Mylan NV’s latest attempt to deflect criticism over the price of allergy shot EpiPen failed to get the drugmaker out of the crosshairs of Congress this week. Last week, Chief Executive Officer Heather Bresch was quick to react to the mounting political scrutiny over EpiPen’s price hike with measures to reduce patients’ out-of-pocket costs for the shot’s $600 brand-name version. When that failed to deter criticism, Mylan on Monday announced it would introduce a generic EpiPen for $300, according to a Bloomberg report. Mylan’s crisis control on #Epipen price has failed to get them out of the crosshairs Click To Tweet
The controversy fueled more campaign rhetoric with Democratic candidate Hillary Clinton calling the pricing “outrageous” last week. While Mylan’s response was quicker than other drugmakers who’ve been criticized for their pricing practices, it wasn’t fast enough for politicians who continue to take aim at the company.
“More must be done–and more quickly–to make the life-saving drug affordable,” Senator Richard Blumenthal, a Democrat from Connecticut, said Monday.
That sort of critique will likely continue, said Ronny Gal, an analyst at Sanford C. Bernstein.
“They’re not getting absolved from this,” though the company’s concessions may help some, Gal said Monday. “Their problem is there’s a broad swath of patients that have to pay for this. It’s a product used by a lot of mothers for kids.”
Mylan said on Monday it expected to launch the generic product “in several weeks,” an unusual move considering the branded bestseller is still patent protected and most major rival treatments have failed to get regulatory clearances.
“Our decision to launch a generic alternative to EpiPen is an extraordinary commercial response,” CEO Heather Bresch said Monday, according to a Reuters report. “We determined that bypassing the brand system in this case and offering an additional alternative was the best option.”
Mylan’s price move failed to quell criticism of the company’s huge price increase for EpiPen since it acquired the product in 2007. The U.S. House Committee on Oversight and Government Reform sent a letter to Mylan’s CEO on Monday seeking documents on EpiPen pricing, including those relating to revenue from EpiPen sales since 2007, manufacturing costs, and the amount of money the company receives from federal government healthcare programs.
And former Democratic presidential hopeful Bernie Sanders tweeted on Monday:
“At $300, generic EpiPens will still cost 3 times more than they did in 2007. This isn’t a discount. It’s a PR move.”
Consumer watchdog group Public Citizen said Mylan’s latest move was another “convoluted mechanism to avoid plain talk.” It said activists on Tuesday will deliver petitions from more than 600,000 consumers and allergy sufferers to Mylan’s headquarters in Canonsburg, PA, demanding further price cuts.
“We would like the company to drop the price to $100 for two EpiPens,” said Public Citizen spokeswoman Angela Bradbery, adding that was about the price charged in France. She said the petitions were gathered by it and various other consumer groups, including Consumers Union.
EpiPen has a 94% market share for auto-injector devices, which jabs a dose of the drug epinephrine into the thigh to counter dangerous allergic reactions such as to peanuts, food allergies and bee stings. The biggest danger is an allergic reaction called anaphylaxis that could cause death if untreated.
Its only U.S. competitor is Adrenaclick, a device sold by Impax Laboratories that has not caught on with patients and doctors. The product, which is assembled by hand and is not considered by regulators to be an exact copy of EpiPen, has a list price of more than $400.
Impax spokesman Mark Donohue declined to comment on whether the company would lower Adrenaclick’s list price given the planned cheaper price of Mylan’s generic. Dr. Howard Selinger, chairman of family medicine at Quinnipiac University, said he has only written two prescriptions for Adrenaclick because it is not much cheaper than EpiPen. Many other doctors do not even know the product’s name because of EpiPen’s long domination, he said.
Steve’s Take: Another day, another shrewd(?) move by Mylan and its much-maligned CEO Heather Bresch to dampen the flames from practically all quarters about the EpiPen rip-off. The company on Monday has resorted to an unusual–to say the least–tactic, namely, introducing a generic version of its own product.
Mylan said that the generic EpiPen would be identical to the existing product, which is used to treat severe allergic reactions but because of its $600 price tag, many patients don’t have access to it. The “new” generic EpiPen will have a wholesale list price of $300 for a pack of two. Of course, people needing the life-saving medicine know full well you need a warehouse full of the product to be protected, not just two of the auto-injector’s.
