In the US, we pay more for prescription drugs than ANY OTHER COUNTRY. By a lot – more than double. The reason for this is complicated. And the amount of attention brought to this issue ebbs and flows. Last week, a bunch of pissed-off parents made it clear that the epic price hike on the EpiPen (used for major life-threatening allergy attacks) was not an acceptable move on the part of drug manufacturer Mylan — the same company whose CEO received a 671% salary increase in just eight years from under $3M to over $18M.
Luckily, I don’t have allergies or the need for an EpiPen – which now costs $400 per pen or about $415 after insurance for two pens. In Canada, a hop, skip, and snowshoe north of our borders, the pens are distributed by Pfizer and cost just $100 a pen. In France, the pens cost $85. Perhaps allergies in Canada are not as vicious as those in the States? Maybe French people are allergic to allergies so they just don’t get them? No — the EpiPen in all countries serves the same exact purpose… it’s just a lot more expensive to acquire in the US.
For each person in the United States, $858 was spent on prescription drugs, compared with an average of $400 per person across 19 other industrialized nations. Prescription medications now comprise an estimated 17 percent of overall health care expenses. – CBS News
As many have noted in this election cycle, our country is painfully corrupt. Democrat, Republican – it doesn’t matter – both parties have been bought by powerful lobbyists who sponsor power. While the .0001% celebrate at the top, the rest of us are left to figure out how to invest in the stocks that those who are most corrupt stand to benefit from… want to afford that prescription drug you or your loved one needs to save a life? Better invest in their company’s stock.
The Mylan situation would be almost comedic if it weren’t true. EpiPens are Epinephrine autoinjectors carried by people who have anaphylactic reactions to their allergies. The first pen was invented in the mid-1970s by Sheldon Kaplan, an engineer for NASA who wasn’t even paid royalties for the device he invented. The US Department of Defense purchased the device from Kaplan as an antidote for nerve gas. However, Mylan Pharmaceuticals secured the patent to the EpiPen in 2007 with what one could call both evil and brilliant intentions to make billions.
Mylan CEO Bresch (who one must notes is the daughter of a democratic U.S. Senator, though her politics are unknown) was the company’s chief lobbyist before taking on the role of CEO. It was Bresch who helped successfully pass a 2013 bill requiring all public schools to carry EpiPens for students with food allergies. This was not out of the goodness of Bresch’s heart – though access to EpiPens in schools can indeed be a lifesaver. The company, however, wasn’t looking to save lives. It was looking to make a profit. A big, big profit. And it did. The company implemented double-digit price hikes for the EpiPen every other quarter.
At the same time, the ever-so-smart and evil Mylan leveraged tax inversion to incorporate in the Netherlands and lower its effective tax rate -even though it was really based out of Pennsylvania. Because corporations are able to get away with everything but murder and the rest of us are left to social media protests to hope something eventually changes. But will it?
From Allergies to AIDS, How Big Phrama is Killing Us with Costs
In America, drug prices are set in ways that make absolutely no sense. As the NY Times explains, “Manufacturers set list prices for their brand-name drugs; those are the eye-popping figures that have sent Congress and presidential candidates into fits of outrage. But almost no one actually pays those prices. Insurers and pharmacy-benefit managers, who manage drug plans for insurers, negotiate discounts and rebates, which lowers the effective cost of a drug. And they have been getting better at doing this.”
The bigger problem arises for drugs that do not have competition on the market. Monopolies on life-saving treatments pretty much means you can charge whatever you want as long as someone is willing to pay it (and they will be because they need the drug to stay alive.)
The NY Times article also explains who gets paid when a drug is sold:
- the pharmaceutical company
- a distributor
- pharmacy-benefit manager (if patient is insured)
Deducing Deductibles: Increasing Drug Costs Land on Patient
Health plans have changed substantially over the lifetime of a baby boomer or millennial. PPO plans which used to have low deductibles with reasonable monthly fees are no longer. High deductible health plans are here to stay. While young and entirely healthy people may do well on a high deductible health plan, anyone who needs any kind of treatment beyond a basic checkup is in for a shock.
Based on their analysis, the researchers found that the primary reason for increasing drug spending is the high price of branded products. While only about 10% of all prescription drugs in the country are brand-name drugs, such as the EpiPen, they account for a whopping 72% of drugs being sold, the researchers discovered. – CNN
And it’s not just the EpiPen. Last year the social internet was in an uproar over the increased price of cancer and AIDs drug Daraprim from $13.50 to $750 in one year. Albuterol, an asthma medicine, has also gone up in price in recent years (I did use that once when I had pneumonia and could barely breathe – I am glad it wasn’t cost prohibitive to get at the time.) A House of Representatives report found in 2014 that 10 generic drugs experienced price increases just a year prior, ranging from a 420% hike to more than 8,000%.
A study published by the Journal of the American Medical Association in April found that between 2002 and 2013, insulin’s cost had leapt by more than 200 percent, from $231 to $736 per patient annually.
“Insulin is a life-saving medication,” William Herman, one of the study’s authors and a professor of medicine and epidemiology at the University of Michigan School of Public Health, told Stat at the time. “There are people with type 1 diabetes who will die without insulin. And while there have been incremental benefits in insulin products, prices have been rising. So there are people who can’t afford them. It’s a real problem.”
Even those on Medicare have gaps in coverage that force them to skip shots of Insulin and in many cases can go blind or lose a foot due to amputation, writes Jordan Weismann in a recent Slate article.
As always, though, the overriding issue is that unlike most developed nations, the U.S. government doesn’t cap what drugmakers can charge. Instead, we have a semifree market that lets essentially monopolistic drugmakers set prices for essential drugs, with the frequently misplaced assumption that generic competition will lower costs somewhere down the line. In the case of insulin, we’re starting to see the human casualties the system leaves behind. – Weismann, Slate
Meanwhile, consumers continue to complain and protect the EpiPen price increase, but what good can it do? Mylan’s stock plummeted 11% (for the short term anyway) because of all the backlash — but the CEO is still racking in a hefty salary and her golden parachute is there for her should shit really hit the fan. The company tried to help quel the chaos by noted that it would expand its existing patient-assistance program, which provides discounts to those who can’t afford the out-of-pocket price of a drug.
The problem, advocates explain, is that when Mylan expands its existing patient assistance program, it’ll help only a small number of people who can both demonstrate financial need and already pay a significant portion of their costs out-of-pocket. The move will not help the vast majority of Americans whose insurance companies pay for the majority of their drug costs. In their cases, their insurance companies will continue to pay through the nose for the drug. — Time
“The price of EpiPen is outrageous,” said Robert Weissman, president of consumer watchdog group Public Citizen, to Reuters. “Mylan is endangering lives and ripping off the country.”
Weissman said EpiPen’s U.S. price should be rolled back sharply, noting the product is available for as little as $112 in Canada. Many other drugmakers also routinely raise prices of their prescription drugs by 10 percent or more each year, and U.S. legislation is needed to prevent such “price spikes,” he added.