Mylan just injected some adrenaline into the U.S. healthcare debate. The $23 billion EpiPen maker on Thursday bowed to political pressure over the affordability of its severe-allergy treatment. A complex and opaque system may encourage high prices for drugs, but also doesn’t force the likes of Mylan to jack them up. This episode does more to expose flaws than fix them.
Criticism of Mylan has mounted in recent weeks as kids head back to school and parents buy the devices to protect against peanut and other life-threatening allergies. Multiple lawmakers and Democratic presidential candidate Hillary Clinton spoke out against the fivefold increase in the cost of an EpiPen since 2008. The list price for two is about $600. Valeant Pharmaceuticals and Martin Shkreli’s Turing Pharmaceuticals kicked off a broader controversy over drug prices last year.
In a bid to defuse the situation, Mylan is offering coupons to more customers. Other families will get additional help from the company so that they have to pay nothing out of pocket.
These sorts of programs help poorer patients afford important medication. They also, however, benefit the manufacturer. Most people have insurance, so eliminating the customer’s direct expenses makes price hikes invisible, or at least unworthy of calls to congressional offices.
At the same time, Mylan refused to reduce the list price of EpiPen or rule out further increases. In an interview on CNBC, Chief Executive Heather Bresch, whose father is a Democratic senator, blamed public policy. About half the amount spent on every EpiPen goes to the likes of insurers, pharmacy benefit managers and wholesalers.
It’s true such middlemen make the system incredibly messy. Even so, they don’t require Mylan to push up prices at the rate at which it has been doing so. Coupons and assistance programs also keep things murky rather than make them more understandable. Simply reducing the headline price would be better even if few customers would necessarily notice because so few pay for the medicine themselves. Steadily raising list prices only means governments and insurers – and thus society – end up paying more.
Mylan is only one small part of a much bigger problem. With any luck, though, this dose of epinephrine will help revive efforts for meaningful change.