and R&D (though they are); I was commenting on how drug pricing is a complex process and far from transparent, with markups at each stage and wildly different point-of-sale prices across the consumer market. There may be structural reasons for the increase in EpiPen's price; it might simply be greed based on a captive market. But to arbitrarily blame it on PPACA without an understanding of how the price came to be what it is... well, that's spurious.

[Hazir]

My wife helps design a lot of autoinjectors for her job, and OG is more or less correct on this one. Epinephrine is not the problem - it's the specific dose, formulation, and most importantly delivery system that has been patented and shepherded through the FDA process. And the design is indeed simple, safe, and intuitive. Companies that design autoinjectors for other applications (of which there are many nowadays given the proliferation of biologics) have to skirt around EpiPen patents, but also run into issues where patients are familiar with the EpiPen design and need to be trained on new designs to use them safely. I do disagree with OG about their reliability - they are sold in 2-packs because during continuing anaphylaxis a second dose should be delivered, not because they're afraid the first pen didn't do the trick.

Anyways, that's beside the point. I wasn't commenting on drugs being expensive because of patents and R&D (though they are); I was commenting on how drug pricing is a complex process and far from transparent, with markups at each stage and wildly different point-of-sale prices across the consumer market. There may be structural reasons for the increase in EpiPen's price; it might simply be greed based on a captive market. But to arbitrarily blame it on PPACA without an understanding of how the price came to be what it is... well, that's spurious.

The explanation you give might be sufficient to explain why the delivery system is expensive, but it far from is an explanation for the 400% price rise over the last 7 years.

[Flixy]

Normally you'd redirect prices to fall as more and more of the research costs are earned back no? And the more you've produced you'd expect manufacturing costs to drop as well.

[RandBlade]

My wife helps design a lot of autoinjectors for her job, and OG is more or less correct on this one. Epinephrine is not the problem - it's the specific dose, formulation, and most importantly delivery system that has been patented and shepherded through the FDA process. And the design is indeed simple, safe, and intuitive. Companies that design autoinjectors for other applications (of which there are many nowadays given the proliferation of biologics) have to skirt around EpiPen patents, but also run into issues where patients are familiar with the EpiPen design and need to be trained on new designs to use them safely. I do disagree with OG about their reliability - they are sold in 2-packs because during continuing anaphylaxis a second dose should be delivered, not because they're afraid the first pen didn't do the trick.

Anyways, that's beside the point. I wasn't commenting on drugs being expensive because of patents and R&D (though they are); I was commenting on how drug pricing is a complex process and far from transparent, with markups at each stage and wildly different point-of-sale prices across the consumer market. There may be structural reasons for the increase in EpiPen's price; it might simply be greed based on a captive market. But to arbitrarily blame it on PPACA without an understanding of how the price came to be what it is... well, that's spurious.

Reports I've read name alternative EpiPens on the US market that can cost less than a quarter of the price of the brand leader. So yes I appreciate training for proper use is critical but if something like Adrenaclick costs less than a quarter of what EpiPen costs then I'd think the training could be given?

I'm not blaming it on PPACA. I'm blaming it on a broken system that possibly predates PPACA but hasn't been fixed by it.

EpiPen is one of three adrenaline autoinjectors in the UK market it seems, looking at this alternative one the pen itself seems to be pretty clear on how to use it. I don't know if or why this isn't available in the US.

[wiggin]

Normally you'd redirect prices to fall as more and more of the research costs are earned back no? And the more you've produced you'd expect manufacturing costs to drop as well.

That's not really how the drug market works. Prices are kept as high as possible until patent cliffs are reached. In fact I suspect most (non-drug) companies do the same thing - during patent exclusivity, prices are kept high and only dropped once new entrants start competing. They are not in the business of just recouping R&D and capital costs.

Reports I've read name alternative EpiPens on the US market that can cost less than a quarter of the price of the brand leader. So yes I appreciate training for proper use is critical but if something like Adrenaclick costs less than a quarter of what EpiPen costs then I'd think the training could be given?

I'm not blaming it on PPACA. I'm blaming it on a broken system that possibly predates PPACA but hasn't been fixed by it.

EpiPen is one of three adrenaline autoinjectors in the UK market it seems, looking at this alternative one the pen itself seems to be pretty clear on how to use it. I don't know if or why this isn't available in the US.

If you're not blaming PPACA, we don't disagree. I think there's probably some complexity in there that news reports aren't getting, but I also feel like this seems like predatory pricing. Re: other approval, there are any number of reasons why certain drugs/devices do not yet have FDA approval but are approved elsewhere. They range from the very stupid to the quite reasonable.

[Hazir]

And today they anounce an 'identical' non-brand epipen for half the price?

[RandBlade]

Re: other approval, there are any number of reasons why certain drugs/devices do not yet have FDA approval but are approved elsewhere. They range from the very stupid to the quite reasonable.

Something should be done about the "very stupid" were possible.

I can understand what seems like predatory pricing on a new and exotic drug that is in patent that has a cure that wasn't possible in the past. But here adrenaline is not new, autoinjectors are not new, charging $600 for a product that possesses $1 of active ingredient makes it look like something somewhere is seriously broken. If the market was a free market then something new would come in at below $600 when the active agent costs just $1.

