Drug Money

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Over the past few months there has been quite a bit of controversy regarding the EpiPen pricing issue. A decade ago, when EpiPen was manufactured by Merck, it retailed for $83, while now it is sold for $600. The fury directed at the company that now markets this drug delivery device – Mylan – came from patients, families, and legislators. People’s lives are on the line, as a person with a life-threatening allergic reaction who cannot afford to buy the device may die. Mylan’s initial reaction was to shrug its shoulders. The CEO frankly admitted, “I am running a business.” Then the company decided to market a “generic” version for $300. How could this happen in a civilized country?

The answer is that a number of factors are in play. Medical literature is replete with discussions of the causes and they include: 1) Competition forces weaker generic manufacturers out of the market leaving a stronger company like Tiva (Petah Tikva, Israel) in control of 20 percent of the world’s generic drugs; 2) The FDA approval process for each generic drug manufacturer is slow, creating barriers to new entrants; 3) Manufacturing problems, supply chain issues, FDA regulations, and business failures have decreased the number of suppliers; 4) The emergence of greedy pricing strategies like Mylan’s, represent a new business model where there is no research or development. Rather the company acquires rights to an old generic drug with a natural monopoly and engages in price gouging. The companies as well as some legislators then expect the obscene costs to be passed on to insurers, employers, and the government, and the patient be damned.

Healthcare economics are not like buying a car. Most patients do not have the luxury of picking what options they want. No one suffering from an acute illness can “shop around” for his or her care. Health care goes to the very being of a person. When one company like Mylan, through a legal monopoly, controls the only epinephrine injector that is marketed, some patients are forced to carry expired devices or simply go without them. So the health of patients is held hostage by companies that hoard a drug and then gouge people who need it. This is not capitalism, it’s monopoly capitalism gone off the rails. Allowing a manufacturer to recoup costs associated with research and development may be reasonable, but such is not the case with Mylan.

So how does this get fixed? First of all the FDA should eliminate Mylan’s monopoly by allowing devices and drugs made elsewhere, like Canada or England, to be marketed here. Our drug market should be opened to drugs regulated by the European Medicines Agency and Health Canada. Secondly, the FDA should expedite its review and approval process for new companies seeking to manufacture generic drugs. Lastly, the Centers for Medicare and Medicaid Services (CMS) should be empowered to set and negotiate drug prices. All this may result in more or different regulation but it will not result in the enrichment of the few at the expense of the many, which is the classic tragedy of the commons.

For more information Google Mylan at www.nytimes.com

 

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