Posted on 09/01/2016 11:53:56 AM PDT by wtd
Amid a firestorm of controversy over price hikes on lifesaving EpiPens, drug manufacturer Mylan made a dramatic and unusual move this week – it announced the launch of a lower cost generic replica of its brand-name epinephrine auto-injector.
Mylan has been under relentless pressure over the pricing of its EpiPen epineprhine auto-injectors since it surfaced that the list price for a set of two devices reached $609 in May 2016, an increase of more than 500 percent from 2008. To alleviate widespread sticker shock at pharmacy counters, Mylan CEO Heather Bresch’s initial response was to announce a discount savings card of $300 on Aug. 25, which tripled the value of an existing $100 savings card.
But politicians with drug pricing on their radar weren’t placated, contending that this wasn’t adequate relief, especially for families whose children need to carry the devices in case of an anaphylactic emergency. In an attempt to quell the firestorm of controversy, five days later Mylan announced the generic version of the EpiPen – which will have different labeling on the identical device for half the price.
Yet with protests at Mylan headquarters, social media outrage and petitions signed by hundreds of thousands of Americans, the EpiPen controversy isn’t going to be quickly resolved. Allergic Living delves into the key issues involved. The Brand vs. Generic Price Issue
Critics of Mylan’s EpiPen price increases have been asking: Rather than introduce a generic, why doesn’t Mylan just cut the price of the EpiPen two-pack?
Ronny Gal, an investment analyst with Sanford C. Bernstein who specializes in the pharmaceutical sector, explains that while Mylan could roll back its price, it’s hard to say how that would affect the costs that insurance companies pass along to consumers. He and other industry watchers have said that pharmacy benefits managers (PBMs) and their insurer clients ultimately set the charges to consumers through their co-pays and the size of deductibles in the insurance plans.
Gal’s view is that PBMs and insurers, who reimburse pharmacy drug charges, were none too pleased to see Mylan take two sizeable price increases within the past year (which he estimates as a 27 percent net increase for the company). With respect to EpiPens, “the payers got mad and raised the pain level on patients – raising copays and toughening medical policies, Gal wrote to Bernstein’s investment clients.
He explained the process to Allergic Living: when a drug price goes up, the PBM can decide whether to absorb all of the price difference, transfer some of it to the patient, or not absorb the increase at all and transfer it fully to the patient. “In this case, the employer [the insurer] seems to have said, ‘Well if you’re going to be nasty and raise prices so much, we’re not going to absorb this,’ ” Gal said in an interview.
In addition, some consumers have opted for lower-premium insurance plans, which require them to meet higher deductible levels before coverage kicks in. In such cases, they were hit with the cost of $609 per two-pack or more – since families often have an EpiPen set for school or work while the allergic person also carries a set. As back-to-school season hit and parents showed up to refill annual auto-injector prescriptions – there was a lot of shock at the pharmacy counter, and a price backlash was born.
Mylan CEO Heather Bresch contended in an Aug. 25 CNBC interview that large rebates to PBMs and, to a lesser extent, fees to distributors and pharmacies, meant she couldn’t control the ultimate price charged to consumers. Gal’s view is that “Mylan is right, partially, in saying that a lot of people along the way make money, it’s not just us.” However, he is quick to add that the company still bears the brunt of responsibility: “Mylan did increase its revenue per unit at least two times in one year.”
David Maris, a Wells Fargo senior analyst who predicted in June that some of Mylan’s drug price increases could attract “headline risk,” took greater issue with Bresch’s stance on the role of middlemen. “It’s a real challenge to understand how a management team sits around a board table and makes a decision to raise the price of a lifesaving medication over and over and over, and when the P.R. storm hits, decides to blame someone else for that price increase,” Maris told The New York Times.
Will Mylan’s actions in relation to pricing calm the backlash?
Gal thinks while negative headlines will persist, the company will get some marks from consumers and insurers for the generic’s introduction. In a note to investors, he and his Bernstein colleagues wrote that the PBMs and insurers set the costs paid by patients through deductibles and co-pays, and that these commonly differ between brands and generics. Thus, his team said: “there will be some automatic reduction of cost to patients from availability of generics; some payers [PBMs] may respond by alleviating medical policies; retailers selling the generics to self-pay patients could not charge much more than $300 (at the current environment), helping alleviate that cost.”
