A reality based independent journal of observation & analysis, serving the Flathead Valley & Montana since 2006. © James Conner.

26 August 2016

Insulin, EpiPen, and our would-be blessings in Congress

An unholy combination of corporate pirates and Congressional poltroons is putting a life threatening financial squeeze on diabetics and people with acute allergies.

It’s an issue heaven sent for Democratic candidates campaigning for affordable health care and social justice. After all, Montanans who hike on public lands sometimes get stung by yellowjackets, and there are tens of thousands of diabetics under the Big Sky. But so far, Montana’s Democratic candidates have remained silent on the subject. Perhaps that’s because those candidates seek the votes of Republicans, a group that considers Big Pharma’s greed as capitalism at its finest.

Meanwhile, good people with critical medical needs are going through hell.

  • As reported by the Missoulian over the weekend, and the New York Times a few months earlier, the price of insulin increased 168 to 325 percent for 2010 through 2015. In much of Europe, insulin costs one-sixth as much. Was the price increase related to the manufacturing cost of the drug, first used in 1922? No.

  • A two-pack of the EpiPen, a device for rapidly injecting a dollar’s worth of epinephrine to counter anaphylactic shock (such as caused by a bee sting, for example) cost $100 in 2007. Today it costs $608. The EpiPen, which has a de facto monopoly on the market, is manufactured by Mylan, whose chief executive, Heather Bresch, is the daughter of Sen. Joe Manchin (D-WV). Was the price increase related to the cost of manufacturing the injector? No.

In both cases, prices have gone up because shady business practices have sunk to new lows. For insulin, middle men known as pharmacy benefit managers are taking a piece of the action. Think Enron. For the EpiPen, Mylan is raising the price because the company is greedy as a loan shark and there’s no law to prevent its gouging.

Writing in the NYT, Yale endocrinologist Kasia Lipska observed:

In the United States, just three pharmaceutical giants hold patents that allow them to manufacture insulin: Eli Lilly, Sanofi and Novo Nordisk. Put together, the “big three” made more than $12 billion in profits in 2014, with insulin accounting for a large portion.

What makes this so worrisome is that the big three have simultaneously hiked their prices. From 2010 to 2015, the price of Lantus (made by Sanofi) went up by 168 percent; the price of Levemir (made by Novo Nordisk) rose by 169 percent; and the price of Humulin R U-500 (made by Eli Lilly) soared by 325 percent.

To make insulin affordable, we need more competition. Nothing would do this faster than a “generic” form of insulin. (Technically, because insulin is made using bacteria, it should be referred to as a “biosimilar” instead of a “generic.”) Unfortunately, there isn’t one available in the United States.

This is true, in no small part, because the big three have cleverly extended the lives of their patents, making incremental “improvements” to their insulin. It’s not clear whether the newer insulin products are significantly safer or more effective than their predecessors, yet the strategy has been effective: There is no generic insulin, and over 90 percent of privately insured patients with Type 2 diabetes who are prescribed insulin get the newer and more expensive products.

EpiPen manufacturer Mylan, feeling the heat, recently announced a program to reduce the out-of-pocket costs of patients. That certainly will help some, although not many, but it’s not a solution to the problem of high prices. Rather, as Michael Hiltzik notes in the LA Times, it’s a public relations con:

Programs such as Mylan’s actually preserve, not reduce, its pricing power and profits. By covering the out-of-pocket expense for the neediest and most vulnerable patients, the company hopes to quell the public uproar over its price boosts for the EpiPen. That uproar has generated calls for investigations on Capitol Hill and a crash in the company’s stock price, which lost more than 10% in a matter of days as the controversy erupted.

You’ll notice that Mylan isn’t offering to reduce the wholesale or retail price of the EpiPen. Insurers and the government programs will still have to pay its asking price. Its cost to cover co-pays for the relatively small number of customers served by the program will be vastly outweighed by its profits on the device, which racked up $1 billion in sales for the company last year, at a profit margin that may approach 55%.

Can this price gouging be stopped? Can prices be brought down to life saving levels? Yes — but not by the invisible hand of the marketplace. Only the iron fist of the government has the power to pound Big Pharma’s ripoff prices into submission.

Will Democratic candidates have the steel to raise hell to lower prices and save lives? Or will they steal away with silence, hoping not to offend the Republican votes they seek?