EpiPen Pricing—The Scandal is What’s Legal

By Henry Ehrlich

Today the New York Times published two articles on the outrageous price rises for life-saving EpiPen, and threw in an editorial to boot. The editorial drew attention to a wider problem of drug manufacturers playing the pricing game according to the rules of Monopoly, in which you invest in houses and hotels and raise the price every time your opponents land on them. EpiPen has become Boardwalk and Park Place for Mylan. We have harped on related issues for years—my cousin complains that going back many years even before Mylan bought the property, the EpiPen reps would ignore his practice except during those Brigadoon moments when a competitor would appear. I noted back in 2011 on this website that there must be a new entry on the horizon because Mylan had started advertising, and sure enough in 2012 Auvi-Q showed up. I have continued to draw attention to this corporate behavior ever since, all the while acknowledging that they do save lives.

The main Times article today observed that Mylan was following an established pattern of raising prices faster in the run-up to an expiring patent or the expected introduction of a generic version. Thus, semi-annual 10% hikes after 2007 were followed by three years at 15% instead. This profiteering was enabled by the withdrawal of Auvi-Q, which proved much more popular with users but had manufacturing problems, and the FDA’s failure to approve a generic from Teva. Whoopee! Let’s raise prices.

Management consultants I used to work with enunciated something called the “boiled frog” principle. To wit, if you put a frog in boiling water it would try to get out, but if you put it in room temperature water and raised it slowly, little Hoppy would stay until it was too late. Mylan got too frisky and now the fecal matter has hit the rotating blades. The story has everything. It pits one Senator’s daughter, Mylan CEO Heather Bresch, (father Senator Joseph Manchin of West Virginia) vs. the EpiPen-carrying daughter of Amy Klobuchar of Minnesota. Looking back at another article I did about Mylan and West Virginia last year, it’s clear that the Mountain State has had a very cozy relationship with the company.

Mylan is doing damage control while waiting for the subpoenas to arrive by making EpiPen “more affordable” but this begs the question, why didn’t they think of this already instead of squeezing patients till the water reached the boiling point? Too little too late.

Personally, I think that the problem is structural. Every time this comes up, whether with epinephrine or asthma medicine, I urge people to write to their Congresspersons and ask for restoration of vigorous anti-trust enforcement. I also believe there should be ways to weight the tax system so that scientific innovation is rewarded instead of financial innovation, Mylan having transferred its headquarters to the Netherlands from the United States to avoid paying US taxes (called “inversion”). Way to go, daughter of a US Senator from a coal-producing state. In addition to being known as the Mountain State, West Virginia’s terrain has earned it another nickname: “the Switzerland of America.” With all these financial machinations, that might be more appropriate in this case.

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