After reading and listening to the multitude of reports and commentary about the EpiPen fiasco, I was struck by the nearly universal consensus that what’s needed to fix the price problem is simply more competition. In a free market, competition theoretically should lower prices, especially when it comes to a medicine’s list price, which is set by the manufacturer.
To briefly repeat its history of competition:
- Mylan acquired EpiPen from Merck KgAA, a German firm unconnected to the U.S. drug giant, in 2007. At that point, a pack of two EpiPens listed at $124.
- By the end of 2012, that price had risen to $241.S
- In January 2013, Sanofi SA launched a competitor, Auvi-Q, also listed at $241. Mylan raised EpiPen’s price to $265 that July.
- Two weeks later Sanofi raised the Auvi-Q list price to $277.
- In November Mylan upped EpiPen to $304, and in December Sanofi upped Auvi-Q to $334.
- By the time Sanofi withdrew Auvi-Q because of dosing in issues in 2015, its list price was $509 and EpiPen’s was $461.
Israeli drugmaker Teva Pharmaceuticals is developing a generic alternative for EpiPen that may arrive here in the U.S. as early as next year, almost certainly creating a cheaper alternative to EpiPen, which has cornered an estimated 94% of the market. Teva’s drug was delayed after the FDA identified certain “major deficiencies” in February.
The exact cause of the agency’s concern is unknown. “We suspect the FDA will be under pressure to enable [a] more competitive market,” Bernstein analyst Ronny Gal wrote in a research report last week. Gal predicted the FDA’s review of Teva’s alternative may be “accelerated.” He added: “questions of ‘what is close enough’ may be viewed differently.”
EpiPen’s only U.S. competitor is Adrenaclick, a device sold by Impax Laboratories that has not yet caught on with patients and doctors. The product, which is assembled by hand it is not considered by regulators to be an exact copy of EpiPen, has a list price of more than $400, StreetInsider.com reports. The company’s president and CEO Fred Wilkinson on Monday said:
“With all the recent news related to epinephrine auto-injection products, we are increasing our mission to inform patients, caregivers and the professional community regarding the availability of this epinephrine auto-injector.” He added, “Our [product] represents a proven, low-cost treatment for patients in the U.S. who require the use of epinephrine… .”
Last Thursday, I watched CNBC’s Jim Cramer take on CEO Bresch’s opening comments attempting to rebut the pricing outcry over EpiPen.
“If you get away with jacking things up and gouging it, then you’ve got to do it,” Cramer said on Squawk on the Street.” He added, “You do it because the shareholders want it.”
The quirky but brilliant Cramer, who says he uses a similar medication, has been critical of Mylan and the pharmaceutical industry, saying in part that the companies will:
“do whatever they can get away with in the system.” He said, “This is one where you can get away with it. There’s no competition; there is supposed to be competition.”
Bresch and her Board of Directors certainly are smart enough to know that what they have is a classic “window of opportunity” that won’t last forever. There is already the Impax brand on the market with a retail price of $400–one third the price of the EpiPen. Teva isn’t going away anytime soon and the FDA will now be under enormous pressure to approve its candidate and thereby enable a more competitive market.
It seems clear that Mylan’s announcement of plans to launch a generic EpiPen is–as Senator Sanders terms it–merely a PR move. Hard as it is to fathom, I believe CEO Bresch, a former lobbyist at her company, is trying to get us to believe her branded EpiPen–the one with the $600 price tag–now has “competition” from its own generic, something for which everybody is clamoring.
That’s right, competition. And from a halved-price product. Whoa, that’s serious competition. With this shrewd(?) move, we can all be assured that Mylan has done the right thing and can turn our attention to other pressing matters.
Not quite yet.
Unrelenting pressure on drugmakers who price-gouge works. Hopefully, Mylan’s Board is getting the message that its ethical reputation as a standup business is teetering the wrong way, with horrific consequences to its bottom line and market cap unless real action is taken to truly reduce EpiPen’s “outrageous” price.Steve's Take: Time to save your reputation Mylan: provide access to #EpiPen at a fair price Click To Tweet
Just ask the Board of Valeant Pharmaceuticals. The opaque pricing techniques, with discounts, rebates, coupons, faux generic versions…well, we’re on to that. To Ms. Bresch and her Board I say: Time to take some real action, safeguard your reputation. All you need do is give everyone who needs it access to EpiPen at a fair price.
I believe you know that price now. Everyone can win, you know.