EpiPen sparks outrage, but it doesn’t change our broken drug pricing system

The dust-up over the EpiPen the past few weeks is about much more than the outrageous price increase engineered by Mylan executives who’ve been pilloried in the media for doing what U.S. drug makers do — raise prices as high as they can. (It turns out, Mylan execs had an extra incentive — bonuses of tens of millions of dollars for meeting aggressive sales and profit targets.) At its core, l’affaire EpiPen is not about a single drug maker making sky’s-the-limit profits. It’s about how we use pharmaceuticals in the future, how we regulate them, how we contain price increases, who pays the price, and ultimately, who gets to use the drugs —uncomfortable questions that collectively we have not wanted to confront so far.

Indeed, neither the press nor the public paid much attention to drug price hikes until late 2013 when Gilead Sciences introduced super-high-priced Sovaldi to cure hepatitis C. Only after the enormity of its price tag — $84,000 for a three-week course of treatment — sunk in did the media dwell on what Sovaldi would cost, while also reporting that Gilead had no intention of backing down. The company was, in effect, thumbing its nose at calls for reason in its pricing strategy. Ditto for Martin Shkreli, the former hedge fund manager and chief executive of Turing Pharmaceuticals, who raised the price of Daraprim, a drug used to treat life-threatening parasitic infections, from $13.50 a tablet to $750. He claimed, “This isn’t the greedy drug company trying to gouge patients, it is us trying to stay in business.” 

This time Mylan’s audacity means the price of a two-pen pack now costs around $600, up from $100 in 2007, and it has generated a ton of public outrage. Typical was the comment of young mother who told a reporter at a protest outside Mylan’s headquarters in Canonsburg, Pennsylvania, “There’s no economic or moral justification for the price.” There have been press accounts galore reporting what Mylan has done to snuff out the fire as quickly as possible. It would provide a savings card worth up to $300 for people who had been paying the full price. It would increase the number of patients eligible for patient assistance plans, and sell a generic version of the EpiPen.

While coupons and generic alternatives will help some like the Pennsylvania mom whose two kids suffer from life-threatening allergies, they do little to address the underlying problem. Mylan and other drug companies that use such strategies still have carte blanche to raise prices whenever they want to. To their credit, some media outlets are beginning to pick up that crucial point, as the Associated Press did, explaining, “Coupon cards are standard pharmaceutical strategy, one that leaves employers and taxpayers still footing at least two-thirds of a big bill — and everyone facing higher premiums eventually.” 

“Coupons and generics are incomplete solutions because they solve a near-term solution for the patient, but exacerbate cost problems long term,” says Dr. Peter Bach, who directs the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center in New York City. “They don’t address the underlying problem,” which he defines as the lack of a connection between the drug and value; no limit on prices except what the public will tolerate; and the inability of payers to take steps to lower prices. “When they do, drug companies find ways around payer solutions. At the end of the day, the real problem is that they are granted government monopolies.”  

Mylan and Turing got caught, but they aren’t the only instances of super-high drug pricing. The price of the cancer drug Gleevec is up threefold, Bach told me. “It costs less in France today than what it cost in the U.S. when it was launched 13 years ago.” Then there are the new drugs coming on the market that will be taken by millions of people, not just a few thousand cancer patients. Last month, JAMA reported that a new class of cholesterol-lowering medicines called PCSK9 inhibitors could substantially reduce heart attacks, but with a price of $14,000 per year per patient, researchers also noted the drug was not cost-effective and estimated that total U.S. prescription drug expenditures could increase by nearly 40 percent. The price would have to drop by about $4,000 a year for the drug to be cost-effective.

"Coupons and generics are incomplete solutions because they solve a near-term solution for the patient, but exacerbate cost problems long term. They don’t address the underlying problem. ... At the end of the day, the real problem is that (drug companies) are granted government monopolies."  — Dr. Peter B. Bach, Memorial Sloan Kettering

The public hasn’t been too outraged about high drug prices partly because a third party is still paying their bills. In fact, EpiPen prescriptions increased by a third in August compared to the same period last year, even in the heat of the controversy. That gets to another reason: our culture dictates that we are entitled to every new drug that comes along, regardless of its long-term safety profile, efficacy, or price. When it comes to pharmaceuticals, we’re schizophrenic. We want lower prices but no limitations on what medicines we can have.

State Medicaid directors, county health officials, and some commercial insurers have restricted who could have Sovaldi, limiting its use to those with severe liver disease. Those without such dire symptoms have had to wait. But in some states, the legal backlash over the last several months has forced some public and private payers to back down. In states where there have been legal threats to get the drug into the hands of more patients, Medicaid programs and commercial insurers have bowed to outside pressure. Colorado was the latest to fall a few days ago. After the ACLU threatened to sue and amid pressure from Denver Public Health, Medicaid agreed to expand coverage to more people with the disease.

Even though states are revisiting some of the restrictions, and prices from new competitors have caused prices to drop somewhat, “despite public outcry, there is little that the states or federal government can do to get a life sciences company to roll back prices,” Jeff Myers, the CEO of Medicaid Health Plans of America, told me. 

Still, who should bear the cost of giving hep C drugs to every patient in Colorado, Massachusetts, New York, and elsewhere and other high-priced medicines?

As part of a settlement in Massachusetts, the attorney general extracted rebate concessions from the drug companies selling hep C drugs. The amount was not disclosed. For drug manufacturers, the pricing system remains safely in place. 

In a cogent letter to the editor of The New York Times last weekend, Dr. Caroline Poplin, a Washington D.C. physician and lawyer, listed a number of options that could begin to answer the question of how to control drug prices. She pointed to steps such as changing drug patent laws that create temporary monopolies, regulating drugs like utility monopolies, setting up commissions to calculate prices, or authorizing the government to negotiate prices with drug companies as the rest of the developed world does. Poplin concluded: “When market forces produce bad results, we have remedies.”

It’s the political will to pursue such remedies that’s lacking.

Veteran health care journalist Trudy Lieberman is Contributing Editor of the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care blog.