However, Mylan’s solution to provide a half-price generic certainly has not quelled politicians’ criticisms of the spike in the price of the EpiPen. In fact, the House Oversight Committee is now asking Mylan for numerous documents related to sales, pricing and profits on the branded device, while a group of 20 Democrat senators have requested similar specifics. The political pressure has just begun.
“Mylan may appear to be moving in the right direction, but its [generic device] announcement raises as many questions as solutions – including why the price is still astronomically high, and whether its action is a preemptive strike against a competing generic,” said Sen. Richard Blumenthal (D-Conn.).
Where is the competition for patients who must carry epinephrine?
As Blumenthal indicates, there is now a lot of discussion of the lack of competition and how the EpiPen price rose sharply in a monopoly environment after Sanofi withrew the Auvi-Q auto-injector from the marketplace in October 2015. (This followed reports of potential issues with the dosage delivered by the Auvi-Q.)
A health policy analyst at the non-profit Kaiser Family Foundation also suggests that “the introduction of a lower-priced generic version may keep competitors out of the market.”
But Gal sees the entire situation increasing pressure on the FDA to move quickly to approve a epinephrine product competitor. “One thing I would expect to happen here is that anything to do with epinephrine moves to the top of the pile” in terms of application reviews, he told Allergic Living. “I think that’s going to happen.”
An auto-injector from Teva Pharmaceuticals had been expected for early 2017, but the regulator rejected the application, citing “major deficiencies.” Similarly, the agency also turned down an application for a pre-filled epinephrine syringe from Adamis Pharmaceuticals. Both companies have indicated they will resubmit approval applications.
As well, the rights for the Auvi-Q now reside with its inventors at Kaléo Pharmaceuticals, where officials indicate they plan to return the Auvi-Q to market. The smaller device was voluntarily recalled in the fall of 2015, so it remains approved. Regarding the timing of re-entry, a Kaléo spokesperson would only say: “We are monitoring the conversation and situation very closely.”
The food allergy not-for-profit FARE (Food Allergy Research & Education), says competition is definitely something the allergy community wants, and that the organization has been encouraging. “The Auvi-Q could be the soonest one because it won’t require FDA regulatory activities,” says Dr. James Baker, FARE’s CEO. “I think both Teva and Adamis are coming back in.”
He says another possibility is the entrance of the Emerade auto-injector, which is well-known in Europe. “I think we really need five or six products in the marketplace before competition will work effectively,” said Baker, an allergist who was formerly the CEO of a biotechnology firm and is familiar with the process of bringing drugs to market.
Drug pricing in the U.S., the issue that lacks transparency
In the U.S. pharmaceuticals market, we’ve seen egregious examples of Valeant and Turing Pharmaceuticals price surges – with a 5,000 percent increase on Turing’s drug to combat rare infections.
But there have also been big increases more in keeping with the EpiPen’s steady price hikes. For instance, one study found that the average multiple sclerosis patient was charged $60,000 a year for drugs in 2013, about a 600 percent increase in a decade. A Bloomberg investigation in June showed that, 30 of 39 medicines, recorded price increases more than double the rate of inflation over seven years. Cancer and rheumatoid arthritis medicines are among those with eye-widening price tags.
Industry analysts, including Ronny Gal, think the steady rise in price for insulin, which diabetics need daily, will also soon invite political and headline attention.
In this epidemic of price hikes, manufacturers (including Mylan) argue that it isn’t just them taking more money. The pharmacy benefit management groups, which negotiate better drug prices for insurers and employer clients, take rebates – and the drug companies contend they increasingly want a bigger cut. A Tufts University analysis released in May found that rebates paid to the PBMs play a key role in determining which drugs are offered to patients (when there is competition).
But none of these price negotiations are openly discussed. The PBMs say the price spikes in cases such as the EpiPen shouldn’t be turned into an insurance coverage issue. And while nobody is about to let the pharma makers off the hook for their big increases, clearly this whole system – with prices negotiated in a cloak of secrecy – needs fixing.
In the midst of the EpiPen furor, Forbes columnist Matthew Herper recently published a compelling column about fixing America’s drug pricing mess. As an experienced pharma watcher, he makes the case for drug pricing transparency, the FDA to get cracking on allowing competition in the epinephrine auto-injector market and for price hikes in general to be tied to genuine innovation.
These are excellent points to raise. Especially so for those of us or our children who must rely on not just always carrying – but also affording – a lifesaving medication like epinephrine.
