8 ms·

The EpiPen, a Case Study in Health System Dysfunction

44 points by ChazDazzle 10y ago

endswapper 10y 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 10y 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?
  - endswapper 10y 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.
    - phil21 10y ago
      This is a ridiculous stance to take. So because one drug/company decided to raise prices 1500% we need to take immediate and specific action. But those companies who operate at 600% markup in the same industry are perfectly fine. I can guarantee you the latter are where the actual problem lies - since it's systemic. The outliers that get press are good - but only if people solve the problem vs. kneejerk reactions like specific legislation for a single drug. My point is that every drug company is doing this. And not a little bit. We shouldn't set some ridiculous threshold before we take action (as long as we're stolen from, it's ok if it's only a small amount right?) - we should fix the problem where it begins. This means adding competition to the market, in which case the usual race to the bottom should occur. You are basically advocating for a tiny measure that "fixes" a fraction of a fraction of a percentage of wasteful drug spending - and simply focusing on manufactured outrage. This is how the industry continues to win.
      - endswapper 10y ago
        It's not ridiculous at all. If we are talking about one company then specific action seems appropriate. I agree that there are systemic issues. I think that is a larger conversation that will take more time. There are merits to the European systems that are generally more liberal, or at least are characterized as such, and likewise, merits to the US system. We could probably cherry pick examples in each system and perhaps that is how it will continue in that larger conversation. However, in this instance, which is the context I am focused on we recognize that allowing a monopoly is a failure. It presents special circumstances, so special action to sidestep the bureaucracy seems appropriate to me. I believe that the proverbial 2x4 to the head (of Mylan, in this instance), would do more to further the larger conversation and the points we agree on, than waiting for the conversation to conclude with a pretty bow. It won't. Making examples of the most egregious perpetrators has an immediate, albeit incremental impact.
        phil21 10y ago
        I guess we'll have to agree to disagree. I see negative value in stamping down the outliers. This just sweeps the conversation under the rug and people feel good about "doing something". We then all can rage against the latest scapegoat who is doing exactly what everyone else in their position is - they just got a bit too aggressive and got unlucky on the roll of the PR dice. The rest of the industry laughs and continues to reap 900% margin on generic products, and increases it 15% next year since 15% is totally reasonable. We then repeat the next two minutes of hate every 2-3 years. We are talking about a price increase from a floor that was already absolutely insane. $300 for a $20 or less to manufacturer device is already being ripped off, and we are only just now talking about it because it went to $600. Why is there a difference in reactions here? Are you the one who gets to judge a $580 profit is ok vs. a $280 profit? Why? They both seem obscene to me - why is this just now becoming a problem? Obviously $300 is an acceptable price - so is $400? $500? This is just the tip of the iceberg. If you start by clipping the tall poppies you might get some extremely slight downward pressure on prices in the market - but that does nothing to solve your actual problems. It's penny wise and pound foolish and is the approach we've thus far taken with predictable results.
  - jschwartzi 10y 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.
- MichaelGG 10y 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.
  - endswapper 10y 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.
jcbeard 10y 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 10y 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.
- autokad 10y 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 10y ago
    You really think the problem is doctors' pay?
    - autokad 10y ago
      absolutely. we pay over a hundred dollars for a single 15 minute (if that) visit, most of which is hidden by insurance. even family care pulls home 200k+, add a specialty and your talking 300k+/year. the high cost of doctors pay limits our face time with them, limits our desire to schedule an appointment even when we are sick, and those costs cascade on us in the future. even if you dont agree with me, the cost of paying the doctors far exceeds the cost people are paying in epipens, worse on worse is that everyone bears that burden, not just the people who need an emergency pen. while the commenter above points out they have long hours, thats not uncommon for many professions including engineers who spend their weekends and nights learning new skills, or people on wall street that it is politically correct to envy how much they make, were as you can see on HN the very mention of doctors making too much brings a flurry of down-votes. "hey, he disagrees with me, silence him! hail our new kings and queens with MDs!" and about those long hours? if we increased the supply of doctors to bring down the costs, those hours would reduce drastically as well.
rokosbasilisk 10y 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.
tomohawk 10y 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:-08YyGEf18EJ:www.ncpa.org/pub/ba493&num=1&hl=en&gl=us&strip=1&vwsrc=0 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.
- maxerickson 10y 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 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...).
  - MichaelGG 10y 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?
    - maxerickson 10y ago
      If you twiddle the generic/brand menu (just to the right of the blue "Prescription settings") at my above link, you'll see that their price is already ~$475. So my above point is more that the generics provide a lot of information about what it costs to have a product on the market (which the comment I replied to was speculating about). When companies price higher than that, they are presumably doing it in a way that tends to maximize profits and are responsible for the choices they make to do that.
adocracy 10y 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?
- cheriot 10y 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.
  - JoeAltmaier 10y ago
    Lets go further: nationalize drug companies. Do this to all the drugs.
    - cheriot 10y ago
      Maybe someone more familiar with the biotech industry will comment, but it's my impression there have been some market success as well. Keeping that incentive to innovate is important.
      - JoeAltmaier 10y ago
        Ha! Like they've been innovating in antibiotics for 40 years? In case folks have not been paying attention, zero innovation occurred there. Currently its all about restless legs and secondary asthma relief and snake-oil mixtures of drugs rebranded under goofy names. The drug companies have largely abdicated their responsibilities. For profit. What remains are money-making shells. Can't we just do without them? They are adding friction at this point.
kirrent 10y 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.
- maxerickson 10y 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 10y 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 10y 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_faq_e.htm 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-overrules-bayer-allowing-generic-drug.html http://www.nytimes.com/2012/03/13/business/global/india-over...
- drakonandor 10y 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 10y 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.

