The EpiPen, a Case Study in Health System Dysfunction

http://www.nytimes.com/2016/08/24/upshot/the-epipen-a-case-study-in-health-care-system-dysfunction.html

by ChazDazzle • 10 years ago

44 66 10 years ago

endswapper6• 10 years ago

This is concerning on so many levels because there are multiple agencies that are supposed to oversea and simply avoid issues like this.

In principle I am opposed to regulation, but in this case, where all other measures have failed, I say regulate away.

I want to call out Heather Bresch, Mylan CEO, by name because she and Martin Shkreli are the problem as well as any investor or board member that doesn't steer them back to being human.

This comes down to life and death for people. The instrument is simple, accessible and cheap. This doesn't make the instrument more valuable, but more necessary. Mylan is simply exploiting its customer base temporarily caught in the middle.

b6• 10 years ago

In principle I am opposed to regulation, but in this case, where all other measures have failed, I say regulate away.

But the article says there would be competition except that it's too hard to get a product to market. Doesn't the author mean it's too hard to compete because of regulation, like from the FDA?

endswapper6• 10 years ago

Pardon if this point wasn't clear. I am talking about additional, direct regulation related to this product and this issue.

Normally, I would say the logic doesn't follow that, the answer to failed regulation is more regulation. However, in this case, my opinion is that we should call this out for what it is and do something to counteract it.

jschwartzi• 10 years ago

Generally, yes. The FDA can block anything for any reason, including usability or safety concerns. The easiest process to move thorough is the 510k, but you can only do that if there are consensus-based standards or existing devices you can use as a predicate. Otherwise your product could be held up by the FDA for years or decades, with no clear path to release.

It seems like cloning the Epipen could be a simple process, but you still have to show substantial equivalence and do a bunch of validation to ensure the product is safe and effective.

I'm not an expert in this, by any means. All my knowledge comes from working in an FDA-regulated industry.

MichaelGG2• 10 years ago

What have she or Martin done that's wrong? They bought the entire market and adjusted the price. Maybe you should be calling out the FDA or someone else for allowing an essential industry to end up like this.

You're basically saying that every businessperson in medicine should never raise prices, look for underperforming companies, etc.

endswapper6• 10 years ago

I think they are preying on human lives and I think that is wrong.

In my previous comments I acknowledge the failure of regulations first.

I am not saying that medical related industries or products should not raise prices. In fact, I think competition and profit motivation are essential parts of innovation in medicine, or any field.

jcbeard2• 10 years ago

"When Mylan bought it, EpiPens cost about $57 each."

I can concur. I have a family member I purchase these for. At first, it was like...okay, $50 after insurance. Now $100 after insurance. The thing is...nobody really seems to care until things spiral out of control. Who the hell is watching our backs in America? Is it the FDA, the FTC, Congress (likely too busy defunding AMA to care), the DoJ? No idea. I wonder if gov't agencies like the DoD who stock tons of epipens pay the same prices that we the public do? Does the DoD purchase from another market to get out of the huge sticker price? I'm curious to see how many people in the gov't get around purchasing these in the US for their own agencies yet didn't raise extreme alarm at the ballooning prices for the American consumers.

nerdponx• 10 years ago

Judging by what we recently learned about the Army's finances, well funded government agencies like the DoD probably don't notice or don't care about this kind of thing.

autokad3• 10 years ago

what is really amazing is the epi pen, even for those who need it, is a tiny fraction of our healthcare costs. the gorilla in the room is doctors pay, in which the US purposely keeps low in supply to keep the wages high.

doctors easily make north of 200k after residency(a number almost no engineer will ever come close to), and people complain over hundred dollar epi pens.

draw_down• 10 years ago

You really think the problem is doctors' pay?

sxg2• 10 years ago

Take home pay for physicians represents about 10% of healthcare spending (http://economix.blogs.nytimes.com/2008/11/14/do-doctors-sala...). On top of the cost of 4 years of college, you've got 4 years of medical school (average med student debt is $167k - http://www.cbsnews.com/news/1-million-mistake-becoming-a-doc...). On top of that, you've got 3-7 years of residency where residents barely make $50k/year while working ~80 hours/week (this is a reduction from ~120 hours/week after regulations were passed). Becoming a doctor is expensive, requires massive sacrifices in time, and doctors don't earn their full salaries until almost a decade after most people start their careers. It doesn't seem like physician salaries are a clear cut problem.

ccvannorman2• 10 years ago

Health care capitalism in America is like the invisible hand giving all consumers a permanent prostate examination.

