EpiPen(demonium)

by on Sep 07, 2016

epipen

When thinking about treatments for severe allergic reactions and Asthma attacks, the EpiPen is the standout choice. Now a household name, similar to Kleenex or Advil, the EpiPen is prescribed to over 3.6 million Americans each year and Mylan, the auto-injectors manufacturer, holds a 90% market share of injectable epinephrine devices. Mylan has exploited its market advantage by increasing prices of EpiPens by over 500% in the past eight years, sparking outrage and disbelief among politicians, government officials, users and parents alike. Mylan is not the first company to exploit consumer’s healthcare needs, and while petitions, letters and tweets effectively brought this specific issue into the limelight, more competition is needed in the market of life-saving drugs.

Multiple factors contributed to the increased price of EpiPens, especially the lack of alternatives. This year, the FDA recalled Auvi-Q, a non-generic version, and did not approve another generic version. Consumers depend on generics to drive drug prices down, and without the competition of other suppliers, Mylan had the opportunity to exponentially increase prices. The FDA does not regulate pharmaceutical drug prices, so when monopoly market advantages occur, there are no regulations in place to prevent price gouging. We have seen examples of this throughout the healthcare industry, recently with large health plan mergers sparking debate over competition, and whether or not they might lead to an increase in patient costs.

Heather Bresch, the Mylan CEO, was quick to place responsibility on the healthcare system, suggesting rising insurance premiums are to blame for the increased prices in a recent press release. Consumers with high deductibles likely face the largest out-of-pocket prices for the EpiPen. However, in direct response to the pricing backlash, Mylan quickly offered a $300 savings card and began the rollout process for a generic that will retail for half the price of the EpiPen. This immediate response suggests that Mylan always had the ability to lower prices, but was simply hoping to turn a large profit before another generic entered the market.

This tactic did not bode well for Mylan; its stock price has been in continual decline over the past few weeks, and suffered a 5% plummet in one day. Yet, Mylan’s response is a success story for consumers and public figures that pushed for a change, and should serve as a reminder that corporations do not always have complete price leverage. Public voices are often very effective in spurring change across different industries. The EpiPen controversy exposed the need for innovation and competition in the American healthcare system; without consumer interest regulation, patients and their families end up being those most affected by monopolized systems.

About The Author

Laura is a Senior Research Associate for e-Monitor and Broker Monitor at Corporate Insight. Read more