My guess is the FDA is broken but this isn't my field of expertise.

[Hazir]

I guess I should have been more specific; the producer of the EpiPen has announced they will start producing a product that is identical to their own EpiPen except for the fact that it won't have brand name at half the price of the branded product. Now, I wonder if anybody is still able to defend that, and if such a person exists why he/she hasn't been institutionalised yet ?

[wiggin]

Something should be done about the "very stupid" were possible.

I can understand what seems like predatory pricing on a new and exotic drug that is in patent that has a cure that wasn't possible in the past. But here adrenaline is not new, autoinjectors are not new, charging $600 for a product that possesses $1 of active ingredient makes it look like something somewhere is seriously broken. If the market was a free market then something new would come in at below $600 when the active agent costs just $1.

My guess is the FDA is broken but this isn't my field of expertise.

This autoinjector is new. It contains concrete improvements over earlier autoinjector technologies, and it substantially better than other available delivery methods for epinephrine. There's a reason it is the market leader - in fact, many autoinjectors being developed now (for a wide variety of drugs) are explicitly using the EpiPen as the gold standard for safety and usability. As I've alluded to before, they are not charging $600 (really, something like $250) for the drug; that is cheap and easy to source. They are charging $600 for the delivery system.

Some more context here: http://seekingalpha.com/article/4002...nalysis?page=2

Of course, when my wife and I bought a pair of EpiPen Jr autoinjectors for our daughter, I think we spent at most a few tens of dollars (I don't remember the exact details). The vast majority of people aren't seeing a $600 sticker price or anything even remotely close to that. Sticker prices have little to do with the actual point of sale price.

I'm again not specifically defending the price point. I'm just suggesting that there's a reason they have a patent on their technology, and a reason why the alternative methods of delivering epinephrine are not popular.


Hazir: it's obvious that they're taking this rather unprecedented move to try to placate the masses. I don't think there's all that much logic to it, but I don't really get the logic of branding with drugs anyways.

[Aimless]

There are some advantages to this strategy, from Mylan's perspective. It allows them to maintain high prescription rates even among more price-sensitive customers while retaining those customers who are not subjected to the full price and who lack strong incentives for asking their doctor to specifically prescribe the generic version. Coupled with the common practice of lowering or countering price-sensitivity on the part of patients through the use of discount coupons this will, I think, be more good than bad from Mylan's perspective.

It would be interesting to see just how many people are directly (as opposed to indirectly ) affected by these shenanigans, and to what extent. Last I heard, around 25% of all workers were on high deductible plans for example.

[Hazir]

There are some advantages to this strategy, from Mylan's perspective. It allows them to maintain high prescription rates even among more price-sensitive customers while retaining those customers who are not subjected to the full price and who lack strong incentives for asking their doctor to specifically prescribe the generic version. Coupled with the common practice of lowering or countering price-sensitivity on the part of patients through the use of discount coupons this will, I think, be more good than bad from Mylan's perspective.

It would be interesting to see just how many people are directly (as opposed to indirectly ) affected by these shenanigans, and to what extent. Last I heard, around 25% of all workers were on high deductible plans for example.

I could understand it if brand and generic were actually different products. But it becomes madness if both products are identical.

[wiggin]

I could understand it if brand and generic were actually different products. But it becomes madness if both products are identical.

Generics are always identical to the brand. That's how they get expedited FDA approval. And it's not uncommon for companies to market an unbranded generic so as not to take away from whatever remaining branding power exists for the original drug (e.g. everyone recognizes, say, lipitor but not so much its generic counterparts). The odd and inexplicable part is doing so while the patent is still in force - there are other ways to keep your customers (with e.g. assistance programs to reduce point of sale costs to price sensitive consumers) that don't dilute the brand.

Essentially, now the smart consumer has no reason to prefer the branded EpiPen over the generic (and insurance companies/etc. can structure incentives similarly) when before only price sensitive (but not all) consumers would go for the assistance programs. It really doesn't make much business sense, but it might make PR sense.

[Aimless]

I could understand it if brand and generic were actually different products. But it becomes madness if both products are identical.

Is it really madness if it makes business sense and is similar to practices in other areas (eg. branded vs unbranded/value-branded foods produced by the same company) or even in the same area (eg. a company selling a brand name drug as well as a generic version of the same drug but through a subsidiary)? I first came across this practice with Orion and I asked one of their more senior reps about why they'd do something so bizarre. His answer: "Ehhhhehehehehe..."

Granted there may be minor differences in the production or quality control, but in practice probably not, or those differences are insignificant due to the thorough evaluation process.

What would be madness is if insurance companies, pharmacies etc don't renegotiate so that they can switch to only covering the generic EpiPens. But I expect many are still contractually bound. If they strike new deals for the generic EpiPens then they'll be stuck with those for a long time, which will inevitably have an impact on the prospects of upcoming competitors that may be entering the market a couple of years from now. So maybe it wouldn't be madness for insurance companies, pharmacies etc to hold off on entering new deals with Mylan.

