The EpiPen scandal runs deeper than most of us realize
It has been two years since Gilead Sciences Inc. rolled out its $1,000-a-pill hepatitis C drug Sovaldi, priced at $84,000 for a course of treatment and met with disbelief from patients, insurers and health care professionals. After an 18-month investigation the Senate Finance Committee concluded prices did not reflect Gilead’s development costs and that the drug maker cared about "revenue" not "affordability and accessibility.” The committee also found that Sovaldi and a related pill, Harvoni, cost taxpayers $5 billion in 2014.
It’s been one year since Valeant Pharmaceuticals International Inc. hiked the price of a once-daily form of Wellbutrin, a 30-year-old antidepressant, to $1,400 a month despite the existence of a $30 generic and refused to lower prices on the millions hospitals pay for its life-saving heart medicines.
And it has been only a few months since a smirking Martin Shkreli, former Turing Pharmaceuticals CEO, gave a figurative finger to Congress by refusing questions about why his company raised the price of the life-saving drug Daraprim, crucial for AIDS patients, from $13.50 a tablet to $750 per tablet.
Now, in the latest extortion pricing from Big Pharma, the Pharma company Mylan has jacked the price of its EpiPen, an emergency allergy treatment that saves lives, to $600 up from the $100 it only recently cost. Even as patients, health providers and former Mylan spokesperson Sarah Jessica Parker expressed outrage, the Pharma company announced it would supply financial assistance for poorer people.
“Financial assistance” for low-income patients is a PR ruse that Pharma uses to dodge the accusation that it is killing people who cannot afford its drugs. It is a bald-faced example of “cost shifting” in which taxpayers and people with private health insurance involuntarily cover Mylan’s “generosity”—and the drug giant still gets its obscene, extortion pricing. When drug prices begin to cost four digits a month—think Abilify or Humira—Pharma always rolls out its we-have-a-heart price assistance and coupon ruse.
Who Is Mylan?
Mylan has grown from a generic drug company that saved people money from brand-name drugs to an aggressive specialty drug company and serial company acquirer, acquiring eight companies including Merck KGaA over the years. Employing 30,000 and selling drugs in more than 150 countries, Mylan is a drug giant. But like many Pharma companies it does not think it should have to pay U.S. taxes just because it lives on them, hugely financed by Medicare, Medicaid, TRICARE, the VA and other government health plans. In 2015, Mylan enacted a “tax inversion” by merging with a company in the Netherlands and establishing its corporate headquarters abroad.
There is an irony to Mylan’s growth and desire to dodge U.S. taxes. Its CEO, Heather Bresch, is the daughter of Sen. Joe Manchin III (D-W.Va.) who is among many federal lawmakers against the overseas tax dodges. Ethical questions have swirled about Bresch herself as well as the company’s persistence in manufacturing drugs for lethal injections when other Pharma companies have stopped.
And there are other questions. Mylan spent $4 million lobbying Congress, resulting in the 2013 School Access to Emergency Epinephrine Act, that sold EpiPens through school subsidies.
Why Is Pharma Pricing Drugs at Extortion Prices?
It is no secret that Pharma began charging four and even five digits a month for its drugs at the exact moment its pricy billion-dollar blockbuster drugs like Lipitor went off patent and it was in danger of no longer being a Wall Street darling. At the center of the extreme-priced drugs are “biologics”—liquids such as Humira and Enbrel that are not just costly but are not as easily duplicated by generic drugs as pills, allowing more profits. Just as noteworthy are the new Hep C drugs mentioned above; a new injectable biologic that lowers cholesterol called Praluent that Pharma hopes will replace statin profits and costs $14,600 a year; and a new anti-osteoporosis drug, Radius, to cash in on the lucrative bone market. Radius will compete with the bone drug Forteo, say industry watchers, a drug that costs $3,100 for a four-week supply and whose price manufacturer Lilly has raised twice per year by 9 to 15 percent in recent years.
Pharma PR Campaign Targets Lawmakers
With Congress looking at the price of Hep C drugs like Sovaldi and Harvoni, calling Martin Shkreli to testify, looking at Pharma companies trying to flee taxes by incorporating abroad and no doubt soon to look at EpiPen prices, Pharma has launched a charm offensive to lawmakers. Don’t cut us off, says the “Hopes to Cures” campaign launched by Pharma’s lobbying group PhRMA.
Running mostly in Washington D.C., to reach lawmakers, the campaign is designed to defend Pharma’s new extreme prices through showing patients whose lives were saved or lengthened by Pharma medicines. Launched in 2014, industry group PhRMA plans to add a "massive" amount of money to the tearjerker campaign as it anticipates political battles over drug prices. Already this year PhRMA has spent $11.7 million lobbying lawmakers.
Parading sick patients in front of the FDA and state officials to see the "good” the high drug prices are doing is a time-tested tactic of Pharma. Co-opted patients (sometimes called astroturf because they are not really grassroots) “appear before public and consumer panels, contact lawmakers, and provide media outlets a human face to attach to a cause,” writes Melissa Healy of the Los Angeles Times, “when insurers balk at reimbursing patients for new prescription medications.”
The Hopes to Cures campaign continues the manipulative tradition. Like “Ask Your Doctor” ads, the soft focus videos in the campaign are full of rainbows, puppies and Mr. and Mrs. Front Porch whose lives are improved by Big Pharma. Except that it is hooey.
By focusing on drugs that treat thyroid cancer or HIV/AIDS, the vignettes of patients deliberately imply Pharma’s high-priced drugs are all life saving and that price regulation would threaten the patients’ lives by jeopardizing “research.” Yet according to sources including the national watchdog group Public Citizen, Pharma’s actual research is one-fifth of what it claims, and taxpayers kick in a big portion of it.
Nowhere in the PhRMA charm offensive to lawmakers are actual costs mentioned like the 12 cancer drugs that cost above $100,000 a year, though many do not clearly even extend life. Instead the videos talk about rare diseases and rare cancers that presumably would not be cured if lawmakers curtail Big Pharma profits. Also, nowhere in the campaign does Pharma admit that it sells a lot more thyroid, cholesterol, ADHD and acid reflux drugs than life-saving cancer drugs. PhRMA’s Hope to Cures campaign even claims high-priced meds help the economy by creating jobs, like for “sheet metal workers.” Riiiiight.
But of course the EpiPen as well as Daraprim, the drug desperately needed by AIDS patients whose price Martin Shkreli’s Turing Pharmaceuticals gouged, do save lives. That is why Pharma’s extortion pricing—pricing not on what a drug costs but what people’s lives are “worth”—is evil.