Fraser Forum

U.S. should follow Canada’s lead on EpiPens

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If you follow the health reform debate in the United States, you know that every once in a while a pharmaceutical executive decides to poke the political dragon by jacking up the price of a prescription drug. This time around, it is Mylan, the maker of the EpiPen, which injects a drug that counters severe allergic reactions (anaphylactic shock).

According to Aaron E. Carroll, writing in the New York Times, the real (inflation adjusted) price of EpiPens has risen 4.5 times since 2004. The latest price hike took the cost to over $600 for a two-dose package. Making the story even juicier, the CEO of Mylan is the daughter of a U.S. senator!

This is causing some Americans to order EpiPens from so-called “Canadian” Internet pharmacies, which exposes them to the danger of counterfeit or expired products, according to Consumer Reports. There are a few things the Food and Drug Administration (FDA) could to do relieve American patient pain, but the easiest would be to follow Canada’s lead and allow EpiPens (and their sole current competitor, Adrenaclick) to be sold over-the-counter, instead of by prescription only.

Both Carrol and the Wall Street Journal have described how government has enabled EpiPen’s manufacturer to hike prices so much. EpiPen is complicated, being both a drug and a device. The drug is very inexpensive, and not patented. The device is protected by patents issued in 2005, which expire in 2025.

First, the U.S. government has made interventions in the market that have imposed higher costs on consumers. The federal government changed its guidelines such that the EpiPens have to be sold in packages of two (while customers might prefer just one, or at least an odd number). Also, the federal government gave public-emergency grants to states on condition they stockpile EpiPens, which increased the demand for the product , thereby putting upward pressure on its price.

Further, FDA has hindered other manufacturers’ ability to compete. Those with differentiated products (which do not infringe the patents) have struggled for market access. A competing device which entered the market in 2013 had to withdraw in 2015 after 26 potential malfunctions in the U.S. and Canada, in which it delivered the wrong dose. However, according to the FDA’s own report of the recall:

None of these device malfunction reports have been confirmed. In these reports, patients have described symptoms of the underlying hypersensitivity reaction. No fatal outcomes have been reported among these cases.

In hindsight, we might conclude a caution might have been a better response than a recall. By creating an environment in which EpiPen prices are higher than otherwise, the U.S. federal government may have made them unaffordable to many families. That will cause more harm than 26 unconfirmed cases of bad dosing by its now unavailable competitor.

Devon Herrick of the National Center for Policy Analysis explains that about one billion dollars’ worth of EpiPens are thrown out unused in the U.S. because they need to be immediately at hand but expire after about a year. Because of EpiPens’ prescription-only status, Americans likely stockpile (and dispose unused) more EpiPens than they otherwise would. Like in Canada, U.S. pharmacies have evolved into very consumer-friendly retail environments—almost more like supermarkets or departments stores than old-chemist shops. If patients knew they could walk in and grab an EpiPen like a tube of toothpaste, they would not need to stockpile as many as they do when they have to go to a physician for a prescription.

Further, EpiPen is better known than its competitor, Adrenaclick, and is used colloquially (and wrongly) as a generic name (like Coke and Kleenex are similarly abused).  So it’s hard to break through doctors’ prescribing habits to induce them to prescribe the less-expensive Adrenackick (especially because U.S. doctors are notoriously ill-informed about how much their patients have to pay for drugs). If the two products shared the same shelf space, over-the-counter, in a pharmacy, that in itself would create price competition.

So when it comes to regulating EpiPens, the U.S. should consider following Canada’s lead.