Listen up, FDA
Jordan Ryan | Thursday, September 15, 2016
There has recently been a very public uproar over the perceived unfair increases in the price of EpiPens sold by Mylan Pharmaceuticals, resulting in a class-action lawsuit being brought against Mylan earlier this week. The company is also now under investigation by the House Oversight Committee. The price of this life-saving device, which is a unique delivery system for epinephrine, has risen dramatically since Mylan acquired the product in 2007. When Mylan entered this market, the price for a two-pack of EpiPens cost slightly over $100. The price for a two-pack of the exact same product now is approximately $608.
The EpiPen is a hugely important product for Mylan. The company earned over $1 billion of revenues last year on the device and sales of the product reportedly provided 40 percent of the company’s operating profits in 2014. Reports are quick to link the dramatic rise in the price of EpiPens to compensation increases experienced by Mylan’s CEO, Heather Bresch. During the period from 2007 to 2015, Ms. Bresch’s total compensation rose from $2,453,456 to $18,931,068, a whopping 671 percent increase.
Many are rightfully concerned about the conduct of Mylan in connection with the dramatic increases in the price of this important drug. However, the actions of this publicly-owned company are entirely consistent with profit-motivated entities owing a duty to their shareholders, particularly those companies holding presumably valid patents which provide a right to exclude others from making, using, selling or offering to sell the patented invention, in this case the EpiPen. Mylan’s patent will not expire until 2025. In effect, this means that no other pharmaceutical company can produce the drug and delivery device combination claimed in the EpiPen patent until the patent expires or is found to be invalid.
Mylan, however, is hearing the drumbeats of competition from manufacturers of generic alternatives to the EpiPen. Teva Pharmaceuticals several years ago filed suit seeking to invalidate Mylan’s exclusive rights with respect to the EpiPen intellectual property. The litigation resulted in a settlement agreement, which authorized Teva to manufacture and sell a generic version of the EpiPen. Teva pursued its rights under the agreement and sought approval from the Food and Drug Administration (FDA) to release its version of the product. However, the FDA unexpectedly refused to approve Teva’s request. Teva has yet to win FDA approval to proceed with the alternative to Mylan’s EpiPen.
Similarly, a second drug company, Sanofi, entered the market with a competitive delivery device for epinephrine. In October 2015, the Sanofi product was suddenly pulled from the market over alleged concerns that the device was not dispensing proper doses of epinephrine. This FDA action forced Sanofi to head back to the drawing board and is allowing Mylan to continue to maintain its monopoly of the market.
Most experts agree that we can expect to see more generic versions of the EpiPen by late 2017. The inevitability of competition in this market has created a predictable response of accelerating the price increases of the EpiPen, as Mylan will likely soon lose exclusivity. It is very common for drug companies to impose more significant price increases as the exclusivity for its products are coming to an end. While Mylan may be criticized for being opportunistic and far too focused on profits, much of the blame needs to be laid at the feet of the FDA, as it has been provided with ample opportunity but thus far, has refused to allow competitors to enter the market, thereby allowing Mylan to maintain its monopoly.
While the FDA obviously serves an important and necessary function, its conduct with respect to the EpiPen is an example of how impractical government regulation can choke off competition that would create market efficiencies and ultimately benefit consumers. Simply stated, the FDA needs to realistically work with drug companies seeking generic or other alternatives to the EpiPens so that safe and effective alternatives can be brought to market. Consumers need to be able to afford to purchase a cost-effective solution at CVS or Walgreens, much like other generic drugs have become the choice of many consumers.
Mylan alone cannot be held responsible for this state of affairs. The FDA needs to shoulder a substantial portion of the blame for this health crisis. As importantly, the FDA needs to learn from its mistakes and aggressively move forward with permitting alternatives to Mylan’s EpiPen to get to the market and into the hands of consumers at a far more realistic price.
Jordan Ryan, junior resident of Lyons Hall, is a major in Political Science and Peace Studies and minors in Constitutional Studies. She can be reached at firstname.lastname@example.org
The views expressed in this column are those of the author and not necessarily those of The Observer.