By Henry Ehrlich
We have referred to Mylan, maker of EpiPen, as the luckiest company in the world because every time a plausible competitor to its near-monopoly status appears, the newcomer succumbs to an unforeseen problem like a supporting character in a horror movie. With Auvi-Q, the groovy, talking auto-injector, the culprit was a manufacturing flaw, although Auvi-Q has written its own second act.
Now, however, the colossus has taken a succession of hits. First there was the mediocre performance of CEO Heather Bresch for her “scared rabbit” performance in front of Congress where she seemed to admit that she didn’t understand pharmaceutical pricing any better than the rest of us.
More recently, Meridian Medical Technologies, which makes EpiPen for Mylan, announced a recall of the injectors “due to the potential that these devices may contain a defective part that may result in the devices’ failure to activate.” Big problem. When Auvi-Q took medical leave, EpiPen was there for backup. When EpiPen disappears, where do people go? Fortunately, we weren’t afflicted with a wave of catastrophe.
The newest threat to Mylan comes in the form of killer tort lawyer, Steve Berman, who (according to Damian Garde writing in the medical website Stat) calls pharmaceutical pricing a Rube Goldberg machine, which takes a cheap product like epinephrine and turns it into a gold on the journey to the patient’s thigh. He’s out to discover the alchemy by which this happens. His case against Mylan, Stat writes, argues that “the company ran a racket with its infamous EpiPen, doling out kickbacks to PBMs (pharmacy benefit managers) to ensure its epinephrine primacy.” Berman says, “The theme in all the cases is that the consumer is powerless, and the drug companies know that. It’s completely opaque, so the drug companies will take advantage of that any time they can.” How complicated is it? I recently asked a friend who ran a health insurance company, and who is a lawyer, if she could unravel this for our readers and she gave up.
I have a problem with having to resort to litigation to bring pharmaceutical companies to heel. I would like it better if there were a vigorous regulatory apparatus in place that could protect public health while protecting the financial interests of families and taxpayers alike. Unfortunately, as Nobel Prize economist and free-market purist Milton Friedman pointed out, regulators often go from being industry watchdogs to industry lapdogs. Into the breech steps the tort bar, well-capitalized, ruthless, and willing to wait and work hard in anticipation of a massive payday.
My friend Dr. Renata Engler spent a career as a physician in the US Army and has as broad a perspective on what’s right and wrong with American medicine as anyone I know. She had written a paper about “approved” therapy and “complementary and alternative” medicine. One comment stands out: “Ultimately, the standard of care will be determined by expert witness testimony in a court of law and is the same for all physicians regardless of whether they use conventional or CAM therapy.” The legal system fills the gaps between regulation and the marketplace.
As long as the regulatory system falls short we are stuck with the tort bar stepping in, which is why big money fights so hard to weaken it. Most of us hate what we consider to be nuisance suits that are cheaper for defendants to settle than to try, but whose costs are subsequently borne by the rest of us in the form of higher insurance premiums. But there are some instances where they are worth the fight. This is one I can’t wait for. If counselor Berman can unwind this mysterious process of price inflation for EpiPen and thousands of other drugs in American formularies, he will earn his third of the take.
{By coincidence, just as I was finishing this article I saw that Sanofi, which brought Auvi-Q to market under license, and later returned the rights to Kaleo during the recall, has filed suit against Mylan. This is another instance when litigation substitutes for government action. HE}