What You Need to Know About the EpiPen Controversy

EpiPen
People with severe bee sting allergies may carry an EpiPen to treat anaphylaxis.
The EpiPen is a convenient autoinjector system for administering epinephrine quickly and easily.

It’s designed to inject a pre-measured dose of epinephrine, usually for the treatment of severe allergic reactions known as anaphylaxis. For example, someone with a severe or life-threatening allergy to bee stings might carry an EpiPen during outdoor activities in the event of a sting. Autoinjectors for epinephrine have been around since the 1980s.

If someone experiences anaphylaxis, the EpiPen is used to inject the medication into the person’s thigh muscle. Injections may be repeated if the response to the first injection is insufficient. The epinephrine in autoinjectors expires after a year. Studies have been done in rabbits showing that the medication does not work as well after expiration. However, if the epinephrine in an expired EpiPen has not started to precipitate (produce particles and grow cloudy), it’s better than nothing at all in an emergency situation.

Controversy has gained steam in the news media and on social media in recent weeks because the cost of the EpiPen has gone up by 548% over the past few years. What once cost around $100 now costs $608.61.

Here’s What Happened

Mylan is a generic drug manufacturer that makes the EpiPen, which is a branded product. The “sticker price” of a pair of EpiPens is now just over $600. Mylan CEO Heather Bresch (daughter of a United States senator) responded to the inevitable backlash by saying that if she lowered the price, some people wouldn’t be able to get them anymore. On its face, that statement makes no sense, but in the through-the-looking-glass world of pharmaceutical pricing, it can actually happen that way.

A few days after Mylan began trying to do damage control, it announced it would start selling generic EpiPens at half price alongside the full-price brand-name version. The price of EpiPens started ratcheting upward in 2007, when Mylan bought US marketing rights for the product. At that time, a pair of EpiPens cost around $100. Fearing the advent of generic competitors for the autoinjector technology, Mylan decided it wanted to make as much money as it could before that happened, steadily raising the price to over $600.

Drug Prices Reflect More Than Supply and Demand

Simple logic would say that if EpiPens are priced out of the reach of consumers, demand will drop for them. That’s true to some extent, but the people who need them could die from not having them. In other words, the price of the EpiPen is relatively inelastic, because changes in price don’t have much of an effect on the quantity of the product that people need. But pharmaceutical pricing is determined by far more than simple supply and demand. Forces are at play that the ordinary consumer doesn’t normally have to think about.

The sticker price for a drug is determined through convoluted calculations involving the manufacturer, insurers, pharmacies, Congress, and people known as pharmacy benefit managers. This is convenient because it allows most of these parties to point the finger elsewhere when criticism over drug pricing is leveled. The biggest problem is that the sticker price for drugs was originally intended to be a starting point for negotiations between manufacturers, insurers, and pharmacy benefit managers. Yet for people with high-deductible health insurance, it becomes the actual price if the insured person hasn’t reached his or her annual deductible.

Who Is at Greatest Risk from the Price Hike?

Unfortunately, the people most directly affected by the spike in EpiPen price are often the most financially and medically vulnerable. Even the half-price generic option Mylan is offering is too expensive for many consumers, particularly if they have no insurance, or a high-deductible plan. With high-deductible health insurance, benefits don’t kick in until the insured person has spent thousands of dollars out of their own pockets, and low-income consumers may consume little enough healthcare that they never reach those deductible amounts.

Many of the very people who choose high-deductible plans are not particularly well-suited for them, because they may not have extra money available to cover unexpected costs. But many low-income individuals and families choose high-deductible plans so that the predictable costs of health insurance – the monthly premiums – are more affordable. High deductibles can theoretically keep a lid on unnecessary spending for discretionary healthcare, but EpiPens are hardly discretionary for the people who need them. As a result, some consumers may go without, and the consequences can be fatal.

Blame Mylan, or Pharmacy Benefits Managers?

Mylan CEO Bresch has been quick to point out that Mylan doesn’t keep the whole $608.61 whenever a pair of EpiPens is sold, even though the technology and the drug itself have been around for decades. She blames pharmacy benefit managers, who negotiate discounts on behalf of insurers and employers. Negotiations often include rebates and other incentives, and a drug manufacturer can sometimes raise drug prices, yet see revenues fall because of the money that goes to pharmacy benefit managers.

In other words, pharmacy benefit managers function as gatekeepers to some extent, because they can elect not to include a drug in the formulary, which is a list of drugs covered by insurance. Typical discounts negotiated by pharmacy benefits managers on EpiPens is about $300, and Mylan also pays wholesalers and other fees. The company nets under $300 when a pair of EpiPens is sold at full price.

For their part, pharmacy benefit managers bristled at being accused of basing formulary coverage on what’s in it for them, and benefiting from reduced coverage for EpiPens if their rebates weren’t big enough for their liking. The industry trade group, Pharmaceutical Care Management Association, insisted that pharmacy benefit managers do not have selfish motives when determining rebates from manufacturers.

EpiPen
Prescription drug profits are divided among several parties.
What Steps Have Been Taken?

Mylan has done a couple of things in response to the EpiPen controversy. They increased the value of an EpiPen coupon from $100 to $300, which only actually affects people who have insurance. The question is, how many insured patients know about the coupon program and know how to access the coupons? Savvy pharmacists, who can inform consumers about smartphone apps to access the coupons help somewhat, but they can’t be expected to bear the entire burden of informing the public.

The second thing Mylan did was increase eligibility for their patient assistance program for uninsured people who make up to 400% of the federal poverty level. These people can receive free EpiPens. Before, the patient assistance program was only available to people whose income fell within 200% of the federal poverty level. Forms for accessing the program must be signed by a patient’s physician. This still puts the onus on the patient, who must find out about the program, determine if they’re eligible, and take the steps to take advantage of it, but it’s an improvement nonetheless.

Thanksgiving at Sen. Joe Manchin’s House May Be Awkward

Senator Joe Manchin (D-WV), whose daughter is Heather Bresch, Mylan CEO, has naturally faced some questions as well, in a political climate where outrage over pharmaceutical price hikes is already piqued. The senator issued a statement saying, “I am aware of the questions my colleagues and many parents are asking, and frankly, I share their concerns about the skyrocketing prices of prescription drugs. Today I heard Mylan’s initial response, and I am sure Mylan will have a more comprehensive and formal response to those questions. I look forward to reviewing their response in detail and working with my colleagues and all interested parties to lower the price of prescription drugs and to continue to improve our health care system.” Further Congressional action is possible, but not likely until after November’s presidential election.

eDrugstore.com works with US-licensed pharmacists to bring lifestyle prescription medications to consumers at competitive prices, with convenience that can’t be beat. We also strive to keep our readers informed about healthcare topics that affect them. We encourage you to browse our blog to learn more about prescription drug prices, telemedicine, Medicare, and common health conditions.

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