EpiPen investigation shows need for greater pricing transparency, other reforms

Sep 28, 2016 Issues: Health Care

EpiPen investigation shows need for greater pricing transparency, other reforms

By Rep. Stephen F. Lynch (D-Mass.) September 28, 2016, 06:00 am THE HILL

https://thehill.com/blogs/congress-blog/healthcare/298077-epipen-investigation-shows-need-for-greater-pricing

For months, my office has heard from families concerned about their ability to afford a device they desperately need in the event that a loved one suffers a sudden allergic reaction. Parents should not have to worry about whether they can afford an EpiPen for their children. Seniors should not be limited in access to this lifesaving device. Back in 2007, parents and seniors paid less than $100 for a two-pack of EpiPens. Now in 2016, they are faced with a price tag of over $600. When the CEO of Mylan Pharmaceuticals appeared before the House Oversight Committee last week, we sought to examine why the cost to fill an EpiPen prescription has gotten so out of hand. 

We weren’t fooled by the insufficient documents Mylan provided to the committee claiming that the company only makes $50 profit for each $600 two-pack. And while Mylan CEO Heather Bresch did not give a clear cut reason why prices for the EpiPen were stable until Mylan took control of the product back in 2007 and began to jack up prices year after year, she did inadvertently motivate Congress to take a step towards addressing some issues with the pharmaceutical industry that have been avoided for years. 

Mylan has a virtual monopoly on the EpiPen with more than 90% of the epinephrine injector market in our country. Mylan’s patent does not expire until 2025, so there is little competition in the market and even less incentive to keep prices fair. Congress must consider oversight of pharmaceutical companies’ price hikes, particularly in situations where a high price drug has little to no competition and it is difficult for other companies to get into the field. In some states, when there is a monopoly on the market, price increases have to be approved at the state level. Similarly, where Congress has created such legal monopolies for lifesaving drugs, it is fair and proper to empower the Food and Drug Administration or the Secretary of Health and Human Services to approve price hikes in those drugs. I recognize the value of companies investing in research and development, but in the case of Mylan, they have made few changes since acquiring the product and yet have continuously and dramatically raised the price.

Another avenue where Congress must take action is to allow Medicare to negotiate their own drug prices directly with the pharmaceutical companies. While I doubt it was Mylan’s plan, by their blind greed, they have shown blatant disregard for the people who desperately need this medication. With a Congressionally protected monopoly for their product, there is little incentive for them to negotiate their prices.

In contrast, we have seen success in drug price negotiations at the Veterans Health Administration. On a wide range of drugs, compared to the market, the VA pharmacy program has leveraged its buying power to negotiate much lower prices for more than 8.9 million veterans. 

Republicans and Democrats should consider the tens of billions of taxpayer dollars that could be saved if we allow the Secretary of HHS to negotiate drug prices for the 38.6 million Americans who participate in Medicare Part D. According to a recent study by the Kaiser Family Foundation, Medicare Part D spending for the EpiPen has grown by 1151% since Mylan acquired the EpiPen in 2007 until 2014. That is a substantial increase and it doesn’t even account for the nearly 74% increase in the cost of an EpiPen from $349 in 2014 to $609 in 2016.

I know that families in the 8th District of Massachusetts cannot afford over $600 for a two-pack of EpiPens. And I think this is the case across the country. Regular middle class people aren’t getting access to Mylan’s supposed discounts and they can’t afford to replace EpiPens each year, as is required, at the current price. It is not merely those with an EpiPen prescription that are bearing this price increase; it is taxpayers across the country.

There is a real problem when greed becomes the dominant factor and there is little attention paid to the regular families that these decisions affect. We can’t be pricing people out of the market for EpiPens and it is time for Congress to pass legislation that will address the monopoly issue, increase transparency in drug pricing, and help to control the cost of prescription drugs. In particular, the bipartisan and bicameral Fair Accountability and Innovative Research Drug Pricing Act, introduced by Sens. John McCain (R-Ariz.) and Tammy Baldwin (D-Wis.) and Rep. Jan Schakowsky (D-Ill.), will require manufacturers to provide a justification for each prescription drug price increase, improving disclosure and providing important information to taxpayers.

And the Medicare Prescription Drug Price Negotiation Act, introduced by Baldwin and Rep. Peter Welch (D-Vt.), will allow the Secretary of HHS to negotiate prescription drug prices on behalf of Medicare Part D beneficiaries. Drug price negotiation has successfully reduced costs for the VA and could do the same for Medicare. If drug prices continue to rise exponentially, the current system of Medicare paying top dollar on behalf of its beneficiaries will become unsustainable.

The American people deserve the full picture when it comes to the pharmaceutical industry’s opaque pricing. And they should not have to worry about whether they can afford a new EpiPen to save their child’s life. Mylan’s dramatic price increases clearly demonstrate what is wrong with our healthcare system and the visceral bipartisan reaction to Mylan’s greed could be the impetus for Congress at last to step in and do its job.

Rep. Lynch represents the 8th District of Massachusetts and is a member of the House Oversight and Government Reform Committee.