America’s drug-pricing scandals all follow the same script. First, the media notice that a certain pharmaceutical giant has hiked the price of a lifesaving drug by several hundred percent. The company’s chief executive receives a public flogging, and offers a few concessions. Members of Congress hold hearings and express outrage, but never get around to voting on proposals to bring down prices. Americans go on paying more than anyone else in the world for their prescription drugs.
The pattern is playing out again with Mylan, the manufacturer of the EpiPen, a device that injects epinephrine to counter extreme allergic reactions. Epinephrine itself is cheap; the injector delivers less than $1 of the medicine. But Mylan has a near-monopoly on its design, thanks to deft manipulation of patent law, aggressive lobbying, and widespread marketing. That’s allowed the company to steadily raise the price of the EpiPen, from $58 for a single pen in 2007 to upwards of $600 for a pack of two. Mylan now collects more than $1 billion a year from EpiPen sales—a windfall made possible by US patent law and American taxpayers (the Department of Defense sponsored the development of the EpiPen’s precursor in the 1970s), but shielded from US taxes because of the Pennsylvania-based company reincorporated itself in the Netherlands in 2014.
The Senate’s Permanent Subcommittee on Investigations announced a “preliminary inquiry” into the price hikes on Wednesday, and New York Attorney General Eric Schneiderman has opened an antitrust investigation into potential anti-competitive language in Mylan’s contracts with school districts in the EpiPen4Schools program. Despite all of this attention, Big Pharma’s latest gaffe is being papered over with some familiar myths about why prices are skyrocketing. Here are five.
Mylan is an outlier
First it was Giliad Sciences, which put a $1,000 per-pill price tag on its hepatitis C drug Sovaldi. Then it was Valeant Pharmaceuticals, which ratcheted up the prices of two crucial heart medications by 525 percent and 212 percent. Next came Teurig Pharmaceuticals and its then-CEO, Martin Shkreli, who smirked and rolled his eyes when members of Congress questioned why his company had raised the price of the AIDs drug Daraprim from $13.50 to $750 a tablet .