EpiPen, the life-saving allergy product, is now a $US1 billion ($1.3 billion) a year business for Mylan, a drug company that's currently enduring a wave of bad publicity over the extraordinary surge in US EpiPen pricing. In 2007, an EpiPen in the US cost about $US57 ($75). Today that price has skyrocketed to over $US600 ($787) — all for about $1 worth of injectable medicine. Image: Jim Cooke, Photo: Getty
EpiPen is an emergency medication that's stabbed into a person experiencing anaphylactic shock, a life-threatening allergic reaction that can be triggered by anything from bee stings to food. I've never used an EpiPen, but as someone with a peanut allergy who once made his own trip to the ER after a particularly unfortunate restaurant experience ("these Chinese beans sure are crunchy...") I can tell you that anaphylactic shock is really no fun.
And while it's incredibly scary, the worst case scenario is exceedingly rare: Between 1999 and 2009, deaths from anaphylactic shock in the United States ranged from 186 to 225 deaths per year. To put that in perspective, about 4800 American adults die from choking on their food every year. But Mylan hasn't yet found a way to extract $US1 billion ($1.3 billion) from the Heimlich manoeuvre.
"We're only touching about 2 million, 2.5 million people and believe it's well, well above that, people that are are risk for anaphylactic shock," said Heather Bresch, Mylan's CEO, in October of 2011. At the time, the EpiPen had roughly 98 per cent market share, essentially dominating the market.
But Mylan wanted more, and a series of savvy manoeuvres allowed them to get it. From FDA policy changes that expanded the number of consumers to which the product could be marketed, to legislation signed in 2013 that put EpiPens in schools across the US, the US federal government has helped Mylan stack the deck for its product. Oh, and Sarah Jessica Parker helped too.
File photo of an EpiPen 2-Pak (AP Photo/Mark Zaleski)
Mylan acquired the EpiPen when it bought a group of medications from drug company Merck in 2007. At the time, the product only produced about $US200 million ($262 million) in revenue. Today, according to Bloomberg, it makes about $US1 billion ($1.3 billion) per year for the formerly US-based company, now headquartered in the Netherlands after a corporate inversion last year.
The EpiPen is no longer covered by patent protection, but it still has no real competitors. Auvi-Q, the only thing that came close, was recalled for delivering faulty dosages almost a year ago. A competing drug company, Teva, didn't win approval for its generic version of the EpiPen this year. Teva won't try to win FDA approval again until at least 2017.
So what can a company like Mylan do to increase profits on an old product, like EpiPen, when it's already captured 98 per cent market share and has no real competitors?
One option is to increase prices. The second is to increase the size of the market by convincing regulators, like the FDA, that the product should be marketed directly to a wider swath of the population. Then, a company can swoop in with high-profile (albeit backdoor) endorsements, from people like Sarah Jessica Parker, to increase awareness about the conditions that EpiPen treats. Or, better still, why not push to have institutions like public schools incentivised under US federal law to carry the product? Mylan has spent the past decade doing all of the above.
Americans with expensive health insurance pay about $US30 ($39) each for EpiPen. But not everyone is so lucky. Families with lower cost, high deductible plans are reportedly paying anywhere from $US150 ($197) to $US400 ($525) for a single pack of EpiPens. And parents who now see EpiPens as a necessity are fearing for their children's lives when they can't access the drug. Especially when the new normal established by public awareness campaigns is that people at risk for anaphylactic shock should have multiple EpiPens — at work, in the car, at home, at school and on their person.
President Barack Obama signs the School Access to Emergency Epinephrine Act (H.R. 2094) in the Oval Office of the White House on 13 November 2013 (Photo by Kristoffer Tripplaar-Pool/Getty Images)
Some members of US Congress are not only calling for Mylan to immediately lower the price of EpiPen, but for investigations by the FTC within the next few months. What they don't mention is that many of them helped create this situation, even if it was with the best of intentions.
