“Our decision to launch a generic alternative to EpiPen is an extraordinary commercial response,” Mylan CEO Heather Bresch said in a statement.
But the company’s ability to produce a generic option at half-price over the weekend suggests that its recent price increases have little to do with the economics of developing and producing the drug and device—which is how pharmaceutical executives usually justify high prices. The original EpiPen’s cost has inflated from under $100 in 2007, to $600 today. The generic version will sell for about $300.
The plastic emergency device automatically injects the drug epinephrine into people suffering from allergic shock or asthma attacks. Epinephrine, a chemical akin to the human hormone adrenaline, can help prevent heart failure and breathing trouble.
EpiPens are a staple of schools and summer camps where children can be exposed to allergic shocks they may not be prepared for; in 2013, US president Obama actually signed a law encouraging schools to purchase them.
Though EpiPen has gradually increased in price over the last decade, only this summer did a spate of media reports—starting with a story at STAT in July—lead to broader scrutiny. Members of congress, including senator Chuck Grassley, who leads the committee that oversees US health spending, were not happy that Mylan jacked up the price. Nor were they impressed when Mylan offered $300 rebate coupons for the device after public outcry.
“[It] doesn’t appear to change the product price,” Grassley said on Aug. 25. ”The price is what Medicare, Medicaid and insurance companies pay. It’s what patients who don’t get assistance cards pay.”
The surprise announcement of Mylan’s new $300 generic version appears to be designed to forestall public testimony by executives, and avoid the kind of harsh publicity that hit investor Martin Shkreli and his Turing Pharmaceuticals. Turing increased the price of a drug used by AIDs patients more than 5,000% last year. Congressional scrutiny later laid waste to Shkreli’s image (he was later indicted on securities fraud charges) as sales of the pill plummeted.
Mylan faces the additional wrinkle that CEO Bresch is the daughter of senator Joe Manchin, a conservative Democrat from West Virginia.
But congress seems unlikely to be deterred now that they have a new question to ask: Why wasn’t the cheap alternative on the market earlier—and is a 300% price increase over nine years any more reasonable?