Back in 2016, Washington went into anaphylactic shock due to the high prices for EpiPens. This week, however, the Trump Administration interceeded with some overdue competition into the market to lower the cost for millions of EpiPen users.
Last Thursday, the FDA approved the first competitor to Mylan’s EpiPen. Teva, the Israeli pharmaceutical company, make the competing generic drug. But why couldn’t a simple spring device complete with cheap medicine have any competitors? Especially decades after its invention.
That was just one question in 2016 when Congress questioned Heather Bresch, the Mylan CEO, to give their opinion on the over $600 price list of a two-pack of the adrenaline-filled pens millions of Americans have to keep on hand at all times. Many don’t pay the full price after discounts and rebates are factored in. Part of the shock came from insurance designs which increased out-of-pocket costs. However, over ten years the sticker price has risen by over 500%.
Even though Mylan kept the prices high, they did have help from the FDA. The agency hadn’t articulated standards for involved generics drugs such as inhalers. Due to this oversight, no competition existed for Mylan, although it now sells its own generic brand.
The market holds other injectors, but pharmacists can’t trade in these versions due to issues as small as the instructions for the device despite there being no clinical distinction. Teva and other similar companies took years ensnared in FDA processes. In the meantime, Mylan can increase prices without any consequences market-wise.
The FDA and its Involvement in the EpiPen Crisis
Before Scott Gottlieb became the FDA Commissioner, he told Congress about the Catch-22 for drug makers. They couldn’t win approval for generic drugs since other injection devices weren’t the same as the EpiPen. However, additional regulations made it difficult for competitors to brand alternatives through the FDA’s new drug approval pathway.
Dr. Gottlieb made it a priority for the FDA to give clarity for these complex generics. Thursday, he said the Teva device approval was part of the FDA’s efforts to allow for competition. The support comes at a timely manner during the shortages of EpiPens.
Products tend to see the sharpest decline in price when two generics compete with the branded version. Other drugmakers should jump into the market when they see an opportunity to make money and a regulatory agency without unnecessary barriers to entry.
During the EpiPen ordeal, Hillary Clinton called for a federal team for consumer responses to penalize companies for price spikes. In this laugh-cry moment, the Trump Administration seems to be looking into a response from Clinton’s idea. Importing price controls from Europe for expired patent drugs without competition.
Trump believes drugs are too expensive due to unfettered markets. However, the EpiPen is a reminder of the real culprit. It’s more often big businesses exploiting big government to keep the prices high rather than too much freedom.