Outrage over a price increase for a life-saving medicine continues to grow, despite a promise Thursday from the manufacturer that "immediate action" is being taken to ensure that everyone who needs the drug will get it.
The uproar began when the pharmaceutical company Mylan raised the price of the EpiPen, a device that administers epinephrine to people suffering from allergic reactions to food or insect stings. Those who use the device are questioning the reasoning behind the latest price hike which equals a 400 percent increase in the cost of the drug over the last 10 years.
Mylan's CEO, Heather Bresch, who prior to Thursday said the increase in the price of the device was part of the cost of doing business, told CNBC’s “Squawk Box” that she will make sure that, “everyone who needs an EpiPen will get one.”
Why did the cost of the device go up? What was the company's reasoning and is there any help you can get with the cost of the medication?
Here’s a quick look at the controversy over the EpiPen.
What is the EpiPen and how does it work?
The EpiPen is an injection device that contains a measured dose of the chemical epinephrine. Epinephrine narrows blood vessels and opens airways in the lungs which can reversed the effects of a severe allergic reaction to food or animal bites.
Did Mylan come up with the idea for the pen?
No, Mylan purchased Merck’s generic drug division – which included the EpiPen – in 2007 for $6 billion. By then the EpiPen had been around for about 10 years. The technology used to produce the pen alone was genereating around $200 million a year for Merck. Likewise, the profit from the device has been substantial for Mylan. According to NBC, Mylan’s profits from selling EpiPens was $1.2 billion by 2015, accounting for 40 percent of Mylan’s operating profits.
Why did the cost go up?
Mylan, along with its president, Heather Bresch, have said that the cost of the EpiPen "has changed over time to better reflect important product features and the value the product provides," and that the company has "made a significant investment to support the device over the past years." However, according to some analysts, the reason that people have become alarmed over the cost of the device is because insurance plans are requiring customers to pay higher deductibles. In other words, the person who is insured is required to pay more money out of pocket before the insurance payments kick in. Bresch echoed that reasoning in an interview with CNBC Thursday morning, and a statement from the company references the Affordable Care Act as a part of the problem.
What kind of price hikes have there been with EpiPen?
EpiPen has had a series of price hikes in the past decade since Mylan purchased the device from its original maker. In April 2001, the device cost $75.80 per pen. According to David Maris, an analyst for Wells Fargo, that price went up by 3 or 4 percent on several occasions before Mylan bought the device in 2007. The injector had price increases of 5 percent in 2008 and again in 2009, then, later that year, the price went up by 20 percent. On eight occasions during the next four years, the cost of EpiPen was increased by 10 percent each time. According to Maris, the price of the EpiPen went up yet again in November of 2013 by 15 percent. Between that time and May 2016, the pen's cost increased five more times, each by 15 percent.
What does it cost now?
The EpiPen auto-injectors, which come in a package of two, cost $633.66 at Walgreens when you use a coupon (free) from Mylan.
Is EpiPen the only Mylan medicine that has seen such a hike in prices?
No, it isn't. The company has also increased prices on other drugs. According to David Maris, Mylan has hiked prices for ursodiol, a generic medication to treat gallstones, by 542 percent; metoclopramide, which treats gastroesophageal reflux, by 444 percent; dicyclomine, used to treat irritable bowel syndrome by 400 percent, and tolterodine, which treats overactive bladders by 56 percent.
So how does the average patient afford the medicine they may one day need to save their life?
Bresch announced a new plan on Thursday that she says is meant to help with the cost of the medication. Mylan is expanding its patient-assistance program by providing certain patients with a savings card worth up to $300 per prescription. The company is also doubling eligibility to households earning up to 400 percent of the federal poverty level, or $97,200 for a family of four. Using that criteria, many of families would pay nothing out-of-pocket for the device.
In addition to expanding cost-cutting programs, Mylan is also continuing its “EpiPen4Schools” program. The program provides free EpiPen auto-injectors to schools nationwide.
Is Congress doing anything about it?
According to Politico, a bipartisan group of senators have asked the FDA, in a letter, to explain why there are no generic alternatives to the EpiPen available in the United States. In other parts of the world, EpiPen has competition and those device cost significantly less, the letter points out. See the letter here.
The enquiry from members of Congress hits a little close to home for at least one senator – Mylan’s CEO, Heather Bresch, is the daughter of Sen. Joe Manchin (D-W.V.)
What would other things cost if they had a similar price hike?
What does a 400 percent increase in a price look like? Imagine a $3 loaf of bread costing around $15; a $7 movie ticket costing $35; and a $2 gallon of gas setting you back $10 instead.
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