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Why EpiPens Are So Expensive

March 16, 2020

high drug prices

Trying to make sense of the pharmaceutical industry and prescription drug costs in the United States can be exhausting and demoralizing. Just when consumers have absorbed and come to terms with a massive price hike on one essential medication, another scandalous price increase is announced, and the cycle repeats itself.

In the case of the EpiPen, which delivers an auto-injectable dose of epinephrine to counteract life threatening allergic reactions, the dramatic price increase over the last few years actually prompted congressional hearings where the company that makes the Epipen, Mylan, had its executives asked to justify their actions in the face of mounting public outcry.

While obscene price hikes have become the norm in the American pharmaceutical industry, the EpiPen is a particularly egregious example due to the fact that the price has ballooned over 500% in a little over a decade, literally putting the lives of children and people with severe allergies at risk.

Predictably, little progress has been made in terms of significantly lowering the price of the EpiPen since the manufacturer’s CEO testified before members of congress in 2016. According to a summary of the proceedings in USA Today:

The hearing was heavy on rhetoric, light on answers. After Mylan raised the base price of an EpiPen two-pack from $100 in 2009 to more than $600 in 2016, consumers lambasted the company as the latest example of a greedy pharmaceutical giant taking advantage of helpless Americans.

Congress joined the parade. Rep. Stephen Lynch, D-Mass., called it "disgraceful" and "disgusting," while Rep. Elijah Cummings, D-Maryland, blasted Mylan for seeking "to get filthy rich at the expense of our constituents." Lectures were plentiful. Agreement on what to do about it? Not so much.

Lynch said the situation illustrates that Medicare needs the power to negotiate drug prices, which some experts have said could help, but there was no substantive discussion of the matter. Others have suggested that the U.S. needs to implement price controls on life-saving drugs. That idea, too, was nowhere to be found.

Like most pharmaceutical companies, Mylan executives are long on excuses but short on real solutions and justifications for the financial plight they have inflicted on the millions of Americans whose lives literally depend on access to these medications.

A Brief History of the EpiPen and Why It is So Expensive

On the surface, EpiPens are about as straightforward as medication gets. For the millions of children and adults suffering from potentially lethal allergies to food or insect bites, the ability to quickly administer a shot of epinephrine at the onset of an allergic attack can literally mean the difference between life and death.

But in the United States, where over 40% of the population would struggle to afford a $400 surprise expense or medical emergency, paying hundreds of dollars in insurance premiums, co-pays, or out of pocket costs puts even basic medications like the EpiPen out of reach. So why is it suddenly so expensive?

Many Americans would probably be surprised to learn that the EpiPen as we currently know it evolved from a military application developed to help soldiers counteract the effects of nerve gas during World War II. According to the Science History Institute:

EpiPen is the more commonly used trade name for an epinephrine autoinjector. No bigger than a cigar, the device is a Cold War spin-off based on the 19th-century innovation of hollow-needle injections.

During the Cold War the military wanted a quick way for troops to self-inject antidotes to nerve gas. In the 1970s inventor Sheldon Kaplan recognized that modifications in the pen could turn it into a lifesaver for civilians, especially those susceptible to anaphylactic shock, where a fast response can mean the difference between life and death.

The EpiPen as it’s known today was eventually approved by the U.S. Food and Drug Administration (FDA) in 1987 and changed hands several times before finally being acquired by its current owner Mylan in 2007. It should be noted that the inventor credited with designing the modern EpiPen, Sheldon Kaplan, never received as much as a dollar in compensation for his work.

Like the developers of modern insulin, who sold the patent to the University of Toronto in the 1920s for $1 out of a sense of altruism and moral duty, for-profit pharmaceutical companies are raking in billions of dollars in profits on products that were never intended to be commodified. When Mylan acquired the EpiPen, they proceeded to increase the price of the product fivefold despite the fact that no major adjustments or improvements have been made to the basic formula and design in that timeframe.

Special Interests, Profiteering, and Political Influence Peddling

Despite their perceived outrage during the hearings over Mylan’s blatant price gouging, American lawmakers have done almost nothing to reign in the pharmaceutical industry and to protect American consumers from the growing public health crisis caused by unaffordable health care and prescription drugs. For one, the pharmaceutical industry alone spends millions of dollars every year lobbying lawmakers from both sides of the aisle. According to the Center for Responsive Politics, drug makers spent over $100 million on lobbying in the first three quarters of 2019.

