Mylan CEO Heather Bresch is the new Martin Shkreli, at least according to the latest round of public outrage aimed at pharmaceutical companies. Her company has repeatedly increased the price of their EpiPen devices, which now retail at a cost of over $600. Major newspapers, media outlets, and even politicians like Hillary Clinton have expressed outrage at the 400% price increase since 2007.
Let’s briefly go over what EpiPens do and why they’re important. EpiPens are used to counteract the sometimes-fatal allergic reaction called anaphylaxis, which occurs after an individual has been exposed to an allergen. It can cause restriction of the airways, which leads to difficulty breathing and potentially a complete closing of the airway if it’s not corrected quickly.
An EpiPen can reverse this process if the epinephrine inside of the device is injected into the individual. This is usually done in a panicky-stabby motion as you channel your inner Vincent Vega and slam the EpiPen quickly and authoritatively into the affected person. Except this time you aim for the thigh instead of the heart since the EpiPen contains epinephrine (aka adrenaline) and hitting the heart would likely lead to your respective Mia Wallace having a similar reaction.
So this is clearly an important drug device, especially given the rising allergy rates among children over the past decade. But why would a pharmaceutical company raise the price on this life-saving medication for seemingly no reason? Well, because of money you idiot. Why does anyone do anything? Why’d I get out of bed this morning to commute an hour to a job I hate? Why’d you do the same thing? Money.
But according to Bresch, there are valid reasons for why they decided to increase the price so drastically in the past few years. These reasons include intermediaries (wholesalers, retailers, etc.) increasing prices, Mylan’s EpiPen4Schools program that has dished out over 700,000 free EpiPens to more than 65,000 U.S. schools, and the overall vast money pit that is the American healthcare system.
These are all legitimate points, although they don’t really make up the margin of a 400% increase in 9 years. The skepticism a lot of people have for this price hike is more than deserved. Recently, one of the only other pharmaceutical producers of EpiPens ceased their manufacturing efforts, as they just couldn’t compete with Mylan. So what do you do when you have almost no competition? You price gouge. It’s simple supply and demand, laissez faire, Reaganomics, the invisible hand of the free market… have I used enough econ 101 terms to make you believe I know what I’m talking about? Good.
So why is it also kind of bullshit that certain people are getting mad? Well let’s start with the leading health insurance lobbying group, America’s Health Insurance Plans. Regarding recent price hikes and Mylan’s attempt to cover it with patient assistance programs and copay support, they said that “pharma companies are continuing to deny reality.” Clearly health insurance companies aren’t happy about these increased drug prices, since that’s more money out of their pockets as well. But this is a classic case of the pot identifying the kettle by its African heritage (hey pot, racist much?).
Between 2010 and 2014, the six largest health insurance companies have all had massive increases in their share prices. It looks a little like this:
UnitedHealth Group: +375%
Health Net: +224%
Gasp! How dare Mylan and other pharmaceutical companies try to increase their profits and play with the health of the American people! We, the wholesome and generous health insurance companies, would never do such a thing. Oh, you’re wondering about our billions upon billions of yearly profit? Well, how else would we be able to afford to donate over $13 million to Hillary Clinton’s campaigns? Yep, the same Hillary who’s campaign spokesman said “Mylan should immediately lower the overall price of EpiPens,” as there is “no apparent justification for the price increase.” Really warms your heart that you can take your politicians at their word, because there obviously isn’t any blood money influencing what they say.
So far, Mylan has done a decent job attempting to fix this mess they’ve gotten into. They’ve increased rebates for the EpiPens and expanded cost-cutting programs, as well as doubling eligibility for their patient assistant program and opening up a pathway so that patients can order EpiPens directly from the company, thereby reducing cost. They also just announced that they’ll be introducing a generic version of their EpiPen within the next few weeks, which will be available at half the cost.
The problem is that with Mylan now backtracking and reducing the price, this story will be gone from the headlines soon. But the main problem still hasn’t been fixed. America is in a health care crisis that almost nobody is trying to solve. Politicians won’t go near Medicare or Medicaid as it’s political kryptonite and health insurance companies have Congress in their pocket, so any chance of reform is swiftly shutdown. But hey, let’s all yell at the pharmaceutical companies who research and manufacture the drugs that save lives while we ignore the health insurance companies that will deny legitimate claims while raking in billions. I feel like I’m taking crazy pills, but at least my insurance is covering it.