[Hazir]

Well yes, because this 'business sense' depends on patients demanding the branded article in stead of the unbranded identical article produced by the same producer. I can understand how you instill people with just the amount of uncertainty about the quality of the generic product. But in this case if you have doubts about the effectiveness of the non-branded injector, you would have to have the same doubts about the branded injector for the simple reason that this non-branded injector is identical. Never mention the fact that the agent administered barely is a factor in the whole quality issue at all.

[Aimless]

Afaict the majority of end-users won't have to pay these ridiculous prices anyway (eg. due to discount coupons from Mylan) so for them there isn't as strong a financial incentive to switch. The incentives are stronger for insurance companies, pharmacies, doctors etc but those actors have other constraints and considerations. Obviously there is an indirect financial incentive for end users in the form of higher premiums but the impact of this one product on premiums should be negligible. I don't know what issues people on high deductible plans have to deal with that may make them less inclined to demand a switch to the generic device.

[Flixy]

Something should be done about the "very stupid" were possible.

I can understand what seems like predatory pricing on a new and exotic drug that is in patent that has a cure that wasn't possible in the past. But here adrenaline is not new, autoinjectors are not new, charging $600 for a product that possesses $1 of active ingredient makes it look like something somewhere is seriously broken. If the market was a free market then something new would come in at below $600 when the active agent costs just $1.

My guess is the FDA is broken but this isn't my field of expertise.

FDA isn't particularly broken where it comes to approving medical devices compared to the EU, but it is somewhat different and stricter. But the new EU MDR will be stricter and also require new testing even after making small changes to devices which used to be considered negligible (this could be why more alternatives to epipen are available here), and there is actually good reason for that. The change is coming because of issues with knee implants a while ago (and the breast implants scandal and one more issue I forgot).

[wiggin]

FDA isn't particularly broken where it comes to approving medical devices compared to the EU, but it is somewhat different and stricter. But the new EU MDR will be stricter and also require new testing even after making small changes to devices which used to be considered negligible (this could be why more alternatives to epipen are available here), and there is actually good reason for that. The change is coming because of issues with knee implants a while ago (and the breast implants scandal and one more issue I forgot).

Quite. There is a legitimate argument to be had here about regulatory barriers to entry - essentially the FDA and similar organizations only see upside from being more strict since they only get in trouble if they approve a product that then goes wrong, rather than delaying/preventing products from hitting the market and increasing costs/decreasing efficacy to patients.

That means that even if the FDA et al can always point to a given case when something went wrong to justify a stricter policy, it doesn't always mean they are right. They should be required to explicitly weigh the costs of inaction against the costs in inaccurate action. And to an extent, this is already the case - there are fast-track options for therapies that don't currently have viable alternatives or are not profitable to develop (e.g. orphan diseases, HDEs, etc.), and they do try to weigh these competing priorities. Unfortunately, the incentives are still skewed.

[Flixy]

Not to mention the uncertainty there is now that the MDR will require compliance in x years but is not completely known now (added to the fact that it is also a major overhaul for notified bodies etc. which those bodies will have to comply with, and some may stop their business). But to simply say the FDA is 'broken' because some products are delayed is definitely an oversimplification, especially when you consider that laxer rules very recently lead to three avoidable cases that affected patient health (I can't remember if it actually resulted in deaths or not).

Oh and then we have the issue that our certifying body is based on the UK so who knows what effect the Brexit will have...

Though from what I hear the FDA can be rather arbitrary and extremely disruptive with their audits.

[GGT]

Yeah, something is "broken" alright. Even Mylan's CEO said so in an interview....but she blamed it on our healthcare system in general, and suggested the pharmaceutical industry's middlemen (insurers, pension benefit managers, sales reps, distributors, pharmacies, etc. that account for a certain chunk of pricing/profit margins) are just as responsible for the hideous price hikes as Mylan itself. While it's obvious we have structural problems, and too many profit-seekers slicing the pie, that's no excuse for what boils down to predatory pricing.

What she neglected to mention is that Mylan spent millions of dollars actively lobbying congress, to enact LAWS that require public schools to stock EpiPens (by default their brand, because there's no real alternative, as Ominous outlined). When their latest price hike caused public outrage, they suddenly offered an "authorized generic" at half the cost ("only" $300) even tho their official corporate stance was against that practice for years (yes, Hazir, that doesn't make sense).

And she didn't correlate her 400% increase in salary with the 600% increase in EpiPen pricing. Maybe the board of directors and shareholders felt it was warranted, because they gained nicely along the way?

The FDA has its flaws, for sure, but congress is responsible for legislation, including anti-trust laws. And while congress wanted to look good passing laws that "protect children!", they failed to see how their previous laws -- that prohibit price negotiation by gov't agencies, or prevent getting prescriptions from other low-cost countries -- would actually benefit a monopoly, and hurt people in the long run. I have a guess how this "senate review" will go, and how Mylan's CEO will respond.

So who's really to blame? WE ARE. The consumers, the voters, the US public. We've been losing the expectations game for a long time, in an environment/culture/economy that's been polarized, dysfunctional, and politicized far too long.