Business

The Price Explosion For EpiPen’s Is Linked To One Key Gov’t Decision

EpiPen maker Mylan has benefited from monopolistic practices in the market for epinephrine injectors, and the FDA has subsidized that monopoly through regulations.

French pharma company Sanofi, the one competitor of Mylan, pulled it’s epinephrine injecting device–Auvi-Q–in 2015 citing problems with inaccurate dosing and pricing, according to FiercePharma. At the time of Sanofi leaving the market, Mylan had 85 percent of the market share for epinephrine prescriptions.

Ronny Gal, analyst at Bernstein (a Wall Street analytic firm), told FiercePharma that if Sanofi’s Auvi-Q “recall is not proven erroneous, it is very hard to see Auvi-Q returning to the market, as it will need to be redesigned and face uphill battle to recapture patient trust after the recall.” Thus highlighting the high barriers to entry in the market epinephrine pharmaceutical market (even for those firms that were once in the market).

Mylan now holds some 98 percent of the market share for epinephrine prescriptions in 2016, and the injection device makes up 40 percent of their profit.

The FDA protects this monopoly by not allowing new players into the market to drive competition in pricing or prescription options. For example, pharmaceutical company Teva has attempted to get a generic version of the EpiPen to the market but was shot down by the FDA, reports FiercePharma. Teva allegedly will not try again for FDA approval till 2017.

Mylan has spent the last decade upping it’s marketing campaign, bringing awareness to severe allergies by hiring Sarah Jessica Parker to do ad work, and lobbying to have federal law mandate that public schools carry EpiPens and train staff in properly administering the drug.

The company, in addition to their other efforts, lobbied to the tune of $1.2 million to get two EpiPens per subscription. These efforts succeeded, with the FDA approving the move in 2010, according to Daily Mail.

When Mylan acquired the device in 2007 the cost of the drug to consumers was just $56.64, according to CBS News. By 2015, Bresch had spiked the price to $317.82. The price of the epinephrine inside the EpiPen is just one dollar.

CEO of Mylan, Heather Bresch, salary rose from $2,453,456 in 2007 and to $18,931,068 in 2015. With costs raising 461 percent over 8 years and the CEO’s salary now over $18 million, it isn’t likely that Mylan will change it’s tune without some intervention, competition, or some means of forced coercion.

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