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From Health Law Daily, August 25, 2016

Mylan attempts to mitigate EpiPen® cost hike controversy

By Kathryn S. Beard, J.D.

After news spread nationwide that the cost of an EpiPen® ephinephrine auto-injector increased over 400 percent since the Mylan pharmaceutical company purchased the emergency allergy medication device from Merck in 2007, Mylan announced that it doubled eligibility for its patient assistance program. The announcement that some patients—but not Medicare or Medicaid beneficiaries, due to the anti-kickback statute (42 U.S.C. §1320a-7b)—will be able to use a savings card for the EpiPen 2-Pak® does not affect the overall cost of the drug, which reportedly represents 40 percent of the company’s operating profits. Mylan’s announcement met immediate criticism for not doing enough to ensure consumer access to the potentially life-saving device.

EpiPen. The EpiPen is the main epinephrine auto-injector available in the United States for treatment of anaphylaxis. It is a combination product that uses a spring-loaded needle to deliver a dose of epinephrine via intramuscular injection to an individual suffering from a severe allergic reaction. It is sold in a two-injector package because, according to Mylan’s prescribing and patient information, approximately one-in-five recipients of an epinephrine dose for anaphylaxis require a second dose, and the two devices should be kept together so that the second dose can be administered if necessary.

Pricing history. In 2007, when Mylan acquired the EpiPen from Merck, the device’s list price was about $57. Today, the list price for the EpiPen 2-Pak (the only available product) is $608. Earlier this year, a Wells Fargo security analyst wrote a report to investors titled "Is Mylan Next in Line for Pricing Scrutiny?" after determining that the company had "exceptionally" increased the price of some of its drugs. Stock prices for the company fell in response to the report as investors worried that Mylan would follow in the footsteps of Turing Pharmaceuticals, which last year attempted to raise the prices of its drug Daraprim® by almost 5,000 percent (see CEO changes course on Daraprim® pricing after gouging claims spread, September 23, 2015).

Wells Fargo’s report proved prescient in August 2016, as parents making yearly purchases of EpiPens for their children in time for school faced sticker shock over the increased cost of the device. The issue quickly caught the attention of a number of Senators—including Sens. Chuck Grassley (R-Iowa), Richard Blumenthal (D-Conn), Amy Klobuchar (D-Minn), and a joint statement from Claire McCaskill (D-Mo) and Susan Collins (R-Maine)—as well as the American Medical Association and presidential candidate Hillary Clinton (D). Klobuchar also called for the Federal Trade Commission (FTC) to investigate possible antitrust violations; the FTC is unable to address price changes that are due to normal market issues but can investigate anticompetitive activity.

Mylan’s response. In response to the criticism, Mylan announced immediate actions to allow broader access to the EpiPen. First, it will reduce the patient cost of the device through a savings card, which will cover up to $300 for the 2-Pak; according to the company, this will halve the cost for patients who were previously paying the full list price out-of-pocket. The company will also double eligibility for its patient assistance program, by allowing individuals with yearly income up to 400 percent of the federal poverty level to have little or no out-of-pocket costs for the device.

Mylan CEO Heather Bresch said that the company recognizes "the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter," blaming the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) for the evolution of the health insurance market. Bresch appeared on CNBC, saying that "no one’s more frustrated" than she is, and explained the device’s supply chain as part of the problem. She also admitted that the price of the EpiPen in the United States subsidizes lower costs of the device in Europe, where governments limit drug prices.

Not good enough? Criticism of Mylan’s response was swift. Clinton’s campaign spokesperson called the measures "insufficient," and said that the company should immediately lower the price of EpiPens, "since there is no apparent justification for the price increase." Blumenthal was more blunt, saying "This step seems like a PR fix more than a real remedy, masking an exorbitant and callous price hike," and calling for the "baby step" to be "followed by actual robust action."

The Washington Post wrote that the savings card cannot be used by individuals without insurance or those who are enrolled in federal health programs because it constitutes an illegal kickback. It further wrote about the difficulties involved in obtaining such cards. The LA Times agreed, calling Mylan’s announcement "a cynical move that actually protects the company’s profits and harms the healthcare system." The article discussed the ubiquity of such assistance programs, claiming they are "detested by insurers, healthcare economists and government agencies."

Companies: Mylan; Merck; Wells Fargo; Turing Pharmaceuticals; American Medical Association

MainStory: TopStory DrugNews MDNews SenateNews AntikickbackNews AntitrustNews CombinationNews DrugBiologicNews HealthReformNews PrescriptionDrugNews

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