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EpiPen’s Notorious Marketing Model
Published September 8, 2016 | Medicine, Public Health
- Pharmaceutical company Mylan acquired the EpiPen market from Merck in 2007 and has increased the cost of the life-saving device by 461 percent since then, increasing the product’s contribution to company revenues from $200 million to more than $1 billion in 2015.
- Designed to safely and easily provide a premeasured dose of epinephrine to those suffering a life-threatening anaphylactic allergic reaction, EpiPens currently cost over $300 per pre-measured dose, out of reach for many sufferers.
- Mylan responses to public and governmental outrage include offers of expanded patient assistance programs and the promise of a half-priced generic version, but it may not be enough to satisfy critics.
It’s a great business model: Start (or find) a life-threatening
trend, develop (or acquire) a product absolutely necessary to counteract
that trend, then gradually raise the cost until you find the highest
price the market will bear. No wonder Mylan, the company that owns the
EpiPen, is being compared—and unfavorably yet—to Turing Pharmaceuticals
and its former chief executive Marti Shkreli, the man vilified for
raising the cost of HIV drugs through the stratosphere.
There’s even an online game in which the player’s character is Mylan CEO Heather Bresch. The opening page reads: “Your shareholders want results. Your customers want to not die of anaphylactic shock. It’s up to you to jack the price as high as you can.”1 When the character gets into trouble with her public persona, one of her options is “call your senator (Dad),” and when she finally is fired for “gross negligence,” she receives a 2.4 million dollar settlement package. It would be really funny if it just… wasn’t.
Since Mylan bought Merck’s KGaA division, which makes the EpiPen as well as about 400 other products, the company has increased the price of the EpiPen by some 461 percent. Before Merck sold KGaA to Mylan, the devices accounted for $200 million in company revenues, but shrewd marketing strategies by Mylan propelled that number to more than $1 billion by 2015.2
Put into personal terms, an EpiPen cost about $57 per pen in 2007 compared to today’s cost of at least $300 per pen (generally sold only in sets of two with a retail price of more than $600). Once almost an invisible charge to patients as most insurance companies fully covered the devices as a life-saving necessity, now companies are passing a big percentage of that cost on to the consumer, and people are standing up and crying foul!
Anaphylaxis, a life-threatening allergic reaction that narrows the airways, blocking normal breathing, also causes a sudden decrease in blood pressure; a rapid, weak pulse; skin rash; and nausea or vomiting.3 The immediate need in the presence of anaphylaxis is for epinephrine (adrenaline), which acts on many systems of the body to counteract the reaction, bring the severe inflammation under control, and rapidly restore normal breathing.
The idea of reversing anaphylaxis with epinephrine is not new, and Mylan as a company had nothing to do with its development or application to severe allergies: The delivery system used in the EpiPen was actually created in 1904, for use by the military to quickly administer atropine and reverse reactions to nerve gas. The device now known as the EpiPen was then modified for epinephrine and patented in 1977.4
For the burgeoning numbers of children and adults in the U.S. who have life-threatening allergies to foods, insect stings, or environmental triggers, they can literally mean the difference between life and death from anaphylactic shock.
Two other potential rivals have run into glitches that have essentially handed the field over to Mylan. Sanofi’s Auvi-Q pens faced a massive recall because of fears it might be delivering inaccurate doses8 and Teva Pharmaceutical’s application for a generic version has been rejected by the FDA for “major deficiencies” that will take some time to fix.9
There are probably multiple cascading causes behind the massive surge in allergies we are seeing in this country, from antibiotic use to of too many vaccines to an over-dependence on an antiseptic environment—anything that knocks the immune system off its tracks can be a factor—but the reality is that life-threatening allergic reactions are a fact of life for many in the 21st century, and any pharmaceutical company getting fat off the backs of a populace it has helped to make sick needs to be called to task.
