Posted on 08/25/2016 11:26:30 AM PDT by amorphous
There’s a new bout of outrage over an expensive medicine or medical treatment. While the good in question changes each time, the blame always seems to fall on greedy corporations who just aren’t regulated enough. Free markets and capitalism are the scapegoat, even when nothing remotely resembling unhampered markets in health care is in place in the United States.
This time, it’s the EpiPen, a device that easily and safely injects epinephrine to quickly open up airways for people undergoing severe anaphylaxis because of an extreme allergy. It has saved the lives of countless people who are allergic to bee stings, certain foods, or other drugs because it can be administered on the spot by somebody without any medical training.
EpiPen is sold by Mylan, and the price for a pack of two has increased from about $100 in 2007 to over $600 as of May 2016. Mylan has tried to quell the storm by pointing out that many of their customers pay nothing for the drug because of insurance. Their deflection has been unsuccessful.
The economist looks for competitors in cases like this. A firm cannot just willy-nilly raise their prices without a competing firm leaping in to give consumers what they want at a lower price. As it turns out, Mylan has a great friend who keeps would-be competitors out of the market, or at least makes it so difficult for them that they eventually go out of business. That friend is the FDA.
With the FDA, patents, and cozy insurance relationships, Mylan has been able to steadily increase the price of EpiPens without significant market repercussions. Though, the current backlash may push many patients and doctors to look for alternatives. The only problem is that alternatives are few and far between because of government interventions.
Epinephrine is extremely cheap—just a few cents per dose. The complications come from producing the easy auto-injecting devices. Mylan “owns” their auto-injector device design, so competitors must find work-arounds in their devices to deliver the epinephrine into the patient’s body. This task, coupled with the tangled mess of FDA red tape, has proven to be difficult for would-be EpiPen competitors. It’s like expecting somebody to come up with a new way to play baseball without bases, balls, gloves, or bats, but still getting the game approved by the MLB as a baseball game substitute.
A French pharmaceutical company offered an electronic device that actually talks people through the steps of administering the drug, but it was recalled because of concerns about it delivering the required dose. Just this year, Teva Pharmaceutical’s attempt at bringing a generic epinephrine injector to market in the US was blocked by the FDA. Adrenaclick and Twinject were unable to get insurance companies on board and so discontinued their injectors in 2012.
Adrenaclick has since come back, but it is still not covered by many insurance plans, and the FDA has made it illegal for pharmacies to substitute Adrenaclick as a generic alternative to EpiPen. Another company tried to sidestep the whole auto-injector patent barrier by offering prefilled syringes, but the FDA has stalled them, too.
Mylan has been repeatedly protected from competition, and it has repeatedly (and predictably) increased the price of EpiPens in response. Allowing all of these companies to compete in producing epinephrine auto-injectors would be the best course for all of the many patients who want a cheaper solution for severe allergic reactions.
One thing is for sure: capitalism is not to blame. Government regulations have choked this market and many others. What we need is a big dose of freedom.
Note: An earlier version cited the original 1977 patent for the EpiPen. While it has expired, since 1977 EpiPen producers have been able to secure multiple patents for other aspects and variations of the design and small parts associated with the design. A link to one of these patents has replaced the original link to the 1977 patent, above.
Jonathan Newman is a recent graduate of Auburn University and a Mises Institute Fellow.
Once again, the government creates a problem that only they can provide a solution to.
How many EPI-PENS could have been given to poor people for the $250,000.00 that she gave to the Clinton Crime Family Slush Fund????
Anyone that pays anything for insurance pays for it.
So why can't someone manufacture an auto-injector using the old design with the expired patent? That should only cost about $50 out-of-pocket.
The corporation is the one raising the price not the FDA. The problem is not the lack of competition but the disparity in negotiating power. Let every libertarian go to the corporation and say I want to negotiate the contract of sale for your product. The B*stards running the drug companies are screaming “Regulate my Prices, I can’t control myself!”
There is a similar article on today’s WSJ opinion page.
Instead of government discouraging monopolies by enforcing Anti-Trust laws, they now openly embrace monopolies.
The CEO of the company that owns EpiPen is the daughter of a US Senator! Surprise! And FedGov just mandated that schools MUST have these on hand.
So we have FedGov killing competition, mandating sale, and allowing price hikes.
And we STILL won’t vote these people out.
Corruption is out of control. Follow it and one always finds a path to the Clinton Foundation.
The conductor of this symphony is Obamacare.
I could smell this back-of-the-story from miles away. No one could introduce these kinds of increases unless they were an approved monopoly. The old concept of the “Peter Principal” also applies as the price kept increasing until the screams were no longer able to be kept quiet.
That was my thought as well. (the old design thing.)
I declare a fatwa on Joe Manchin and his daughter and indeed anyone on the board of that company.
The “old” design of the epi pen is obsolete.
These injectors are driven by springs and plastic parts.
Older designs had springs that did not always deliver the required force to make the plunger move inside the syringe cartridge inside the injector.
Auto-injectors function because the spring energy expels the contents of the syringe into the body.
The FDA has imposed tighter and tighter regulations on “combination” products that combine an injectable product with a device that allows delivery of the drug.
These combination rules require the creation and maintenance of “Device Design and History Controls” that provide documented evidence of validation for the product.
I have been in Pharma for almost 40 years and regulations just get harder and harder to achieve. The amount of $$$ that we in Pharma spend to meet FDA and other world regulatory rules is often prohibitive. If a company cannot absorb the cost, the pass it on in the piece price of the unit.
Finally, the reimbursement schedules for devices is another regulatory maze that prohibits competition as most companies will stop making the product instead of putting millions of $ into an old product.
END
G
“I have been in Pharma for almost 40 years and regulations just get harder and harder to achieve.”
I know nothing about pharma :-). Absolutely nothing :-).
Is there some kind of minimum velocity a medication must enter the body (i.e. mL/seconds)?
If not, I can’t see why a micro-electromechanical delivery system can’t do the job (I’m an EE). There are lots of different technologies out there (check out MEMS if you are curious) where, under a simple microprocessor’s control, deliver the medication. It’d probably be cheap enough to put redundant MEMS systems in the pen given the task of the pen and it’s life saving properties.
The only drawback is that it might not deliver the medication at a fast enough rate into the body (though that can be addressed).
What’s slick about MEMS is that you can integrate the digital control onto the same die as the mechanical system. This translates into a huge cost savings manufacturing the control system. Moreover, they’re a heck of a lot more reliable.
I’d have to dig into the problem more, but I can’t see, offhand anyway, why this medication can’t be delivered electromechanically in a simple pen form.
The military has been using auto-injectors for decades for things like atropine. If it’s good enough for them it should be good enough for civilians.
I think the Israelis make an auto-injector that was submitted to the FDA for approval. I wonder what’s happening with that?
I don’t have time to read the article, but the design of this epipen has not changed in a long time. They used to be available for $75 no insurance. The last time I went to refill one, it was going to be $230 out of pocket after the insurance discount for a pair of them.
I purchased empty syringes, needles, and epinephrine in sterile vials for around $25 per setup, and these babies pack around 2ml of medicine, enough for spills, and multiple 0.3ml rounds of injections as needed.
Who needs a spring?
And 2-Pam Chloride auto injectors. :)
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