This past week EpiPen maker, Mylan Pharmaceuticals, visited the U.S. House Oversight Committee to discuss price increases of the Epinephrine auto injector they manufacture. The committee called the session to order, after recent public outcry over EpiPen’s dramatic price increase.
Since 2007, EpiPen has seen a steady increase in pricing. In 2007, a package of two EpiPens cost consumers about $100. Now, in 2016, the cost for 2 pens is $608.
What Changed with EpiPen Prices?
EpiPen has been around since the 1970s after Sheldon Kaplan, of Survival Technology Inc., invented the ComboPen for military use. It was approved for use with Epinephrine in 1987. Mylan Pharmaceuticals acquired EpiPen in 2007.
Rep. Elijah Cummings of Maryland said he believes Mylan operated on the model of “Find an old, cheap drug that has virtually no competition and raise the price over and over and over again. As high as you can.”
According to Cummings, in 2007, the price for 2 EpiPens was about $100. In 2012, the price was raised to about $218. In 2014, it was raised to about $350. In 2015 it was raised to about $460. Now, in 2016, it’s $608.
EpiPen by the Numbers
Mylan’s cost of goods for producing EpiPen is $69, according to Heather Bresch, CEO of Mylan Pharmaceuticals.
According to Cummings, Mylan spent $100 million on advertising and marketing for EpiPens in 2015.
In 2008, EpiPen generated $184 million in net sales revenue. For 2016, Mylan expects that number to reach more than $1.1 billion – more than a fivefold increase in 10 years.
Rep. Jason Chaffetz, chairman of the U.S. House Oversight and Government Reform Committee, said about 10% of Mylan Pharmaceuticals’ $9.45 billion in revenue is brought in from EpiPen sales. According to Mylan Pharmaceuticals’ website, they have a global market portfolio of more than 1,400 separate products.
Chaffetz also mentioned that Mylan has five executives that have earned nearly $300 million in compensation the last five years.
Bresch, in 2007, was making $2.45 million. In 2015, she made $18 million – a 671% increase.
What is the FDA doing to help alleviate these high costs?
Dr. Douglas Throckmorton, the FDA’s Regulatory Programs Deputy Director, says the Food and Drug Administration is “Working hard to support the timely scientific and efficient development of new Epinephrine auto injector products.
Throckmorton would not say how many Epinephrine products were in the queue to be reviewed by the FDA, but did say the FDA is providing technical information to the pharmaceutical industry to design and test new auto injectors.
He said more recently the FDA released draft guidance on how to determine whether auto injectors can be used effectively by patients. Throckmorton also stated the FDA’s efforts can help development by providing a clear road map to reduce uncertainty that could slow development.
How is Mylan Making this Right?
Bresch was on defense during the majority of the committee’s hearing, referencing Mylan’s low profit margins for EpiPen and their introduction of a generic to the market.
Members of the committee were skeptical, considering the generic would need FDA approval and the cost would be $300 for two pens. Chaffetz struggled to understand how this wasn’t just a way for Mylan to increase their profits, since the generic version would be a direct to consumer offering, meaning 100% of that $300 would be collected by Mylan. This is important to note, because Bresch claims Mylan Pharmaceuticals only receives $274 from EpiPen. After “cost of goods” and other “related costs” are factored in, she says Mylan only makes $100 profit.
She said manufacturing the generic version would cost the same as EpiPen does ($69), since it would be exactly the same process, just considered a generic.
Mylan has also responded by saying they will offer a patient assistance program for consumers purchasing EpiPens. Members of the committee challenged her on this, calling it a “PR play.”
What can be done about EpiPen Prices?
It is important to know EpiPen isn’t the only prescription with the ability to treat anaphylaxis. There is a therapeutic alternative called Adrenaclick, which costs less than EpiPen. Adrenaclick also has a less expensive generic simply named Epinephrine.
If you had a direct line to Ms. Bresch, how would you suggest Mylan Pharmaceuticals makes things right? Let us know in the comment section below.