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The outrage over Mylan’s price hikes for its EpiPen auto-injector illustrates the many factors that keep drug pricing immune from normal economic pressures, writes Jill Wechsler.
The public outrage over Mylan’s price hikes for its EpiPen epinephrine auto-injector illustrates the many factors that keep prescription drug pricing immune from normal economic pressures, and how brand manufacturers can and will set rates at any level they think the market will bear. Mylan’s actions put the spotlight on how industry mergers and corporate deals can limit competition, and further erode the fiction of any link between high R&D costs and pricing decisions. The EpiPen saga has raised questions about how patent and exclusivity policies support monopoly situations and whether FDA’s regulatory requirements for combination products make it harder to develop alternative treatments, even potentially life-saving therapies.
While generic drugs have long been regarded as a key means for applying market pressure to reduce treatment costs, Mylan’s actions demonstrate the complexities of generating such competition. While the company is a leader in the generic drug industry (with CEO Heather Bresch currently chairman of the Generic Pharmaceutical Association), the firm has aggressively promoted and protected EpiPen as a high-priced brand. Mylan worked to keep competitors at bay, filing a citizens’ petition with FDA in January 2015 that challenged whether a potential injector from Teva could be used in exactly the same way as EpiPen. Although FDA rejected the petition, it did find problems with the Teva candidate and turned down its application earlier this year. And when FDA concerns prompted Sanofi’s recall of its Auvi-Q auto-injector in October 2015, Mylan crowed in a press release that its EpiPen suffered none of its competitor’s problems related to inaccurate dosing.
Mylan’s initial response to the outcry over EpiPen pricing was to blame insurers for shifting individuals to more high-deductible plans and limiting coverage to only one injector package, leaving patients holding the bag for the costly medicine. When that failed to gain traction, Mylan offered higher co-pay coupons to help consumers afford more pens. That only generated more opposition from insurers and pharmacy benefit managers (PBMs) that despise such coupons as a pharma strategy to get patients hooked on more expensive new medicines-and leave health plans bearing higher long-run costs.
So Mylan changed course and announced it would offer an “authorized generic” version of its product at half the price. Bresch explained that the company would keep its costly brand on the market at a list of $600 for a two-injector packet, which maintains that price as the basis for Medicare reimbursement and “best price” calculations. The new generic will cost $300, which is still expensive for families that have to buy several packets a year. It didn’t appease Public Citizen or other public health groups that want to roll the price back to $200 or less, prices available in Canada and Europe.
Brands often roll out authorized generics (AGs) to retain some control of a market while generic competitors move through the FDA regulatory process. Mylan can bring out its generic version quickly, as it doesn’t need regulatory approval. While AGs don’t fully block new generic challengers, they may deter competition. Such actions have caught the attention of the Federal Trade Commission (FTC), which issued a report in 2011 on the role of AGs in shaping, and limiting, generic competition. Brands frequently produce these alternatives during the initial 180-day period when the first generic has market exclusivity and when the brand is more likely to hold some market share. FDA maintains a list of nearly 1000 authorized generics (many no longer marketed), which mirror brand counterparts except for labeling, codes, and trade name. The FTC has been particularly interested in the role of AGs in “pay-for-delay” agreements, where a brand promises not to market an AG as part of a deal for a generic maker to delay market entry.
Meanwhile, five senators have questioned FDA on what could be done to generate more competition in the auto-injector market, as is the case in many European countries. They want FDA to explain steps it can take to alleviate shortages for these products and to ensure fast action on applications for new products in this field. They also ask whether the product could be available over-the-counter.
All these issues will be raised at Congressional hearings in the coming weeks. Prescription drug pricing is a hot topic on the campaign trail, and the EpiPen scandal is escalating calls for a crackdown from both sides of the aisle. The House Committee on Oversight and Government Reform just sent a letter to Mylan’s Bresch demanding documents and data on EpiPen pricing, sales, manufacturing and marketing costs, and profits. It also wants to know about payments for the product by all federal and state health programs.
A week earlier, leaders of the Senate Special Committee on Aging demanded a “special briefing” with Bresch on the rationale for EpiPen pricing and profits. Similarly, members of the Senate Judiciary Committee want the FTC to examine whether Mylan’s pricing and sales practices violate antitrust laws. Bresch’s father, Sen. Joe Mancin of West Virginia, probably will be very quiet on these queries.