As cost of EpiPen soars, what are the ethics of drug pricing?

Washington D.C., Aug 29, 2016 / 04:02 pm (CNA).- Amidst national outrage over the steep cost hike of a potentially life-saving drug, questions have been raised about the market ethics of drug pricing.

There are “a lot of factors” behind price increases in the prescription drug market, Dr. Jack Hoadley, a health policy analyst and researcher at Georgetown University, told CNA. Thus, it’s hard to attribute the 400 percent rise in cost of the EpiPen to one particular cause, he said.

However, if Mylan – the manufacturer of the EpiPen – was simply “taking advantage of a partial monopoly,” he continued, than one “could raise the question” about the ethics of the cost increases.

The EpiPen is an injection device used on a patient whose allergic reaction has become a medical emergency. Some 3.6 million Americans were prescribed an EpiPen last year, according to the Wall Street Journal.

In very serious cases, an allergic reaction can become Anaphylaxis, a life-threatening condition with symptoms including trouble breathing, reduced blood pressure, gastrointestinal problems, and itchy skin. Some of the most common reactions of Anaphylaxis are from peanut and shellfish allergies, bee stings, and latex exposure.

These severe allergies require a hospital visit and an immediate injection of epinephrine, the drug in EpiPens.

Since it acquired the EpiPen in 2007, Mylan has been raising the cost of the device. In 2007, two pens cost just over $100, but now they cost over $600, according to the New York Times. EpiPens can only be used once because of a spring-loaded mechanism for dispensing the epinephrine that activates upon injection.

The news of the price hike has led to widespread outcry, with some critics citing Pope Francis, who has spoken out numerous times about the dangers of a free market when it is not governed by Christ-like principles and morals.

Hoadley suggested that if the EpiPen price hike is an example of drug makers taking advantage of very limited competition, at the expense of people who need the drug, ethical questions could be raised.

Different consumers will be affected by the cost hike in different ways, he noted.

For instance, someone without insurance will have to pay the high out-of-pocket costs for the EpiPen. A low-income family whose children are on Medicaid or the Children’s Health Insurance Program may obtain it for a small co-pay or even for free, and the cost would be passed on to the states or federal government.

For those with private insurance, it would depend on their plan. In the short-term, there only might be a small increase in their co-pay, but a large increase in their premium later on.

In cases where a health plan doesn’t cover an EpiPen, however, patients may be on the hook for most or all of the cost of new pens.

A number of reported upgrades were made to the device over the years, like a retractable needle and better grip for the pen. Many factors go into the cost of drugs, Hoadley explained, like the cost of ingredients, and producing and manufacturing a drug. Still, the cost of the epinephrine dosage in EpiPens has been estimated by experts to be only several dollars.

But market forces can also play a big role in costs, he said, as when a drug company is devoid of real competition and there are no real “market countervailing pressures” for a drug company.

In this particular case of EpiPens, he said, one competitor left the market over “FDA issues.” A competing pen, Auvi-Q is no longer available, and the FDA rejected another generic alternative to the EpiPen, according to the Times.

A generic alternative still exists – Adrenaclick – for a lower cost, Consumer Reports has noted.

Mylan has also pushed for its product to be in public schools as an emergency device. A federal law signed by President Obama in 2013 – which Mylan actively lobbied for – rewarded the states that mandated epinephrine injectors in schools. Mylan’s program EpiPens4Schools provides several free pens per year for qualifying public schools.

Mylan announced last week that it was taking measures to supposedly make it easier for patients to obtain EpiPens. They said they were “doubling eligibility for our patient assistance program,” so that “a family of four making up to $97,200 would pay nothing out of pocket for their EpiPen Auto-Injector.” They also offered a “savings card” to trim costs by almost half for a two-pack of pens for those paying “full list price.”

“We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter,” Mylan CEO Heather Bresch said in a statement.

Then on August 29, amid continuing outcry, the company announced that it would release a generic version of the product – containing the same drug and auto-injection function – for $300 per two-pack, half the price of the name brand version.

It is unclear whether the announcement will be enough to satisfy critics.

However, Hoadley said, Mylan’s cost increase is a “symptom of some of the issues that we’re dealing with” in the larger prescription drug market as a whole, where cost hikes of drugs have been linked by some to companies using “market leverage.”

For instance, Martin Shkreli – former CEO of Turing Pharmaceuticals – made headlines after Turing increased the cost of its anti-parasite drug Daraprim from $13.50 to $750. Subpoenaed by Congress, he simply told members that he would “invoke my Fifth Amendment privilege against self-incrimination.”