How Federal Regulations Hiked EpiPen Prices

Health | Policy Backgrounders

No. 186
Monday, October 24, 2016
by Devon M. Herrick, Ph.D.

People with severe allergies and asthma often carry an epinephrine auto-injector or have one readily available at all times. The most common model by far is the EpiPen, which enjoys an 85 percent market share. The price of the EpiPen, preloaded with the generic drug epinephrine, has increased by more than
400 percent in less than a decade.

The drug maker Mylan bought the rights to the nearly 30-year-old EpiPen in 2007. At the time, one EpiPen sold for about $57. By August 2016, Mylan had raised the price of each EpiPen to more than $304. Due to rising health plan deductibles over the past 10 years, families have increasingly borne more of the cost of health care out of pocket. Higher cost-sharing made it more difficult for Mylan to mask its price increases. A public outcry at Mylan’s price hikes ensued. The case of EpiPens shows why it important to use cost-sharing to enlist consumers in the battle to control drug spending. Without consumers complaining about their share of the cost, there would be little public outcry to stop many of the more egregious price hikes.

Costly Regulations

Mechanical engineers have been working on auto-injectors for 50 years and the technology is not particularly complicated. The devices should be sold for less than $20 apiece, based on production costs. That is probably about how much they would cost if the Food and Drug Administration (FDA) approved an over-the-counter version or a “behind the counter” version pharmacists could dispense without a doctor’s prescription. The price of a generic drug is much lower than the original when there are several competitors. Moreover, over-the-counter drugs often cost 95 percent less than when sold only by prescription. Greater access could save lives by making epinephrine more easily accessible.

Instead, Epinephrine auto-injectors worth more than $1 billion expire annually, unused; or, more accurately, Americans waste more than $1 billion annually on $80 million dollars’ worth of epinephrine auto-injectors that are discarded unused.

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