EpiPen Pricing Another Sign the FDA Needs to Wade into the Drug-pricing Debate
If you or a loved one uses an EpiPen, you probably haven’t ignored the 450 percent increase in price over the last eight years. And now, nobody else is either.
Though the company responsible for the price surge has tried to walk back their price increase with coupons over the week, many are saying their solutions don’t go far enough.
“Offering a meager discount only after widespread bipartisan criticism is exactly the same tactic used by drug companies across the industry to distract from their exorbitant price increases,” he said Rep. Elijah Cummings in a statement. “Nobody is buying this PR move any more.”
Except that they may have to, if the FDA can’t get its act together and help solve the mess many believe its web of policies has helped cause.
Surging drug prices have been on legislators’ minds for a few months now, following Turing Pharmaceuticals’ disastrous attempt to up the price of AIDS drug Daraprim from $13.50 per pill to $750. This week, EpiPen got its turn in the spotlight.
It seems that since pharmaceutical company Mylan acquired EpiPen in 2007, they’ve slowly been rocketing the price up each year due to “product improvements.” Eight years later, and consumers are left with a $600 2-Pak, more than $500 more than the price in 2008, with no noticeable improvements to most people. And considering EpiPens have to be replaced every year, Mylan’s price-setting is an annual commitment for those with deadly allergies.
“These don’t actually do anything about the price itself, because the high price is still being paid by the insurer, which then ends up being reflected in increasing premiums. This is not a public health solution,” said Harvard Medical School professor Aaron Kesselheim to The Washington Post. “It will be something else later, until we really take a good hard look at the market and at the pharmaceutical market and try to fashion systemic responses. We’re just going to be continuing to chase our tails, around these individual instances. … We can continue to play Whac-A-Mole, or we can try and make real changes to enhance the market’s ability to address the issues.”
Which is essentially the case many are making: EpiPen may be the high-priced medicine of the moment, but there’s other life-saving medications—for gout, diabetes, etc.—that have received their own astronomical price hikes.
The U.S. patent system, in this realm, has long been used to help encourage competition and innovation amongst drug companies. They get to enjoy a sort-of monopoly for a few years on a drug they developed in order to help recoup research and development costs, and once that expires generic brands help drive the price down for consumers.
“Once Turing Pharmaceuticals bought the rights to pyrimethamine and raised the prices to $750 per dose, the missing market incentive suddenly appeared. Express Scripts, the largest U.S. pharmaceutical benefit manager, quickly reached a deal with generic company Imprimis to provide pyrimethamine for $1 a pill,” wrote Simon J. Elliott on PharmaPatents. “[With pyrimethamine, a drug for a relatively rare infectious disease,] KaloBios exploited that market vacuum by applying for FDA approval, which would give it market exclusivity and the ability to raise prices, at least temporarily. Therefore, in both cases, the spike in drug prices was not caused by monopoly power supported by patents, but by monopoly power stemming from the barrier to market entry associated with the requirement for FDA approval.”
Which is the problem most people are circling back to. During the same timeline as the EpiPen’s price surge, the FDA’s process for creating generic drugs has grown more complicated.
Traditionally the 1984 Drug Price Competition and Patent Term Restoration Act has helped create a faster, cheaper barrier for generic copies to hit the pharmaceutical market by keeping regulatory barriers relatively low. But over the years the cost has crept back up again: Back in 2003, the FDA estimated it would take about $1 million to file a generic-drug application. Now it’s closer to $5 million. In 2009 the agency forced generic drug manufacturers to retool sterile manufacturing plants and make production lines less intricate, leading many facilities to be shut down and creating a surge in drug prices. All this leads to a lack of market for generics, who now often only have one competitor and cost as much as branded drugs.
As The Conversation notes, the EpiPen controversy seems to be showing that the FDA can’t avoid the issue for that much longer:
In theory, some of these are just short-run problems. Eventually exorbitant prices will draw other competitors to the market and prices will come down, or so goes the thinking of basic supply and demand. But, FDA regulations – if unduly onerous – could continue to create long delays, resulting in higher prices and loss of access to some of these medications.
It may be time for the FDA to reconsider some of its regulations governing these well-known, generic drugs to reduce the cost of approval and to facilitate competition. For example, the FDA may need to consider some sort of accelerated approval for importing drugs already sold in countries with regulatory systems comparable to our own. In that way, competition for these unpatented drugs could return more quickly.
As famed economist John Maynard Keynes noted, in the long run, we’re all dead. But, even if these price hikes are only in the short run, some of these patients may be dead in the short run, too.
With the EpiPen price has drawing vocal outrage from many legislators at all levels, it seems drug companies will continue to set prices where the market allows, with perhaps a bit more admonishment about going too hard. But unless there’s some communication of that outrage into action, we’re just putting out one fire at a time.