The outrage part of the EpiPen controversy is easy. It is simple to generate criticism of drug company Mylan, which has increased the price of a life-saving EpiPen two-pack from $100 to about $600 during the past nine years. But actually solving the problem, actually weighing the benefits of the free market against the public good provided by government intervention, is more complex.
Mylan is the sole maker of EpiPen, which is a delivery mechanism for epinephrine, and the company has patent protection on the product until 2025. Because epinephrine is essential for those who have severe allergic reactions to spider bites or bee stings or a variety of foods, for many families an EpiPen has become indispensable. Seconds can mean the difference between life and death when a severe reaction occurs, meaning that sufferers keep the product in backpacks, desks, cars, medicine cabinets, and anyplace else that ensures a dose is close at hand. In addition, it is recommended that an EpiPen be replaced each year.
Mylan has taken advantage of this, raising the price of the product by about 15 percent every three months in recent years — although experts say each EpiPen contains $1 worth of epinephrine. Meanwhile, the salary of CEO Heather Bresch has gone from $2.5 million in 2007, the year Mylan acquired the EpiPen rights, to $18.9 million last year, and the company’s stock price has tripled. It is easy to see why “Big Pharma” has become a pejorative in the mind of the public.
The reason for the price increase on the EpiPen? Because the company could get away with it. Mylan has a monopoly on the product, many state legislatures have seen fit to require schools to have EpiPens on hand, and there has been no public backlash against the price hikes — until the past couple weeks.
An argument can be made that this represents the free market at work — for both good and ill. Mylan has a valuable product and deserves to make money off of it. But the question that needs to be asked —especially by Congress — is why an EpiPen pack costs $100 in Canada and about $85 in France. The answer is that those nations are more concerned with protecting the public than they are with protecting the profits of a pharmaceutical company. As columnist Froma Harrop wrote: “Our elected representatives have tied the American consumer down, belly up, to accept corporate abuse that other countries would not tolerate.”
Defenders of Mylan point out that it takes, on average, 12 years for a medicine to go from lab to drugstore, and that when a drug is proven effective the company must make money off of it to fund research in other areas. This is a reasonable argument; pharmaceutical companies have more whiffs than hits when pursuing new medications, and it is the occasional home runs that keep them in business.
But Mylan’s gouging of the public in the name of profit demonstrates that the system is out of balance. While the market should determine the price of a medicine and the level of a company’s profit, the length of patent protections should be shortened; the federal government should negotiate drug prices with manufacturers (as they do through the Department of Veterans Affairs and the Medicaid system); and competition should be promoted instead of hampered.
Mylan’s price increases for a product essential to about 40 million citizens is outrageous. That part is easy to surmise. Fixing it is a little more nuanced.