“Mylan may appear to be moving in the right direction, but its [generic device] announcement raises as many questions as solutions – including why the price is still astronomically high, and whether its action is a preemptive strike against a competing generic,” said Sen. Richard Blumenthal (D-Conn.). Where is the competition for patients who must carry epinephrine?
As Blumenthal indicates, there is now a lot of discussion of the lack of competition and how the EpiPen price rose sharply in a monopoly environment after Sanofi withrew the Auvi-Q auto-injector from the marketplace in October 2015. (This followed reports of potential issues with the dosage delivered by the Auvi-Q.)
I have yet to see any of the "reports" of "potential" issues with the dosage delivered by the far superior & convenient (albeit recalled) device called Auvi-Q.
*****
I also found this earlier quote most telling and agreeable:
"“It’s a real challenge to understand how a management team sits around a board table and makes a decision to raise the price of a lifesaving medication over and over and over, and when the P.R. storm hits, decides to blame someone else for that price increase,” Maris told The New York Times."
*****
I was one of the consumers suddenly blindsided with the sudden price increase for the EpiPen two pack. Back in September 2015, I received an e-mail notice that my Auvi-Q's were being recalled and required immediate replacement due to concerns about "potential dosage" accuracy.
No one wants to risk having a faulty medical device when needed, so off I went to the pharmacy to ask for replacement. Apparently I was one of the first to bring this issue to my pharmacist because they were NOT aware of the recall at that time. Then, I was informed that the Auvi-Q was no longer going to be offered. Secondly, I could not simply request a replacement at the pharmacy counter. I had to make an appointment with my children's physician to acquire a new prescription.
I followed up by calling my pediatrician who thankfully opted to call in the Rx for me.
At the checkout counter, I handed my insurance card to the clerk and was informed that my insurance wasn't covering the cost of the replacement - and the bill came to almost $2,000 because I requested three sets of EpiPens as I always have. I keep one set for each of two allergic children on my person. I provided one set for the elementary/middle school nurse because the elementary/middle school aged students were prohibited from carrying their own. I provided another set for my high school student. I also provided one set each for their sports coaches to carry during away trips. With insurance the cost was manageable - prior to 2015. Not after.
Reading that Mylan will offer a generic for half the price of the EpiPen is adding insult to injury. The prescribed EpiPen units cost $57 in 2007.
The cost of the actual drug, "epinephrine" doesn't appear to have gone up recently either. See Animart continues to sell 50mL bottle for $23.89 Now, unless the epinephrine for veterinary use is different from medical use on children - the insane rapid and escalating price increase of epinephrine is not yet explained to the slightest extent...even with the recent addition of the ACA initiated medical device tax which adds only about $5 per unit.
Also, no mention is made of other options such as:
*****
As an aside, let me mention another coincidence'...
Since two of my children required access to EpiPens/Auvi-Q auto-injectors over the years due to severe allergies (nuts, peanuts, shellfish, seafood, penicillin, sulfa), we also had to have immediate access to Benadryl and were instructed to provide & administer the Benadryl first, EpiPen/AuviQ next and call 911.
One of the most convenient ways to carry/store the Benadryl was also pulled from the market about the same time...
Too many coincidences, if you ask me
How about a 3.5 gram tube of eye ointment that costs $230?
With a $50 discount.
It’s gouging.
Let’s call it what it is.
I'd like to know more specifically the actual expiration date of epinephrine because NONE of the expired units in my possession are clouded - going back as far as 2000. As expensive as these meds have become, I hesitate to discard them.
I heard someone on radio discussing a 2-step or dual injection type of device. As I don’t need the pens, I did not pay that close of attention, but now I wish I had..
Have you heard of any alternative types of pens?
Senate lobbying records show that Mylan spent more than $2 million on Washington lobbying in 2015. In addition, the company’s political action committee has distributed more than $79,500 in contributions for the 2016 election cycle, according to campaign-finance records available at OpenSecrets.org.
The lobbying disclosure forms tell a remarkably bipartisan story. Mylan paid $40,000 to hire Scott Evertz, who had been director of AIDS policy in the George W. Bush administration. It paid $70,000 to the Glover Park Group; that bought the services of Joel Johnson, who is a former senior aide to President Bill Clinton, and of Gregg Rothschild, who had been chief counsel to Democratic Rep. John Dingell, longtime chairman of the House Commerce Committee.
And Mylan paid $240,000 to a firm called West Front Strategies, whose partners include Malloy McDaniel, a former policy adviser to Senate Republican leader Mitch McConnell.