44 points by ChazDazzle 10y 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 10y 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?
- endswapper 10y 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.
  - phil21 10y ago
    This is a ridiculous stance to take. So because one drug/company decided to raise prices 1500% we need to take immediate and specific action. But those companies who operate at 600% markup in the same industry are perfectly fine. I can guarantee you the latter are where the actual problem lies - since it's systemic. The outliers that get press are good - but only if people solve the problem vs. kneejerk reactions like specific legislation for a single drug. My point is that every drug company is doing this. And not a little bit. We shouldn't set some ridiculous threshold before we take action (as long as we're stolen from, it's ok if it's only a small amount right?) - we should fix the problem where it begins. This means adding competition to the market, in which case the usual race to the bottom should occur. You are basically advocating for a tiny measure that "fixes" a fraction of a fraction of a percentage of wasteful drug spending - and simply focusing on manufactured outrage. This is how the industry continues to win.
    - endswapper 10y ago
      It's not ridiculous at all. If we are talking about one company then specific action seems appropriate. I agree that there are systemic issues. I think that is a larger conversation that will take more time. There are merits to the European systems that are generally more liberal, or at least are characterized as such, and likewise, merits to the US system. We could probably cherry pick examples in each system and perhaps that is how it will continue in that larger conversation. However, in this instance, which is the context I am focused on we recognize that allowing a monopoly is a failure. It presents special circumstances, so special action to sidestep the bureaucracy seems appropriate to me. I believe that the proverbial 2x4 to the head (of Mylan, in this instance), would do more to further the larger conversation and the points we agree on, than waiting for the conversation to conclude with a pretty bow. It won't. Making examples of the most egregious perpetrators has an immediate, albeit incremental impact.
      - phil21 10y ago
        I guess we'll have to agree to disagree. I see negative value in stamping down the outliers. This just sweeps the conversation under the rug and people feel good about "doing something". We then all can rage against the latest scapegoat who is doing exactly what everyone else in their position is - they just got a bit too aggressive and got unlucky on the roll of the PR dice. The rest of the industry laughs and continues to reap 900% margin on generic products, and increases it 15% next year since 15% is totally reasonable. We then repeat the next two minutes of hate every 2-3 years. We are talking about a price increase from a floor that was already absolutely insane. $300 for a $20 or less to manufacturer device is already being ripped off, and we are only just now talking about it because it went to $600. Why is there a difference in reactions here? Are you the one who gets to judge a $580 profit is ok vs. a $280 profit? Why? They both seem obscene to me - why is this just now becoming a problem? Obviously $300 is an acceptable price - so is $400? $500? This is just the tip of the iceberg. If you start by clipping the tall poppies you might get some extremely slight downward pressure on prices in the market - but that does nothing to solve your actual problems. It's penny wise and pound foolish and is the approach we've thus far taken with predictable results.
- jschwartzi 10y 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.
MichaelGG 10y 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.
- endswapper 10y 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.

jcbeard 10y 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 10y 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.
autokad 10y 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 10y ago
  You really think the problem is doctors' pay?
  - autokad 10y ago
    absolutely. we pay over a hundred dollars for a single 15 minute (if that) visit, most of which is hidden by insurance. even family care pulls home 200k+, add a specialty and your talking 300k+/year. the high cost of doctors pay limits our face time with them, limits our desire to schedule an appointment even when we are sick, and those costs cascade on us in the future. even if you dont agree with me, the cost of paying the doctors far exceeds the cost people are paying in epipens, worse on worse is that everyone bears that burden, not just the people who need an emergency pen. while the commenter above points out they have long hours, thats not uncommon for many professions including engineers who spend their weekends and nights learning new skills, or people on wall street that it is politically correct to envy how much they make, were as you can see on HN the very mention of doctors making too much brings a flurry of down-votes. "hey, he disagrees with me, silence him! hail our new kings and queens with MDs!" and about those long hours? if we increased the supply of doctors to bring down the costs, those hours would reduce drastically as well.

rokosbasilisk 10y 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.

tomohawk 10y 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:-08YyGEf18EJ:www.ncpa.org/pub/ba493&num=1&hl=en&gl=us&strip=1&vwsrc=0 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.

maxerickson 10y 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 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...).
- MichaelGG 10y 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?
  - maxerickson 10y ago
    If you twiddle the generic/brand menu (just to the right of the blue "Prescription settings") at my above link, you'll see that their price is already ~$475. So my above point is more that the generics provide a lot of information about what it costs to have a product on the market (which the comment I replied to was speculating about). When companies price higher than that, they are presumably doing it in a way that tends to maximize profits and are responsible for the choices they make to do that.

adocracy 10y 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?

cheriot 10y 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.
- JoeAltmaier 10y ago
  Lets go further: nationalize drug companies. Do this to all the drugs.
  - cheriot 10y ago
    Maybe someone more familiar with the biotech industry will comment, but it's my impression there have been some market success as well. Keeping that incentive to innovate is important.
    - JoeAltmaier 10y ago
      Ha! Like they've been innovating in antibiotics for 40 years? In case folks have not been paying attention, zero innovation occurred there. Currently its all about restless legs and secondary asthma relief and snake-oil mixtures of drugs rebranded under goofy names. The drug companies have largely abdicated their responsibilities. For profit. What remains are money-making shells. Can't we just do without them? They are adding friction at this point.

kirrent 10y 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.

maxerickson 10y 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 10y 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 10y 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_faq_e.htm 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-overrules-bayer-allowing-generic-drug.html http://www.nytimes.com/2012/03/13/business/global/india-over...

drakonandor 10y 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 10y 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.