PD Editorial: Mylan makes a killing on life-saving EpiPen

By now, the story is depressingly familiar: A pharmaceutical company obtains monopoly rights to a medication that has been on the market for years, then jacks up the price to stratospheric levels.

We could be talking about Turing, which raised the price of Daraprim, an anti-parasitic, from $13.50 a tablet to $750 while the company’s CEO gloated.

Then there was Valeant. After obtaining the rights to Isuprel, which is used to treat heart rhythm problems, Valeant increased the price six-fold to $1,346 per vial.

The latest price-gouging story comes courtesy of Mylan, which acquired rights to the EpiPen injector - an emergency kit staple for adults and children with severe allergies. With a quick stab to the thigh, EpiPens inject a life-saving dose of epinephrine, a drug that quickly opens airways swollen shut by an allergic reaction.

Mylan bought the patent in 2007 when a pack of two EpiPens, which must be replaced annually, cost about $100. Since then, the company has steadily raised the price to a present level of $600.

Why do pharmaceutical companies keep giving themselves black eyes this way?

Probably because it’s easy money. These aren’t new drugs. Daraprim has been around for six decades, EpiPens hit the market in the mid-1970s. The drugs are widely used, the research-and-development costs were recouped long ago, and there isn’t much competition. So substantial price increases produce an immediate windfall.

That may be good news for investors, but it’s cold comfort for anyone who needs these drugs - especially if they are uninsured or have a high-deductible plan.

And the only extraordinary thing about these examples is the magnitude of the price increases. Higher prices are a trend for the entire industry. Sales of the top 10 drugs went up 44 percent to $54 billion between 2011 and 2014, even though prescriptions for those medications declined 22 percent over the same three-year period, Reuters reported earlier this year.

Mylan CEO Heather Bresch blamed government health policies for the price increase. It’s true that the health care system is complicated, probably too complicated, with decisions by regulators, insurers and employers influencing the price and availability of drugs. It’s also true that the pharmaceutical industry has aggressively opposed cost-control efforts and even attempts to introduce an element of transparency to drug pricing.

In Sacramento, drug makers recently blocked a bill that would have required them to give the state a month’s notice before raising the wholesale price of a drug by more than 10 percent. Mylan, meanwhile, is sponsoring legislation now on Gov. Jerry Brown’s desk that would allow daycare centers, sports venues, restaurants and other places where people gather to stock EpiPens. If Brown signs this bill, do you suppose Mylan will celebrate by raising prices yet again?

Following this week’s PR drubbing, Bresch announced that Mylan would provide discount coupons to families of four earning up to $97,200 to relieve them of out-of-pocket costs. It’s a nice gesture, but it doesn’t begin to address the rationale for raising the price 500 percent.

On Nov. 8, California voters will consider Proposition 61, which promises to rein in out-of-control drug prices. We’re still studying its merits, but it’s likely the EpiPen episode will focus even more attention on this initiative.