We need to nationalize health care (all drug and insurance). There is no other solution.

e40• 10 years ago

Who the hell is watching our backs in America? Is it the FDA, the FTC, Congress (likely too busy defunding AMA to care), the DoJ? No idea.

The problem is, we have no price controls on medicines or medical procedures in the US. Prices are set by the makers of drugs or devices. We are the only 1st world country on the planet without price controls. Everything terrible stems from this and that there is no real competitions between medical providers (because prices are not published).

rokosbasilisk• 10 years ago

Isnt this a much more simple tale of greed and corruption. the ceo is the daughter of a democrat senator and lobbied big government the jacked hwr salary 600x. Just another shkrelli, maybe even worse because she lobbied for schools to have them.

tomohawk2• 10 years ago

It would be interesting to hear the other side of the story. So far, as in this piece, there is only the implied or stated theory that the price increases are due to greed, or just because they can.

This whole thing reminds me of the flu vaccine debacle. The original narrative was that flu vaccines cost less in other countries, so why not in the US? Must be due to some greedy capitalists! The truth turned out to be a bit more nuanced.

http://webcache.googleusercontent.com/search?q=cache:-08YyGE...

It should surprise no one that these kinds of price problems occur in a system with heavy regulation, very little choice, and no transparency.

maxerickson6• 10 years ago

There's a different epinephrine auto-injector that has generic versions. The generic versions cost $150 for a set of two (http://www.goodrx.com/adrenaclick).

It's reasonable to assume that most of the $350 difference goes to things like marketing, profit and shenanigans to encourage people to utilize their insurance (the rebate cards eliminate copay and some deductible costs and extract money that eventually has to be paid out of premiums...).

MichaelGG2• 10 years ago

If there's an alternative, then what's the issue? Well a quick search shows 2 alternatives have had recalls. So maybe they have QA issues. Adrenaclick says they lack the ability to scale up to more market demand. So perhaps they should raise their prices a bit to build out facilities?

dghughes2• 10 years ago

Here in Canada you can buy an EpiPen pack for $160CAN $123US. But I'm not sure if it's the same brand.

https://www.thestar.com/opinion/editorials/2016/08/25/canada...

"A key reason is a federal agency called the Patented Medicine Prices Review Board, which regulates drug costs to avoid precisely the sort of excesses evident in the United States."

tomohawk2• 10 years ago

Price controls can work in a monopoly situation, but they don't work otherwise. Has this board managed to bring alternative products to the market? Has this board increased the stability of supply (for example, diversity of supply chain)?

The flu vaccine debacle highlights all of these shortcomings of well intentioned people attempting to do good things but causing unintended side effects. For example, price controls were put in place, but all that did was reduce the 24 suppliers of vaccine down to a very small number, with very predictable results (less stable supply, greatly increased cost).

Speaking of Canada and medicine, we had some new neighbors from there who moved to the US because they couldn't get adequate care north of the border.

adocracy4• 10 years ago

It's unfortunate the NYT story doesn't get into the billings process as part of the dysfunction. It makes me wonder how the pricing is then negotiated with the insurance companies. Did they set the retail price so high because the insurance companies were refusing to pay a workable price? Mylan has already commented that most EpiPens are paid through insurance, and there's the "billed rate" and "paid rate" on claims reports which often shows outrageous retail prices by health providers and then the negotiated rate the insurance company actually paid. Mylan's "quick" offer of a $300 discount to individual payers appears to keep in line with this and potentially not impact the insurance claim issue, but does anyone have any evidence that this theory is mistaken?

cheriot6• 10 years ago

If that's the case, then the market equilibrium makes un/underinsured patients collateral damage in a battle between pharmaceutical and insurance companies. That's a massive market failure that's killing its victims.

Here's my capitalist suggestion: figure out how much the pharmaceutical company stands to earn from life saving medication. Then let the government purchase the rights and put them in the public domain. The variable costs of producing these things is so low that we can treat every one for nearly the same price as treating only the rich.

JoeAltmaier2• 10 years ago

Lets go further: nationalize drug companies. Do this to all the drugs.

ende3• 10 years ago

This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition?

The government created this problem, not the market, and yet people again clamor for more government intervention.

gwright2• 10 years ago

Why is this 'market failure'?

It is government regulations and legal prohibitions that have created a situation in which there is no competition. The market didn't create that situation, the government did. It is no surprise the price goes up in a market where competition is effectively prohibited.

