The Price of EpiPen

When Mylan raised the price of its EpiPen, a device used to provide emergency epinephrine to stop potentially fatal allergic reactions, by $100, it was something of a mystery. No reason was given; not rising costs of production, nor any dramatic improvement in the product.

Millions of Americans who depend on EpiPen wondered what happened. Now members of Congress are also wondering. To satisfy their curiosity, they are calling for a formal investigation.

Of course, it didn’t take anybody long to suspect the obvious: that Mylan has been unscrupulously taking advantage of a vital medical need to make as big a buck as it possibly can.

The medication itself doesn’t cost much, about $1 for the dosage contained in a single pen. Mylan charges primarily for its patented pen injector. The nearest competitor, a cheaper generic version called Adrenaclick (selling for as little as $142, as opposed to the current $600 to $700 for EpiPens), has the disadvantage of a less familiar method of injection. Doctors, nurses and patients have come to rely on the EpiPens, which have proved themselves in emergency situations.

The price did not jump all at once; it came in increments. In 2008 and 2009, Mylan raised the price by 5 percent. At the end of 2009 there was a 19 percent hike. The years 2010-2013 saw a series of 10 percent price hikes. Then, from the fourth quarter of 2013 to the second quarter of 2016, Mylan, seeing it was on the right track, kept on raising EpiPen prices 15 percent every other quarter.

Mylan will somehow have to justify that steep vertical graph. Otherwise, it looks like each increase was implemented to test the waters, to see if consumers would tolerate it, before daring to implement the next price hike.

The company appears to have been banking on a kind of appeasement policy in the marketplace, people paying more each year, each quarter, and hoping it will be the last price change, at least for a while. But by allowing itself to be bullied by Big Pharm, the public only emboldened the drugmaker to become more aggressive in its gouging.

Any lingering doubts we might have had about whether the price jump was an outright profit grab or a legitimate increase were dispelled by the revelation that Mylan executive salaries have also seen what NBC News called “a stratospheric uptick” during the same period EpiPen prices went up. For example, CEO Heather Bresch’s total compensation rose majestically from $2,453,456 to $18,931,068, a 671 percent increase, while the average wholesale price climbed from $56.64 to $317.82, a 461 percent increase.

Of course, this could be a coincidence, but we prefer to let Bresch and her lawyers do the explaining.

If our tone sounds cynical, maybe that’s because the CEO’s record is clouded by a previous scandal. NBC News reported this week that a 2008 inquiry found Bresch didn’t complete the coursework for her MBA granted by West Virginia University. The school had received a $20 million donation from Mylan chairman Milan Puskar in 2003. Several of the university administrators resigned in the aftermath, including president Mike Garrison.

EpiPen is not the only Mylan product at issue. Eyegrabbing price increases were noted by Wells Fargo senior analyst David Maris, who wrote in a report in June that “Mylan has raised the prices more than 20 percent on 24 products, and more than 100 percent on seven products.”

On Maris’s list were ursodiol, a generic remedy for gallstones, up 542 percent, metoclopramide, used to treat GERD, or gastroesophageal reflux disease, up 444 percent, and dicyclomine, a drug used to treat irritable bowel syndrome, up 400 percent.

So far, Mylan has responded with a cloying pronouncement about how they are “proud of the programs which we have implemented over the past years to help support access to treatment,” referring to savings cards and assistance programs.

“With changes in the healthcare insurance landscape, an increasing number of people and families are enrolled in high deductible health plans, and deductible amounts continue to rise. This shift has presented new challenges for consumers, and they are bearing more of the cost. This change to the industry is not an easy challenge to address, but we recognize the need and are committed to working with customers and payors to find solutions to meet the needs of the patients and families we serve,” the company said.

These pieties did not deter Senator Amy Klobuchar (D-Minn.), ranking member of the Senate antitrust subcommittee, from calling for investigations by the Senate Judiciary Committee and the Federal Trade Commission.

We eagerly await the testimony from Bresch and her colleagues.