Pharmaceutical Price Regulation

The 2-pack EpiPen has gone from $100 to over $600 since 2008

Mylan Laboratories, sensing that Teva Pharmaceuticals will soon get their generic version of the EpiPen approved, have been steadily hiking the price for the dosing pen in order to extract as much benefit as possible before increased competition drives down prices.

In 2008, the 2-pen pack carried a suggested retail price of $100. Today, the retail price is $608, although production costs have barely changed.

"So what?", you might ask. "Mylan operates in a free market environment where they have the freedom to set whatever price they may want."

In order to understand the "so what", we need to understand what the EpiPen does. The EpiPen is an easy-to-use dosing mechanism for injectable epinephrine, which is used to reverse anaphylactic shock in patients with certain life-threatening allergies. For people with those allergies the EpiPen can literally be the difference between life and a swift death.

Therefore, an exorbitant 6x increase in price will inevitably lead to reduced accessibility to the product and increased risk to those with certain allergies, and to difficult choices since dollars spent on the EpiPen compete with dollars spent on other health care priorities.

If you hear Mylan talk about it, the increase is altruistic in nature: by increasing the price to those with a pharmaceutical benefit to their health coverage they can fund programs to subsidize the pens to those who cannot afford them. So is Mylan Robin Hood, or simply robbin' da 'hood?

I would say the latter. Mylan is looking after its shareholders by seeking to extract as much benefit as possible from their monopoly position in the market for a necessary product before they lose that power.

That is why I believe that price lists for patent and off-patent drugs should be subject to FDA review and approval in order to prevent predatory pricing practices which inevitably emerge where the supplier has complete pricing power.

The FDA, in working with the pharmaceutical companies to set pricing, should take into account development costs, raw material costs, production costs, distribution costs and the extent to which public research played a role in drug development.

Additionally, the FDA should strictly regulate drug marketing. It is my opinion that prescription drugs should not be marketed directly to consumers by any media outlet.  Additionally, pharmaceutical companies should not be permitted to provide free samples to doctors, nor should they be permitted to engage in any other quid pro quo with physicians and hospitals that might be expected to result in more prescriptions being written for their products.

The pharmaceutical companies spend billions on samples and mass marketing, money that will flow to their bottom line under the new regime of FDA regulation. And, consumers and benefits companies will be able to better budget knowing that pricing for drugs is regulated and relatively stable.

In exchange, the U.S. Congress should cap pharmaceutical company liability for unexpected reactions or side effects that the developers of the drug and the FDA's own scientists did not anticipate.

These proposals will yield lower prices for brand-name drugs and robust profits for the pharmaceutical companies tasked with innovating and bringing to market life-saving remedies, slightly higher prices for most generics (which will attract more companies to this important market segment and help insure adequate drug supplies), and faster time to market for new medications and generics alike.