Here is what we heard on the news lately: Consumers are shocked at the price increase in EpiPens, the brand name of an epinephrine
auto-injector used by those with severe allergies. In some cases, this is a lifesaving
medication that patients are advised to carry with them at all times. In a more toned down version, the New York Times wellness blog states: “A steep increase in the price of the EpiPen, a lifesaving
injection device for people with severe allergies, has sparked outrage among
consumers and lawmakers.”
In the business of EpiPens, I am completely
disinterested. No one in my family or
circle of friends is affected. The
report made me think, though, about some
healthcare-related issues that reach past the current controversy.
The first is the issue of news media objectivity. Upon first hearing the wording of these
reports – shocked and outraged – they made it sound like the price of the
medication shot up overnight. In reality
the price increase, from around $100 to over $600, took place over about eight
or nine years at an average compound rate of about 30%. This is still highly unacceptable, but it did
not come as a sudden blow.
Here are the facts according to Elsevier Clinical Solutions’
Gold Standard Drug Database. A two-pen
set had been selling for less than $100 until the pharmaceutical company,
Mylan, acquired manufacturing rights in 2007.
By 2009 the wholesale price was up to $103.50 and four years later
$264.50. Last year it was $461, and it
went up again to $608.61 this May. I
would think the backlash would have started far sooner than this, but most
people are shielded from these incidents by their insurance and it takes a big
increase to spark outrage.
Consider the whole insurance mess. First not everyone pays the full price for a
number of reasons. The USA Today reported: “The average wholesale price
of EpiPen has increased by nearly 500% since 2009, while the price that insurers
and employers pay to Mylan is up 150% since 2013, according to Rx Savings
Solutions.” The insurance companies
and employers cut their own deals as we all know from looking at our own
insurance explanation of benefits (EBO) forms.
There is a price charged and a price allowed by insurance.
The company’s response was to broaden their practice of
offering coupons to those who can least afford it, raising the coupon value
from $100 to $300 and doubling the income level for eligibility to 400% of the
federal poverty level (or $97,200 for a family of four) "for patients in
health plans who face higher out-of-pocket costs." But so far they have refused to lower the
price. So as the New York Times reminds us: “People without insurance or with high-deductible
insurance plans” and those with higher income will still pay full price, around
$640.
Meanwhile, a USA Today article cites Martin Shkreli “blaming
insurers for not covering the tab.” In
case you don’t recall, he is the one who, while CEO of drug company Turing last
year, raised the price of an antiparasitic drug by 5,556 percent in a
single move. He currently faces security
fraud charges and is no longer in that position, so why anyone would interview
him or trust his judgment is puzzling.
Finally, the USA also states: “There's no generic equivalent
and no brand-name competitor.” But
Consumer Reports just a few days ago told a different story: “to get the low-cost, EpiPen alternative, you
can't use a prescription for ‘EpiPen’ from your doctor. That's because pharmacists
at your drugstore likely won't be able to automatically substitute the low-cost
version if your prescription is written for EpiPen. Instead, ask your doctor to
write a prescription for an ‘epinephrine auto-injector’.” They found this alternative available at
WalMart for $142.
What do we make of this jumble of reports? First, the news media loves to exaggerate, if
not misrepresent, situations just to get us worked up. They talk about shock and outrage, implying a
replay of the Turing situation when this case has been developing over several
years. They tell us there is no
competition when a little easy research turns up an alternative medication.
Second, you don’t fix healthcare costs by fiddling with
insurance (or offering coupons). The
insurance system is broken. It’s
complicated and confusing. They
negotiate their own rates, but the full price remains the full price. Customers are forced to play by their rules
and restrictions, but full price survives and continues to rise at the whim of
the providers. When there is no
competition, or the alternatives are unknown or “out of network”, customers
have no choice and the system continues to protect the rule makers and the
price setters.
We must begin to use critical thinking and calming
perspective to question everything we hear from the media, to sort through the
hype to get to the real issue. Remember,
they decide not only how to present the news, but what they determine to be news
in the first place. Both decisions have
an underlying profit motive.
We must also question everything politicians tell us about a healthcare crisis and proposed solutions.
No amount of insurance manipulation or government bullying will get to
the core issues, lack of competition and lack of free choices. Fixing that situation is the only way to put
downward pressure on prices.
September 17 update: Headlines from Fortune: "A Minnesota Doctor Is Trying Get a $50 EpiPen Alternative to Market." It's a lot cheaper and more convenient. This is more evidence of the power of competition over insurance or coupons as a solution to the "healthcare crisis." (Reference: http://fortune.com/2016/09/15/epipen-alernative-cheap/)
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