"This outrageous increase in the price of EpiPens is occurring at the same time that Mylan Pharmaceutical is exploiting a monopoly market advantage that has fallen into its lap," Senator Amy Klobuchar from Minnesota said in a recent statement criticising Mylan's business practices.
"Patients all over the U.S. rely on these products, including my own daughter," she continued. "Not only should the Judiciary Committee hold a hearing, the Federal Trade Commission should investigate these price increases immediately. The Commission should also report to Congress on why these outrageous price increases have become common and propose solutions that will better protect consumers within 90 days."
But US Congress spent the past few years helping Mylan get into schools with virtually no thought to the fact that it had a monopoly on a life-saving drug.
In 2013, President Obama signed the School Access to Emergency Epinephrine Act. It was that rare piece of legislation that both Democrats and Republicans agreed upon (Klobuchar was a co-sponsor of the legislation). "This is something that will save children's lives," Obama said.
The law did two things: It essentially protected anyone at public schools from any damage, provided they injected students with EpiPens in good faith. Which is to say, it was basically a Good Samaritan law for allergy-specific situations. Previously, first responders and public school nurses were the only people allowed to inject children with epinephrine if they were having an allergic reaction. And in the case of the school nurse, it was almost always the case that they could only inject the child if the EpiPen belonged to the child. The new legislation encouraged the stocking of EpiPen reserves, and made those reserves communal.
"Some people may know that Malia actually has a peanut allergy," President Obama said at the time about his daughter. "She doesn't have asthma, but obviously making sure that EpiPens are available in case of emergency in schools is something that every parent can understand."
The bill also provided some financial incentives for schools that didn't already stock the EpiPen to start stocking them. Which seems well and good, until you realise that without any real competition, you're creating a situation where once that drug company has a presence in virtually every school in the country, it can raise prices.
Not everyone liked the law when it was first proposed. Specifically, the National School Superintendents' Association, AASA, objected on the grounds that it was going to be costly, especially since the auto-injectors would have to be replaced constantly. The EpiPen only has a shelf life of about 12 months.
Mylan has a program that distributes free EpiPens to schools. So I asked Mylan over email if its program restocks the product for a certain number of years after they expire. The company didn't respond to my question and instead sent a generic prepared statement: "Since the start of the EpiPen4Schools® initiative in 2013, more than 700,000 free EpiPen® Auto-Injectors have been distributed, and more than 65,000 schools, approximately half of all U.S. schools, have participated in the program," the relevant part of the statement reads.
Around 2010, new guidelines from the FDA stated that patients who get the 0.3 mg dose of epinephrine in a single EpiPen should actually be prescribed two 0.3 mg doses. So EpiPen started selling the product exclusively in double packs.
Another big switch at the FDA? The agency opened up the floodgates when it allowed EpiPens to be marketed to people who potentially had a risk of an anaphylactic reaction in 2008. Previously the product could only be marketed to people who had a proven anaphylactic response to allergens.
"The labelling change to the Indications Language in the EpiPEN label was approved in 2008 to clarify the indication," FDA spokesperson Theresa Eisenman told me over email, referring to whom the product could be marketed to specifically.
"The aim of using EpiPen is to prevent a life-threatening situation (i.e. full-blown anaphylaxis with circulatory /respiratory collapse etc.) Clinically, there is a broad spectrum of anaphylaxis presentations that require clinical judgment. The goal of using EpiPen is to prevent symptoms from progressing."
Sarah Jessica Parker appearing on Access Hollywood Live in May 2016 to talk about her son's peanut allergy (Screenshot)
So where's all that money that Mylan's making going? Some is presumably going to actress Sarah Jessica Parker, who was approached by Mylan to talk about her son's life-threatening allergy through the campaign Anaphylaxis for Reel™. The campaign, whose name was trademarked this past May, encourages people to go online and share stories about how severe allergies have affected their families, and make an "anaphylaxis action plan".
