EpiPen: An Explanation of High Rx Cost for Old Technology

Devon Herrick
Posted: Sep 07, 2016 12:01 AM
EpiPen: An Explanation of High Rx Cost for Old Technology

Americans throw away unused epinephrine auto-injectors worth more than $1 billion annually. Or maybe it’s more accurate to say that Americans waste more than $1 billion annually on $50 million worth of epinephrine auto-injectors that are discarded unused. An epinephrine auto-injector is about as complicated as the internal components in a retractable ball point pen. The devices should only cost $20 a pair. So, why do they cost $608 instead?

People with severe allergies and asthma often carry an epinephrine auto-injector around with them at all times -- commonly known as an EpiPen. You’ve no doubt heard of the EpiPen by now. It is the latest example of pharmaceutical price gouging that is making the rounds in the news media. The New York Times proclaimed it another “drug pricing ripoff.” Aaron Carroll, a blogger at the Incidental Economist and professor at Indiana University School of Medicine called the EpiPen “a Case Study in Health System Dysfunction,” in the New York Times. Several members of Congress have even weighed in on the debate.

Drug maker Mylan bought the rights to the 30-year old epinephrine auto-injector in 2007. At the time, one pen sold for about $57. By August 2016, Mylan had jacked up the price to more than $300. A generic EpiPen that was to be sold by Israeli drug maker, Teva, suffered setbacks. The FDA recently declined to approve Teva’s version until it resolved some concerns. A talking epinephrine auto-injector made by French drug maker Sanofi was recalled because 26 of its units supposedly administered inaccurate doses. There is speculation that Sanofi may decide not to return to selling the Auvi-Q.

To make matters worse, in 2010 the government decided one dose of epinephrine is not enough that for about 10 percent of anaphylaxis patients and advised people with serious allergies to have two EpiPens available at all times. Mylan took advantage of the government recommendation and now the only way to buy EpiPens is in a twin-pack with a list price of $608. Families with serious allergies or asthma often have two EpiPens at work or school and two more for at home in case of emergency. Moreover, epinephrine is unstable when exposed to heat and light and EpiPens expire after only one year. Of course, most are never used. To not experience a life threatening allergic reaction is a good thing. But that also means patients are expected to throw out $1,200 worth of unused EpiPens every year and purchase new ones annually.

Buffeted by the perfect storm of bad PR, the drug maker initially tried to blame other firms in its supply chain for the high costs, including pharmacy benefit managers. That didn’t work. The company dismissed price gouging charges by saying it offers a $100 coupon to help cover copays, so most family pay nothing for the pens. Mylan later upped the discount to $300 cost-sharing coupons to reduce the out-of-pocket cost for many patients, but refused to lower the list price. Even if consumers get a break, insurers and employer plans are still paying anywhere from $400 per set to $1,000 per set. Finally, the firm announced it would release its own half-priced generic. It’s just speculation but the move may be an attempt to discourage further investments in competing products by Teva and Sanofi.

So what’s wrong with this picture? Why is a 40-year old technology still so expensive? Like most costly drugs, much of the blame is due to the U.S. Food and Drug Administration and the way drugs are regulated in the United States. The backlog of generic drug applications awaiting the FDA’s approval is nearly 4,000 applications. Thus, competitors who want to enter the market cannot do so for several years. In addition, safety improvements made to the design of the auto-injector over the years can be patented. Although the initial patent (or patents) likely expired in the 1990s, a new patent was issued on some aspect of the EpiPen in 2005, which will not expire until 2025. The FDA will not approve a generic based on, say, a 1975 design if Mylan has identified potential problems and incorporated a safety feature that boosts efficacy or safety.

The epinephrine injected by the EpiPen is available in an ampule for less than $1. In theory any generic drug maker could merely apply to sell syringes pre-filled with epinephrine. But the FDA would likely reject that as less safe than the EpiPen. Doctors like to only prescribe what they trust. Many may not even know about the competing epinephrine auto-injector, Adrenaclick. According to Consumer Reports, a twin-pack can be purchased a Walmart for $145 using a GoodRx coupon. However, regulations in most states prevent pharmacists from substituting the $145 Adrenaclick for the $608 EpiPen. Schools may not want parents to send their kids to class with an Adrenaclick because teachers and school nurses are used to the EpiPen. These are all reasons Mylan’s EpiPen enjoys an 85 percent market share. To get the cheaper version, patients must ask their doctors to prescribe the Adrenaclick or a “generic epinephrine auto-injector.”

Twenty dollars. That’s probably about how much an EpiPen twin-pack would cost if the FDA approved an over-the-counter version or a version pharmacists could dispense to patients without a doctor’s prescription. Greater access would save lives by making epinephrine more widely available. An OTC version would also save Americans nearly $1 billion a year.