EpiPen Maker Mylan Becomes Lead Pharma Villain

In late August, drug manufacturer Mylan assumed the role of most infamous price gouger among pharmaceutical corporations after news reports revealed that it had jacked up the price of its lifesaving EpiPen medication by approximately 500 percent since 2007.[1]

The EpiPen was approved by the Food and Drug Administration in 1987. In 2007, Mylan acquired the rights to the product from another drugmaker.[2] At that time, the EpiPen cost less than $100 per two-pen set. Mylan escalated the price to $265 in 2013, $461 in 2015 and just over $600 in May of this year.[3] The amount of epinephrine, the active ingredient, in an EpiPen costs less than a dollar to make.[4]

The EpiPen is prescribed annually to millions of patients, many of them children who have severe allergies to certain foods, such as peanuts, and bee stings.[5] The product is used in case of a sudden, life-threatening allergic reaction known as anaphylaxis, which causes hives, swelling in the mouth and throat, and difficulty breathing. Each year, only a small fraction of patients prescribed the EpiPen actually need to use it, but because unused EpiPens have a shelf life of 18 months,[6] patients typically must purchase a new set every year.[7]

Soon after Mylan acquired the EpiPen in 2007, Heather Bresch, who became the company’s chief executive officer in 2012, hatched an aggressive marketing scheme to boost sales of the product by targeting parents of children with allergies.[8] The initiative was centered on an enormous public awareness campaign about the hazards of childhood allergies.[9] Mylan reaped huge financial gains from its EpiPen marketing campaign and price gouging. EpiPen became the company’s best-selling product, with annual sales exceeding $1 billion,[10] up from $200 million in 2007.[11]

And as the price for EpiPens became more unaffordable for patients, Bresch profited handsomely: From 2007 to 2015, her annual compensation rose from $2.5 million to $18.9 million, a 670 percent increase.[12]

In response to the widespread uproar over the soaring price for EpiPens, Mylan attempted to mollify critics by announcing an expanded discount card system for the product.[13] But as Robert Weissman, Public Citizen’s president, stated, such action “is a false solution that can be summed up as too little, too late. If the company wants to calm public outrage over its contemptible and unconscionable price spikes for EpiPens, there’s only one course of action: actually lower the price.”[14]

Mylan is far from the only corporation dramatically raising prices on essential drugs. Price gouging is the norm across the pharmaceutical industry. But Mylan has distinguished itself as the villain of the moment and grabbed the attention of Congress. And it’s going to take an act of Congress to stop these rip-offs.

References

[1] Parker-Pope T, Peachman RR. EpiPen price rise sparks concern for allergy sufferers. New York Times. August 22, 2016. http://well.blogs.nytimes.com/2016/08/22/epipen-price-rise-sparks-concern-for-allergy-sufferers. Accessed September 21, 2016.

[2] Koons C, Langreth R. How marketing turned the EpiPen Into a billion-dollar business. Bloomberg Businessweek. September 23, 2015. http://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-billion-dollar-business. Accessed September 21, 2016.

[3] Parker-Pope T, Peachman RR. EpiPen price rise sparks concern for allergy sufferers. New York Times. August 22, 2016. http://well.blogs.nytimes.com/2016/08/22/epipen-price-rise-sparks-concern-for-allergy-sufferers. Accessed September 21, 2016.

[4] Carroll AE. The EpiPen, a case study in health system dysfunction. New York Times. http://www.nytimes.com/2016/08/24/upshot/the-epipen-a-case-study-in-health-care-system-dysfunction.html. Accessed September 21, 2016.

[5] Rockoff JD. Mylan faces scrutiny over EpiPen price increases. Wall Street Journal. August 24, 2016. http://www.wsj.com/articles/mylan-faces-scrutiny-over-epipen-price-increases-1472074823. Accessed September 21, 2016.

[6] Bomey N. 5 things we learned from EpiPen price hike hearing. USA Today. September 22, 2016. http://www.usatoday.com/story/money/2016/09/22/epipen-congress-hearing-mylan/90827270/. Accessed September 23, 2016.

[7] Novak J. EpiPen prices are out of control! Here’s how we fix the problem. CNBC. August 23, 2016. http://www.cnbc.com/2016/08/23/epipen-prices-are-out-of-control-heres-how-we-fix-the-problem-commentary.html. Accessed September 23, 2016.

[8] Koons C, Langreth R. How marketing turned the EpiPen Into a billion-dollar business. Bloomberg Businessweek. September 23, 2015. http://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-billion-dollar-business. Accessed September 21, 2016.

[9] Ibid.

[10] Rockoff JD. Mylan faces scrutiny over EpiPen price increases. Wall Street Journal. August 24, 2016. http://www.wsj.com/articles/mylan-faces-scrutiny-over-epipen-price-increases-1472074823. Accessed September 21, 2016.

[11] Koons C, Langreth R. How marketing turned the EpiPen Into a billion-dollar business. Bloomberg Businessweek. September 23, 2015. http://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-billion-dollar-business. Accessed September 21, 2016.

[12] Popken B. Mylan CEO's pay rose over 600 percent as EpiPen price rose 400 percent. NBC News. August 23, 2016. http://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-raises-they-hiked-epipen-prices-n636591. Accessed September 21, 2016.

[13] Mylan. Mylan taking immediate action to further enhance access to EpiPen (epinephrine injection, USP) Auto-Injector. August 25, 2016. http://newsroom.mylan.com/2016-08-25-Mylan-Taking-Immediate-Action-to-Further-Enhance-Access-to-EpiPen-Epinephrine-Injection-USP-Auto-Injector. Accessed September 21, 2016.

[14] Public Citizen. Mylan’s announcement on EpiPen prices: Too little too late. August 25, 2016. http://www.citizen.org/pressroom/pressroomredirect.cfm?ID=7987. Accessed September 21, 2016.