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.
That is the problem with mail order med suppliers like Express Scripts, they are very well known for Fraud. We got our neighbor’s meds a couple of weeks ago.
As Ret. Military over 65 we are DOD MANDATED to either use the Military base which has a limited # of meds available by size of base, or ES. ES will over ride a doctor’s Dispense as Written Name brand and sub in generics. Not all generics work or have fillers or dyes patients can’t stand. I take name brand Synthyroid which thankfully the Navy base does have, ES would have sent me the generic form I’m allergic to, which has 30% less hormone in it. NEVER give them approval for auto charge to your credit card, always do checks. The take a month to fill a Escript 2 weeks for a refill. I despise having to use them. We use the Navy base for all but 2 of our daily meds. In case of a urgent need we can use a local pharmacy for a 1 time fill drugs like anti-antibiotics. Other wise all daily meds are to be got at the Military base.
And it is NOT HANDICAP FRIENDLY! They just remodeled our Navy Exchange that just needed a new roof, but didn’t touch the Pharmacy end. We now have less to choose from at much higher prices, practically all they carry now are big name brands you have to have a big retirement to pay for. $200 for a Vera Wang wallet.
I had to have a after cataract eye drop co-pay was $50.
And those coupons are not usable for Medicare/Tricare Life, both are earned or pre-paid benefits. Bet it’s the same way for those on state medicaid.
I went to an Urgent Care place for an ear infection. I knew my deductible wasn’t met and I would be paying. I asked how much the visit would cost. They asked if I had insurance. I asked how much the visit would cost. Etc. After some back and forth, they admitted the price of the service depends on what insurance you have and if you have insurance. As it turns out, when I asked how much the service would cost, they may as well have said: “how much you got.” That is just out and out gouging and insurance fraud if you ask me.
In spite of my pain, I went down the road to another clinic at a Krogers. They told me how much a visit with the nurse would cost and then took my card. They also brought my filled prescription to me in the exam room.
Happy to say my ear is much better. Haven’t had an ear infection in a few decades.
I guess I should get some kind of insurance before I get a real big bill of some kind. The medical clinic did give me a 25% discount for paying cash in full the same day. I never got a straight answer at the pharmacy about where that discount came from.
I don’t know if that’s entirely a matter of price gouging at the clinic. If they get paid through an insurer they spend quite a bit of employee time jumping through all the hoops and then wait to get paid. If you pay cash they spend about five minutes employee time on billing and the money is in their account by the next business day if not immediately.
See my post above this one.
Drug companies provide it. They are making record profits off the drugs, and blaming the ins companies for not letting them reduce the prices so they can keep jacking up the premiums.
A lot of patients are locked into REFERRAL only ins plans, and if you have a Primary that is SUCKY and won’t refer you to a specialist you are screwed. I learned a long time ago a Internist is not much better educated than a GP and can’t read test well, especially Endocrinology test or Liver/Kidney. Oh, they can tell you you have an infection, but beyond that they are clueless how to treat you.
You know that mammogram that is supposed to cost only $50 through ins, well I get Medicare/Tricare Life print outs, that test is well over a GRAND. Cost is why Bone Density test were moved to every 2 years, and nerve blocks limited to 3 per year those are close to 3 Grand each last one I had and it failed to work. But the side effects sure worked OT.
Because the government insurance pays.
If you've got the right insurance, of course.
Say something costs a billion dollars. Well naturally, you couldn't afford to buy it. But, if I bought it for you and gave it to you, no problem, right?
In this case the people with the right insurance gets their device, and the rest of us, through Obamacare, pays for it.
The manufacturer gets a nice, big payout for each pen, brought to them by their paid-for politicians. They can afford to payoff politicians because of the profit.
Buying off politicians to pass laws in your favor is one investments you can make in the USA in the 21st Century!
Last sentence should read:
Buying off politicians to pass laws in your favor is one of the BEST investments you can make in the USA in the 21st Century!
So, Mylan is now becoming responsible for keeping unfit people alive
All I can say is; what a mess!
Thanks for all the information :)
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