References:
There’s even an online game in which the player’s character is Mylan CEO Heather Bresch. The opening page reads: “Your shareholders want results. Your customers want to not die of anaphylactic shock. It’s up to you to jack the price as high as you can.”1 When the character gets into trouble with her public persona, one of her options is “call your senator (Dad),” and when she finally is fired for “gross negligence,” she receives a 2.4 million dollar settlement package. It would be really funny if it just… wasn’t.
Since Mylan bought Merck’s KGaA division, which makes the EpiPen as well as about 400 other products, the company has increased the price of the EpiPen by some 461 percent. Before Merck sold KGaA to Mylan, the devices accounted for $200 million in company revenues, but shrewd marketing strategies by Mylan propelled that number to more than $1 billion by 2015.2
Put into personal terms, an EpiPen cost about $57 per pen in 2007 compared to today’s cost of at least $300 per pen (generally sold only in sets of two with a retail price of more than $600). Once almost an invisible charge to patients as most insurance companies fully covered the devices as a life-saving necessity, now companies are passing a big percentage of that cost on to the consumer, and people are standing up and crying foul!
Anaphylactic Shock Is Nothing to Bargain With
The reason the pricing scandal surrounding EpiPens has taken the public by storm is that the device is not a frivolous one. Lives literally depend on it.Anaphylaxis, a life-threatening allergic reaction that narrows the airways, blocking normal breathing, also causes a sudden decrease in blood pressure; a rapid, weak pulse; skin rash; and nausea or vomiting.3 The immediate need in the presence of anaphylaxis is for epinephrine (adrenaline), which acts on many systems of the body to counteract the reaction, bring the severe inflammation under control, and rapidly restore normal breathing.
The idea of reversing anaphylaxis with epinephrine is not new, and Mylan as a company had nothing to do with its development or application to severe allergies: The delivery system used in the EpiPen was actually created in 1904, for use by the military to quickly administer atropine and reverse reactions to nerve gas. The device now known as the EpiPen was then modified for epinephrine and patented in 1977.4
Why Does EpiPen Have Such a Hold on the Market?
EpiPens have long represented a safety net to quickly and easily deliver a premeasured dose of life-saving epinephrine to someone suffering from an anaphylactic reaction to an allergen. They are a routine presence in school clinics, camps, and athletic fields. Many beekeepers, hotels, restaurants, and emergency vehicles also keep them on hand as a precaution against someone having an unexpected reaction.For the burgeoning numbers of children and adults in the U.S. who have life-threatening allergies to foods, insect stings, or environmental triggers, they can literally mean the difference between life and death from anaphylactic shock.
Mylan Responds to Pricing Outrage
Without providing specifics, Mylan claims that the steady increase in their pricing over time reflects “the multiple, important product features and the value the product provides.”5 In the wake of public and governmental outcry, however, the company vowed to “expand a patient assistance program and offer up to $300 in discounts to people whose insurance plans do not fully cover the device.”6 When that measure was “derided… as a mere public-relations fix” by lawmakers, Mylan added that it would introduce a generic version of the drug that would sell for half the cost.7 Many say it’s too little, too late.There are Alternatives, But Not Good Ones
The EpiPen is not the only product on the market for delivery of epinephrine, but its proprietary delivery system is easy to use, the dosage is premeasured, and it doesn’t require fiddling with needles or syringes. In contrast, using a regular vial of epinephrine and a drugstore syringe may cost closer to $20 per dose,5 but it requires training and a clear head in the presence of an emergency.Two other potential rivals have run into glitches that have essentially handed the field over to Mylan. Sanofi’s Auvi-Q pens faced a massive recall because of fears it might be delivering inaccurate doses8 and Teva Pharmaceutical’s application for a generic version has been rejected by the FDA for “major deficiencies” that will take some time to fix.9
There are probably multiple cascading causes behind the massive surge in allergies we are seeing in this country, from antibiotic use to of too many vaccines to an over-dependence on an antiseptic environment—anything that knocks the immune system off its tracks can be a factor—but the reality is that life-threatening allergic reactions are a fact of life for many in the 21st century, and any pharmaceutical company getting fat off the backs of a populace it has helped to make sick needs to be called to task.
References:
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