You'd be forgiven if you mistook Anaphylaxis for Reel™ as a charity group. The YouTube page for The Doctors TV show on CBS even misidentifies the group as a nonprofit organisation, and doesn't acknowledge that during Sarah Jessica Parker's appearance on the show she's speaking on behalf of Mylan.
From the YouTube description:
Actress Sarah Jessica Parker opens up about her son James Wilkie's life-threatening allergy, and the terrifying day that he went into anaphylactic shock. She also shares her passion for the non-profit "Anaphylaxis for Reel."
Anaphylaxis for Reel™ isn't a charity. It's an awareness campaign, started by Mylan and aimed at parents and the roughly five per cent of American kids who have a food allergy. And there's nothing wrong with awareness campaigns. But Mylan isn't raising awareness out of the kindness of its heart, nor would we expect it to. Mylan is in business to make money, and hired Sarah Jessica Parker to be a spokesperson to, by extension, sell more EpiPens.
Sarah Jessica Parker never says the brand name EpiPen when she does TV appearances for Mylan. As you can see in one example below, she says her son "always has two epinephrine auto-injectors and he always has them on his person. Always, always, always."
Of course, EpiPen doesn't have any competition, so if you go to the doctor and ask for an epinephrine auto-injector, you can guess what you'll get. Even if a competitor entered the market tomorrow, they'd be no threat to EpiPen in the short term. And Mylan CEO Heather Bresch has acknowledged in recent earnings calls that generic competitors would probably only help expand reach. EpiPen is essentially the generic name for this product in the minds of consumers — the Kleenex of plastic tubes you stab yourself in the leg with when you think you're going to die.
A post from Sarah Jessica Parker's Instagram account promoting the Anaphylaxis for Reel campaign (Instagram)
Sarah Jessica was a spokesperson for Mylan's anaphylaxis awareness campaign. Epinephrine auto-injectors have been a vital part of her family's health care, as recommended by the family pediatrician to help manage her son's life-threatening peanut allergy. She has always been forthright about her connection to this campaign, both in background materials sent to press in preparation for interviews, as well as in her personal social media posts.
Some people seem to be under the impression that an EpiPen is all you need for a severe allergic reaction. But it's really just the first, life-saving step in treatment. The goal is to open your airways so you can be transported to a hospital and treated by doctors. Which is part of the reason I've stopped filling my prescription for EpiPen. Perhaps stupidly. I'm taking the calculated risk that I live in a major city and can get to a hospital in time, should I have a severe allergic reaction.
Whenever someone offers me food with nuts or peanuts and I explain that I'm allergic, they ask if it's alright that the food is in the same room as me. I have to explain that it's only when I actually eat the nuts that I have a reaction. They still give me a sideways look, like they're endangering my health and don't believe that I'm perfectly safe.
In reality, anaphylactic shock from airborne exposure is so incredibly rare that if you think your allergy can be triggered by being in the same room as peanuts and you're not literally living in a bubble right now, it probably can't.
And the most likely type of accidental exposure, peanuts touching the skin, doesn't even cause anaphylactic shock. One double-blind, placebo-controlled study in 2003 took 30 kids with severe peanut allergies and spread peanut butter over their skin for 15 minutes. A full 27 of the kids experienced no adverse reaction of any kind. The three other kids got mild rashes from the peanut butter.
The awareness campaigns of companies like Mylan have worked. But have they worked too well? Should every kid with even a hint of a sniffle around food be carrying an EpiPen with her at all times? An earnings call from this past February might give people around the rest of the world some inkling of things to come. Mylan continues to expand the market for the EpiPen in the US, but there's a great big world out there.
"Not only do I see it throughout Europe as an opportunity, but as we continue to look and add enhancements and how we bring EpiPen to the market and various other regions around the world," CEO Bresch said. "We do see, like I said, a lot of opportunity even outside of Europe with the rest of the world, as we continue to invest around EpiPen and the awareness of anaphylaxis."
You know what's cooler than a billion dollars? A billion Euros.