JustCare

Tag: EpiPen

  • Pharma’s monopolies are the reason for high drug prices

    Pharma’s monopolies are the reason for high drug prices

    David Blumenthal, President of the Commonwealth Fund, explains in the Fund’s blog, that the simple reason for high drug prices in the US is that Pharma has monopolies over the prescription drug supply for many drugs. This monopoly power results from the patents we grant to pharmaceutical companies for novel medicines.

    Once they are granted patents on their prescription drugs, drugmakers tend to have monopoly pricing power for these drugs for 12 or 13 years. This means that they can charge whatever they would like for their drugs. And, the prices they choose result in industry profits far higher than most other sectors of the economy. For example, in 2015, the 25 biggest software companies had an average profit margin of 13.4 percent; the 25 biggest pharmaceutical companies had an average profit margin about 50 percent higher, 20.1 percent.

    What’s perhaps most insane is that pharmaceutical companies can raise drug prices as they please. There can be some competition from prescription drugs that have their own patents and are marketed to provide the same treatment. But, the competition does not bring down prices sufficiently.

    Moreover, pharmaceutical companies have ways to stretch their monopoly pricing power to as long as 20 years or more. Mylan’s EpiPen patent is just one example. They can change the drug’s packaging or method of administration without clinical benefit and extend their patents. They can also pay off generic drug manufacturers not to bring a generic substitute to market.

    When a patent expires, generic drug manufacturers can enter the market. But, prices often still do not come down because of generic drug company monopolies. For that reason, for example, doxycycline’s price increased 90 times in the two years between 2013 and 2015.

    This drug company monopoly power undermines the free market as a solution for bringing down the price of drugs. We need a “nonmarket force” with as much power as the drug companies to ensure drug prices are affordable. Most foreign governments exercise that power. They do so in different ways. Many base their prices on the clinical benefits of new drugs over other drugs. In all cases, if pharmaceutical companies are not happy with the price of their drugs, they do not have to sell them. But, they usually sell their drugs.

    Drug companies argue that without their ability to generate the revenues they do, they could not develop new therapies. As a country, we need to ask the question how much that innovation is worth and who makes that decision.  For the moment, so long as pharmaceutical companies can set prices for many patented and generic drugs as high as they please, Americans will struggle and those in government with the power to allow negotiated drug prices if they chose to do so will be held accountable.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

  • Does Pfizer care about malfunctioning EpiPens?

    Does Pfizer care about malfunctioning EpiPens?

    The New York Times reports that the Food and Drug Administration (FDA) has accused Pfizer of failing to address complaints about malfunctioning EpiPens, used to prevent serious allergic reactions. Hundreds of people are reporting that EpiPens have killed or harmed them because of a malfunction in its drug delivery mechanism. Does Pfizer care about malfunctioning EpiPens?

    Pfizer owns the patent on the EpiPen’s delivery system. The delivery system is supposed to ensure that people get the proper dose of epinephrine. That dose prevents a serious allergic reaction. If it does not work, people’s lives can be at risk.

    Pfizer claims that people who report being harmed may not have used their EpiPens properly. They are not medically trained. Needless to say, EpiPens are designed so that you do not need to be medically trained to operate them.

    Pfizer further claims that people cannot prove a “causal” link between a death and the malfunction of the EpiPen. However, after FDA intervention, including inspection of the manufacturing plant and many discussions, Pfizer did recently recall 13 lots of the EpiPen because of device malfunction in its drug delivery mechanism.

    The EpiPen has been in the spotlight this past year because of its steep price hike, as Steven Findlay reported for Just Care back in August 2016. Mylan, which manufactures the EpiPen, increased its list price almost fourfold to $608 from $165 five years earlier. The drug it dispenses is a generic, which costs almost nothing to manufacture.

    Both the malfunction and the cost of the EpiPen are two of thousands of reminders that the pharmaceutical marketplace is dysfunctional, non-competitive, and unsustainable. Everyone of us pays the price for the dysfunction, in higher insurance premiums and higher taxes. And people who use the drugs, as well as their loved ones, suffer all the more.

    If you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care:

  • The pharmaceutical marketplace is dysfunctional

    The pharmaceutical marketplace is dysfunctional

    The controversy over the steep price of EpiPen—an injectable device used to treat severe and potentially life-threatening allergic reactions—is among the strongest signals to date that the pharmaceutical marketplace is dysfunctional, and that Congress needs to step in.

    EpiPen’s list price jumped nearly four-fold in five years, from $165 to $608.   The generic drug in EpiPen costs pennies to make and the device has been on the market for over a decade.

    Of course, prescription drugs like EpiPen deliver enormous benefits, improving health and extending lives. They can also save money relative to other forms of treatment. But, over the last few decades, the pharmaceutical industry has become the poster child for poor business ethics and, more recently, out-and-out price gouging.

    Since 1990, for example, the federal government has fined drug companies $15 billion for “off-label” promotion of their drugs—marketing them for uses that the FDA has not approved. Drug companies have also tested their drugs on people in developing countries in unethical and sometimes illegal ways. And, they have been caught hiding study results that show their drugs may not be as safe or as effective as they claim.

    The only justification for raising the price of the EpiPen so substantially was greater profits.  Sales of the device jumped 10-fold from $170 million in 2007 to $1.7 billion in 2015.  That’s primarily because the drug’s manufacturer, Mylan, has a near monopoly in this medical niche, allowing the company to raise the price of EpiPen as high as the market would bear. And, since insurers and the government do most of the buying, Mylan knows that most consumers were shielded from the direct impact.

    But, we all pay the bill in the end, indirectly, through higher insurance premiums, deductibles and copays and in taxes that support public insurance programs such as Medicare and Medicaid.

    Despite this, Mylan’s response to public pressure to simply lower the price of EpiPen has been to act primarily (and predictably) in its own interest and in the interest of its shareholders and the other companies that take the drug from manufacturer to market, including wholesalers and pharmacies.  All take a bite out of the price of every drug.

    First, Mylan agreed to increase the co-pay assistance to people who need but can’t afford the drug.   That’s helpful, but it requires consumers to jump through hoops to qualify and is limited.  When that didn’t quell the outrage, Mylan announced on August 29 that it would sell its own generic version of EpiPen for half the price of the brand-name product—around $300 instead of $600.

    That move keeps the money flowing into Mylan’s coffers and does not anger the supply-chain companies.  It also may stall other generic companies—one is known to be waiting in the wings—from bringing an EpiPen competitor to market.

    What Mylan’s move will not do is make this essential medicine—which, again, probably cost less than $30 to $50 to make—affordable for all who need it and fairly priced for the system as a whole.

    For example, some middle-income families who don’t qualify for the assistance but who have high-deductible health plans or steep co-pays would still be stuck with a sizable out-of-pocket expense for generic EpiPen at $300.

    For the rest of us, EpiPen’s still-too-high price gets built into the cost of insurance, both public and private—along with the rising tab for all prescription drugs.

    As such, EpiPen’s unjustified price hike is the latest reminder that drug pricing needs major reform. We allow drug companies to take advantage of their monopoly power to gouge consumers and undermine people’s health and financial security. And the FDA does not help matters when it is slow to allow competition, preserving drug company monopoly power.

    Here’s more from Just Care: