The soaring cost of EpiPens is the latest in a long run of wildly increased costs of prescription drugs that are unaffordable to many, such as Turing's Daraprim for toxoplasmosis (5,000 percent overnight price increase) and Gilead's Sovaldi for hepatitis C ($84,000 for a 12-week treatment). These greedy grabs by their manufacturers create public anger and even congressional inquiries, but the corporate system of price escalations grinds on without relief on the horizon as Big PhRMA and its lobbyists continue to prevail. (1)
Mylan's EpiPen story is a classic poster child for continued corporate greed that knows no bounds. Its EpiPen 2-Pak contains epinephrine with an easy-to-use auto-injector. It is a life-saving treatment for severe allergic reactions such as anaphylaxis in both children and adults. Since EpiPens generally expire after a year, its prescriptions need to be regularly refilled. The cost of a two-pack has gone up from $94.00 in 2007 to $609 today, more than a six-fold increase, while Medicare spending for EpiPens grew by almost 1,100 percent from 2007 to 2014.(2)
Why this huge jump? Look no farther than corporate greed and malfeasance. The backstory boggles the mind. Between 2007 and 2014, the annual compensation of Heather Bresch, Mylan's CEO, went up by 671 percent from $2.4 million (when Mylan bought EpiPen) to $18.9 million.
Farther back, the story is even worse. Bresch is the daughter of Democratic U. S. Senator Joe Manchin III, former governor of West Virginia. She got her first job at Mylan as a favor from Milan Puskar, an earlier Mylan CEO. A scandal erupted at that time when it was discovered that Puskar had donated $20 million to West Virginia University (WVU), whose president was a Manchin and Bresch family friend, and where Heather Bresch was awarded an MBA. (3) A major investigation by the Pittsburgh Post-Gazette found that she had not completed the MBA program. That was followed by an independent report that revealed falsification of her transcripts, which led to resignation of WVU's provost and business school dean as well as revocation of her MBA. (4)
Heather survived the scandal and rose from a factory basement job at Mylan to lobbyist to CEO. She was Mylan's chief lobbyist when the Medicare prescription drug law was passed in 2003. In 2012 and 2013, Mylan spent about $4 million lobbying for EpiPens and for legislation including the 2013 School Access to Emergency Epinephrine Act. All this lobbying has worked out well for Mylan, which has the dominant market share for this kind of product. In 2014, the company did a tax inversion by making a deal with Abbott Laboratories to incorporate in the Netherlands. (5)
Even if insured, this kind of pricing for what is an essential drug is unaffordable to many, especially for those with high-deductible plans. A family needing a pair of life-saving treatments for an allergic family member has to pay the full price out-of-pocket until the deductible is reached, which may be $3,000 or more these days. Since prescriptions for EpiPens have to be refilled every year, this becomes an annual expense. (6) As Senator Bernie Sanders has recently said: "There's no reason an EpiPen, which costs Mylan just a few dollars to make, should cost families more than $600." (7)
The market for EpiPens is huge. About 40 million Americans have severe allergies to bee stings, spider bites and some foods such as nuts and shellfish. They have to have ready access to EpiPens to guard against anaphylactic shock. Mylan has a virtual monopoly on the injector units for the life-saving epinephrine. More than 3.6 million prescriptions for EpiPen two-packs were filled in 2015, bringing annual revenue to Mylan of almost $1.7 billion. (8)
Mylan has contributed heavily to both presidential campaigns. According to the Center for Responsive Politics, the company has contributed up to $250,000 to the Clinton Foundation, while one of its leading stockholders--with 22 million shares--is the hedge fund owned and managed by the billionaire John Paulson, a Trump bankroller. Mylan's political action committee has also given to congressional candidates on both sides of the aisle. At least $71,000 has been given to congressional candidates in this election cycle, including to Heather Bresch's father, Senator Joe Manchin III. (9)
So the greed lives on without any fix in sight. Mylan will, of course, continue to lobby for no price controls and minimal regulation as it sucks our wallets dry without remorse. It will take a tidal wave of grassroots backlash and political will in both parties to redress this ongoing scandal.
John Geyman, M.D. is the author of The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans
1. Geyman, JP. Big PhRMA: Blatant greed and disregard for the public
interest. The Huffington Post, November 19, 2015.
2. Appleby, J, Carey, MA. It's not just for kids: Medicare Epi-Pen spending up 1,100 percent. Kaiser Health News, September 21, 2016.
3. Winship, M. EpiPen price hike can only happen in hijacked democracy. The Progressive Populist, October 1, 2016.
4. Garde, D. The EpiPen was her 'baby.' Now this PhRMA CEO is in the hot seat over price hikes. STAT, August 24, 2016.
5. Rockoff, JD. Drugmaker stung by EpiPen backlash. Wall Street Journal, August 26, 2016.
6. Skinner, G. EpiPen costs add to high-deductible insurance woes. Consumer Reports, September 12, 2016.
7. Ibid # 4.
8. Johnson, LA. How EpiPen's maker raised prices, and hackles, so much. Associated Press, August 23, 2016.
9. Huetteman, E. Awkward target for outrage over EpiPen: A senator's daughter. New York Times, August 24, 2016.