Financial spending on lobbying is just one part of it. During Mylan CEO Heather Bresch’s testimony at the congressional hearings in 2016, many Americans learned that Bresch’s mother, Gayle Connelly Manchin, was the head of the National Association of State Boards of Education in the United States (Mrs. Manchin is also married to the governor of West Virginia, Joe Manchin).

During her tenure, Mrs. Manchin helped to usher in what many people saw as a monopoly of the EpiPen across public schools, making it difficult if not impossible for nurses to access cheaper generic versions of the EpiPen -- while her daughter was CEO of the company that makes them.

Essentially, when Mrs. Manchin took over the National Association of State Boards of Education in 2012, it is reported that she pushed for an effort to put devices in schools that would help treat students having a dangerous allergic reaction. Given that the EpiPen was the only device at the time that fit this bill, it gave Mylan a virtual monopoly.

According to USA Today:

Eleven states drafted laws requiring epinephrine auto-injectors. Nearly every other state recommended schools stock them after what the White House called the "EpiPen Law" in 2013 gave funding preference to those that did.

While both Mylan and Manchin have claimed that the connection had nothing to do with a familial quid pro quo and was purely coincidental, regulators were not convinced. Yet despite the obvious conflicts of interest and harm being imposed on American consumers by the pharmaceutical industry’s pricing policies and “profit over everything” philosophy, the U.S. government remains reluctant or unwilling to pursue any meaningful regulation of the industry.

Undercutting Price Savings from a Generic Alternative

Inflating prices on essential medications is an effective strategy for pharmaceutical companies like Mylan due to the near monopoly they’ve created in the United States. Thanks to loopholes and blatant abuse of the patent system, big pharma companies like Mylan can keep more affordable generic drugs off the market for years or decades. In many cases, a simple tweak to the packaging or dosage of a medication is enough to file a new patent or extend the life of an existing one.

One of the many ironies of this system is that it actually robs American consumers of the very choice that pharmaceutical and insurance industry giants claim to offer within the for-profit model.

In the case of the EpiPen, The New York Times reported that Mylan’s largest price hikes seemed to coincide with the looming entry into the market of a generic alternative.

How Much Does the EpiPen Cost to Manufacture?

The pharmaceutical industry’s perverse rationale for their greed is especially difficult to accept in light of the fact that many of the medications that Americans now struggle to afford are actually relatively inexpensive — and downright cheap — to manufacture.

The EpiPen is no exception. In total, Mylan probably pays a grand total of $30 for an EpiPen, including everything from the medication and device itself to royalties and research and development costs. In fact, the dose of epinephrine costs approximately $1, and the auto-injector costs anywhere from $2 - $4 to manufacture according to industry data.

The rising costs of everything from prescription drugs and health insurance premiums and co-pays far outpace the rate of inflation in the United States, which is currently just above 2.0%. Additionally, American wages have famously been stagnating for several decades, meaning that the average American increasingly has to do more with much less, often with catastrophic or even deadly consequences.

While pharmaceutical giants do their best to spin their relentless quest for higher and higher profits at any and all costs, the reality is that there is no valid excuse for what Americans are asked to pay in comparison to their neighbors in Canada and in other countries.

Why is the EpiPen Cheaper in Canada?

Like so many other medications, the EpiPen is considerably cheaper in Canada than it is in the United States. In Canada, the average price for an EpiPen ranges from $80 - $150. In fact, the brand name EpiPen, which is the only version available in Canada, is still less expensive than the generic alternative in the United States. How can that be?

For starters, pharmaceutical companies (even when they enjoy a monopoly or near monopoly on a certain drug) don’t have the freedom to price gouge consumers and unfairly hike prices at will like they do in the United States. Unlike in the U.S., the Canadian government has the power and authority to regulate and negotiate drug prices so that they remain more affordable for Canadians.

Additionally, Canadians enjoy a national healthcare system that helps eliminate the factors that contribute to the more expensive system in the U.S. Without private insurance companies, who also work almost exclusively to maximize their profits, and a murky network of “pharmacy benefit managers” and other middlemen driving up costs, Canadians have a fairer, straightforward, and more affordable system. This is true for everything from EpiPens to blood pressure medication and most everything in between.

Affordable EpiPens Through Canadian Pharmacies

In many cases, American consumers are powerless and at the mercy of the pharmaceutical industry’s near monopoly on many prescription medications. If you are struggling to afford your medication, start by speaking to your healthcare provider and pharmacist about discounts, rebates, and lower priced generic alternatives.

To learn more about how you can save on the EpiPen and other prescription drugs by shopping at a Canadian pharmacy, contact our customer service department for more information by calling our toll free number 1-866-539-5330.

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