There are a few solutions: * adjust the regulatory framework to allow competition to emerge * strengthen the regulatory framework and set a price by law * apply public pressure against the sole provider into modifying their pricing

The last one is arguably the 'market' at work. The first two are just doubling down on a regulatory framework.

In any case, 'regulatory failure' seems like a much better description of the situation than 'market failure'.

adocracy4• 10 years ago

It's an interesting concept to suggest an effective put option for the government, based perhaps on the auditable costs of successful R&D. But this would probably have to work both ways - also including a put option in favor of pharma for R&D that was unsuccessful. R&D spending would become more transparent as a result (inflated, perhaps, to try to hedge against the government intervening on a hugely profitable opportunity), but in any event still entirely recoupable. Different sort of risk/reward algorithm at play, but feasible.

kirrent• 10 years ago

The majority of the comments here are interesting to me because they're talking about the cost of an epi-pen after insurance. The problem doesn't seem to be some mismatch of the interplay between drug price and insurance rebate but just how incredibly expensive an epi-pen is in America because of a lack of collective bargaining on price.

For comparison, here in Australia, the dispensed price for an epi-pen is 96.57AUD which includes everything, even the maximum markup from the pharmacist (as far as I understand the pricing mechanisms). Of course, depending on insurance arrangements and personal circumstances you'll end up paying less with a maximum of 38.30AUD out of pocket but that's a different part of the system.

I don't see how the dysfunction is any of the things mentioned in this article as opposed to the ridiculous prices insurance companies and patients are being charged for it. Many drugs expire quickly, are hard to administer, and are difficult to make. All that means is that we need them done well and we need to pay the least we can.

maxerickson6• 10 years ago

There are various entities that collectively bargain drug prices in the US. It's just that other groups and individuals may not have access to the prices they achieve.

(several large insurers provide coverage for more people than live in Australia)

It seems the problem in the US is that a patent that "improves" a product ends up creating a new period of exclusivity (it's not clear to me if this is just because the improved version becomes the new standard of care or because people are nuts and demand the very best regardless of whether the difference is particularly significant).

golergka• 10 years ago

The most interesting thing here would be the lack of competition, but the article, which was pretends to be a "case study", just leaves it at "various reasons". What the hell? It's not like an individual company's responsible for keeping the price sane; it should be kept down by the whole market — and if the market's malfunctioning, government's to blame, not the company.

petilon• 10 years ago

The World Trade Organization has a provision known as "Compulsory Licensing" which can be used in extraordinary situations such as this. Compulsory licensing is when a government allows someone else to produce the patented product or process without the consent of the patent owner.

A few years ago, India's government authorized a drug manufacturer to make and sell a generic copy of a patented Bayer cancer drug because the price charged by Bayer was unaffordable to most of the nation. The US pharmaceutical industry has been up in arms about this, and has been exerting pressure on India to stop this practice. But abuses of the system by Mylan (with EpiPen), Turing (with Daraprim) and others would seem to justify the Indian practice.

In fact the US would do well to copy India's model. Citizens should be able to sue corporations for egregious abuses of the patent system, and courts should be able to provide relief in such cases by granting a compulsory license of a drug patent to a generic maker.

Read about compulsory licensing here: https://www.wto.org/english/tratop_e/trips_e/public_health_f...

Read about India granting compulsory license to Bayer cancer drug here: http://www.nytimes.com/2012/03/13/business/global/india-over...

drakonandor• 10 years ago

An interesting model, taking advantage of other countries taxpayers and innovation so you never have to fund any research yourself.

I'm sure that will work out well to better humanity as a whole - especially when there's no reason to actually invent anything new because every other country is just waiting to steal it.

Eric_WVGG• 10 years ago

I've got a question about price caps, would appreciate a non-trolly/non-sarcastic answer if anyone is informed on the topic.

We know that epi-pens cost under $50 to make, because they're sold profitably in Canada for around $60.

And I recognize that companies are entitled to make a profit, and that drug companies (sometimes) use those profits on R&D for new and better products.

But we see instances of clear cash grabs. Sometimes they're due to circumstances (in this case, a generic alternative failed FDA approval, and a competitor left the market); other times a drug company will buy up competitors and consolidate the market (Turing Pharm).

Why don't we have some sort of market cap of 3-4x or even 10x the cost of manufacturing a drug that is implemented after the R&D has been paid off? I get that companies would bend over backward to inflate that R&D figure, but sooner or later they would have to admit that it was paid for and need to settle into a mode of merely making reasonable profits instead of insane profits.

The EpiPen, a Case Study in Health System Dysfunction

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