For the millions of Americans with serious allergies, the EpiPen Auto-Injector isn't an optional piece of equipment. It can provide an emergency shot of epinephrine, also known as adrenaline, that can spell the difference between life or death for someone facing a potentially dangerous allergic reaction.
Anger over skyrocketing prices for the product reached a breaking point in recent days as criticism of its maker, pharmaceutical company Mylan — including calls for a Congressional investigation, a Federal Trade Commission probe and a blunt critique from presidential frontrunner Hillary Clinton — hit a crescendo. Mylan has promised $300 discount coupons and an expanded subsidy for families of four earning up to $97,200 to relieve them of out-of-pocket costs.
But as helpful as such crisis public relations moves may be in the short term, what's especially troubling about the episode is the lack of protections that allowed Mylan (and perhaps others in the supply chain) to raise the price of the EpiPen around 500 percent since 2009 — to a list price of $600. Had epinephrine become strikingly more expensive to produce? No. Had the device itself been upgraded? Again, no. It was the same product that sold as a two-pack for $56.64 wholesale in 2007 (which is when Mylan acquired rights to it).
What appears to have happened is that the EpiPen lacked serious competition while demand for the product remained, as economists say, inelastic. Raising the price was simply not going to lower demand which is, of course, the nature of lifesaving medication, so people took advantage.
Does that problem sound familiar? It should. Last year, Turing Pharmaceuticals CEO Martin Shkreli became the poster-child for Wall Street greed when he raised the price of an antiparasitic drug used by AIDS patients and some others by more than 5,000 percent. Labeled by some as the "most hated man in America," he stepped down as CEO when the government filed securities fraud charges (related to his hedge fund operations) against him weeks later.
Mylan CEO Heather Bresch blamed government health policies for incentivizing price increases. And there may be some truth to that. The nation's health care system is complex with health insurers, regulators, employers and benefit managers all having influence on the availability and affordability of health care products and services.
But there's also the matter of outright greed. As repugnant as the Turing price-gouging case may have been (it involved an even-older medication used by a smaller group of people), the outrageous price of the EpiPen has affected far more Americans. Nor is this the first time Mylan has put profits ahead of the public good. Two years ago, the company pulled off a tax inversion — acquiring a smaller foreign company and then shipping its headquarters overseas to avoid paying its share of U.S. taxes. The company remains in Canonsburg, Pa., but for tax purposes, its corporate headquarters is in the Netherlands.
That's a pretty obnoxious way to lower one's tax bill and it's particularly repugnant considering that Ms. Bresch is the daughter of a prominent Democrat, West Virginia Sen. Joseph Manchin. Meanwhile, Ms. Bresch has been handsomely rewarded for squeezing out profits from taxpayers and allergy sufferers earning a total compensation of $18.9 million in the 2015 fiscal year.
No doubt Ms. Bresch and her father find this episode embarrassing. They certainly should. But is Washington so dysfunctional that the only way to reverse an ill-considered and potentially dangerous price hike of a lifesaving drug is to heap public criticism on its maker? That would appear to be an exceedingly unreliable enforcement mechanism. Not every drug or medical device is going to draw this kind of attention.
The system is clearly broken, a point all sides seem to acknowledge. But the answer is not to simply pile on Mylan's CEO (although she ought to get the "full Shkreli" and explain herself to Congress — whether she smirks or not is entirely up to her), but to look more broadly at the pricing of drugs and medical devices in this country. Perhaps easier entry for generics into the marketplace would be helpful, or perhaps limits on price increases might be worth exploring. Clearly, the status quo isn't working. What the EpiPen brouhaha proves is that until someone invents a vaccine for greed, some drug makers can't be trusted to do right by their patients.