Pharmaceutical price gouging: What happened to Mylan and the EpiPen scandal?
You may remember back in the fall when pharmaceutical giant Mylan came under fire for raising the price of a lifesaving product, the EpiPen. But where does US law stand on price gouging? And what ever happened to the scandal?
To start off let’s recall what exactly happened with Mylan, a company that raked in $11 billion in 2016. The EpiPen is an auto-injector that contains a drug called epinephrine. Epinephrine is synthetic form of adrenalin in the human body and is used to counteract the effects of an allergic reaction called anaphylaxis. For 3.6 million users in the United States alone, the EpiPen is the only thing that can keep them alive long enough for an ambulance to arrive. Additionally, Mylan is the main manufacturer of consumer use epinephrine, and holds a virtual market monopoly. Before the price increases, a two pack auto-injector cost about $100. Just one day later the price had increased to $608.
After mass public outcry about the price increases, Mylan CEO Heather Bresch attempted to justify the price increases. According to Bresch of the main issues that face big pharma companies is the price to develop a new drug. The cost to develop and bring a new drug to market averages $2.6 billion according to the Tufts Center for the Study of Drug Development. On top of that, the company that holds the patent for the new drug only holds it for 20 years before generics tend to take over. This 20 year period starts after the patent is granted but before the 8-10 years it takes to get FDA approval for mass distribution. This means that pharmaceutical companies only have about 10 years to recoup costs incurred and also make enough profit to please shareholders and fund further development. However, Bresch made about $19 million last year; leading consumers to believe that the price increase are for pure profit, not because the company actually needs money for research and development.
On the other side of the argument are millions of Americans whose wellbeing and lives depend on prescription drugs. Without proper health coverage, and sometimes even with it, the prices of medication cannot be met my many people. According to a Harvard study, nearly 45,000 people die each year because they cannot afford proper medical care. If pricing is let to go wild, people who need lifesaving drugs may not have access. Some influential politician has suggested price caps of $250 dollars per month for patients requiring lifesaving drugs. In the end, it is incredibly important for the American consumer to have affordable access to medications that may be the difference between life and death. So, what ended up happening to Mylan and the EpiPen?
Two major developments have happened since the price increases: a class action racketeering law suit, and the release of a generic injector. In early April, 2017, Mylan was slapped with a federal racketeering class action law suit. Racketeering is the use of dishonest and or fraudulent business agreements. In the case of Mylan, the charges alleged that the company colluded with the pharmacies that sell the product to increase prices of the EpiPen more than 17 times over the past decade in order to put more money in Mylan’s pocket. If granted class status, this law suit would cover all EpiPen users for compensation. Additionally, two generic versions of the EpiPen have been released as an alternative use product. CVS slashed prices to $109.99 for the generic version of a product called Adrenaclick, a lesser known and used version of an epinephrine injector. Mylan themselves have also released a generic version of the EpiPen at a 50% price reduction to $300. This may seem strange, but a company offering the generic version of their own product is actually not that uncommon.
The pharmaceutical world is a very complicated place with lots of different issues it faces. Here at the law offices of Franklin D. Azar & Associates we have experience working with big medical companies. Call us today if you have a medical related case for a free consultation and we will fight to get you the compensation you deserve.