The Mylan political action committee gave $7,500 to Sen. Chuck Schumer’s campaign for the 2016 cycle and $3,500 in the 2010 cycle, according to the Open Secrets records.
Mylan’s CEO, Heather Bresch, is the daughter of a Democratic US senator from West Virginia Joe Manchin.
When she recently spoke with The New York Times, she listed among her top accomplishments the passage of a federal law, the Generic Drug User Fee Amendments of 2012, requiring increased inspections of overseas drug manufacturers.
Mylan also donated to the Clinton Foundation.
Democratic presidential nominee Hillary Clinton issued a statement “calling on Mylan to immediately reduce the price of EpiPens.”
“Gal’s view is that “Mylan is right, partially, in saying that a lot of people along the way make money, it’s not just us.” “
Yeah, “a lot of people along the way make money.” That’s the whole problem with Medical Care, “middlemen” are skimming billions of dollars for doing little or nothing and that includes the insurance companies. The “distribution chain” needs to be seriously shortened. Unless that’s done, no amount of government intervention will fix the problem.
When this country finally goes Socialist these bozos will only have themselves to blame.
Learn to give an injection with a hypodermic needle and you can get a vial of epinephrine and a hypodermic needle for $6.
It’s been a while but I had a $5 deductible and got a prescription to treat conjunctivitis. It was $4.99 for the generic tube.
Couldn't a person take along some Z-Quil, which is simply liquid benadryl (diphenhedramine)?
First, I wish to express my sympathy and prayers for the allergies that your children face. That kind of situation must be a real bear to tolerate.
My second thought is how much this appears to be affected by ‘crony capitalism’ in both the industry and government. A prior approved device from a competitor is ‘withdrawn’ for potential dosage issues? If not actual issues, then why not re-engineer? Mylan has certainly benefitted from the monopoly abetted by the FDA!
Third, and only because of the current heated political atmosphere, I am so happy that the only prominent ‘blame person’ is associated with the ‘D’ camp. Imagine if one of the Trump kids were involved or someone of similar ‘R’ prominence. Regardless of the facts, notice how only light mention of Mylan CEO Heather Bresch’s filial relationship to ‘D’ Senator Joe Manchion is made? Would be considerably different in the opposite case!
This is what socialism does. All the competition was denied approvals. This is purely on the Democrats and the corrupt Clinton Foundation. This is what a bribe looks like. This is what illegal protection from competition looks like.
bushone wrote: "I heard someone on radio discussing a 2-step or dual injection type of device. As I don’t need the pens, I did not pay that close of attention, but now I wish I had..Have you heard of any alternative types of pens?
One two-step device involves a tip on the opposite end of the needle being pulled up and turned clockwise to release the plunger to the second dose.
Not sure if this is the same one you mention. Personally, I would prefer to see the sublingual tablet delivery system brought to market if it is as reliable as the injectors. The tablets are far more convenient for storage/portability in size and "stability of product" than the injectables.
The recalled AuviQ was superior to the EpiPen because of its shape and size and the fact that it talked you through the process as you needed it. AuviQ demo illustrates that it is about as idiot-proof as it comes.
Let me remind everyone that this is but another example of an artificially created monopoly as a consequence of Federal government interference with the market.
They won't approve other manufactures designs of the Epipen.
It makes you think there is Crony Capitalist collusion going on between the company that owns this and the FedGov.
If the regulations aren't protecting the public, then they need to get fixed or eliminated.
How about Concordia Donnatal used to sell $7.00 8oz. Now $2,800 8 oz.
Or now no Qvar for Medicare rx. Just Flovent found by Harvard not to be as effective as Qvar.
Pure Greed and cruelty marching along with Government approval.
Dr. Sivana wrote: " as well as Primatene Mist inhalers (another quick absorbing delivery of Epinephrine.Those used to be over the counter. I don't think you can get them any more (global warming).
Seems to be the same as price gouging (mentioned above in comment #3 by Lurkinanloomin)
Unfortunately I have iritis and the first Rx, a 10ml bottle of drops, was $55 after the $50 discount. No deductibles for me as I don’t have insurance. The inflammation was not cleared up as expected so the ointment was prescribed. I looked it up, the patent on the ointment expires Jan. 29, 2017.
If only my eye had waited six months to go haywire!
If my problem were conjunctivitis I would have dealt with it with an herb wash of my own making.
Thank you Liz - very informative.
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