Mylan N.V. has put itself in a curious position: It will soon sell a generic version of its epinephrine drug dispenser that will compete against its higher-priced but identical brand-name EpiPen.
Mylan, a Dutch firm with U.S. headquarters in Pennsylvania, is the latest company to be tripped up by the corporatism driving drug pricing in recent years. A decade ago, when Mylan acquired the EpiPen line, a single unit retailed for about $50. But the EpiPen, which is now sold in packs of two, currently retails for more than $600. This had forced some ambulance companies to give up carrying EpiPens and instead rely on syringes of adrenaline, which are much more difficult to deliver and could lead to the kinds of medical complications that drive up medical costs.
Epinephrine was first isolated more than a century ago. Given the means of production and distribution for the product has been in place for decades, the wholesale cost in countries like the Dominican Republic is as little as 10 cents a vial. A small bag of M&Ms costs multiples more than that.
But Mylan is among the many drug companies that have jumped on the bandwagon of jacking up prices with little relation to production costs or market forces. The most controversial has been Turing Pharmaceuticals and its former Chief Executive Officer Martin Shkreli, requiring an intervention by Express Scripts, but it is hardly the only one.
Mylan's biggest misstep has been the optics of EpiPens: Many are used by children with severe allergies. If it began pricing families out of the EpiPens and kids started dying needlessly, it would have been an unparalleled PR disaster. The company was already being pressured by parents through social media, which led to Congress receiving more than 120,000 letters of complaint, according to The New York Times.
So, Mylan had to decide if its highly public exposure of its “money-or-your-life” pricing practices was worth the loss of the public goodwill. That led in turn to the company's recent announcement it would soon introduce a “generic” version of its own product, priced at $300--still triple the per-unit price of less than a decade ago. Any guesses on which EpiPen pricepoint will be more popular?
Mylan's EpiPen schizophrenia is due in part to the American notion of never fully admitting a mistake. It could have simply rolled back prices and admitted an error, but no doubt its shareholders would have objected.
As to the skyrocketing prices? The Affordable Care Act, which has insured about 20 million more Americans in the past couple of years, has probably created the presumption that the margin for such fiscal conduct has been widened. A recently published study by researchers at Washington State University suggested that the ACA has helped make drugs more affordable for many Americans, even as their prices have increased.
The debate regarding the business practices of Mylan and other healthcare companies only hints at the fact that some moral line has been crossed with patients. Our healthcare system is mostly for-profit, so a profit should be made. But that should be tempered with a moral responsibility of keeping patients as healthy as possible while not placing them in a financially desperate situation. That has yet to be discussed. It should, sooner rather than later. – Ron (@FierceHealth)