Tuesday, September 27, 2016

The lesson of EpiPen

Posted By on Tue, Sep 27, 2016 at 7:39 AM

Ernest Dumas this weeks writes about the high-priced  EpiPen, a symbol of a Congress controlled by drug makers, as well as rising health care costs.

By Ernest Dumas

Congressional Republicans and Democrats staged a rousing display of rage against the CEO whose company gouged a fortune from families whose kids and sometimes grownups need the lifesaving properties of the drug EpiPen.

The national fury over the fleecing of sick children by Mylan NV, which bought the rights to the allergy antidote and jacked up the price of a dose from $57 to $600, followed by the Mylan executive's rough treatment in Congress, caused some wonder. Could Washington at long last be spurred to do something about the chief driver of staggering health-care inflation?

Don't be silly. Congress will do nothing of the sort. It and successive presidents have squandered every golden opportunity, including passage of two sweeping health-reform laws, the Medicare Modernization Act of 2003 and the Patient Protection and Affordable Care Act of 2010, a.k.a. Obamacare. Like previous laws, they imposed cost-saving rules on providers and insurers, but to get anything enacted Congress gave the drug companies a pass.

Since 1995, premiums for health plans have risen four times faster than family earnings and five times faster than inflation, owing mostly to drug prices and especially those of life-saving medicine where drug companies know the market will bear any price hike.
Government, in the persons of Congress, the Food and Drug Administration and the Department of Human Services, actually assists the gouging by approving bigger prescriptions—a mandatory twin pack in the case of EpiPen—or, also in the case of EpiPen, requiring many schools to stock them for emergencies. EpiPens have a brief shelf life so they must constantly be replaced. Mylan got Congress to provide block grants to states to stock EpiPens in schools.

Insurance companies merely raise premiums to cover the soaring costs. When Congress passed Medicare coverage for drugs in 2004, it defeated attempts by a few Democrats, including East Arkansas's Marion Berry, to control drug prices. Congress even barred the government from negotiating discounts for mass usage or from acquiring drugs in Europe or Canada where prices are far lower.

As critical cancer drugs went on the market the past 15 years, prices soared. A new cancer drug may cost a patient or her insurer more than $100,000 a year. Employer and individual plans often don't cover them. Cancer drugs are a leading cause of bankruptcies.
You may remember the fury last year after the egomaniac Martin Shkreli's company bought rights to a drug for a parasitic infection that was deadly for babies and AIDS sufferers. Shkreli became a symbol of Pharma greed when he raised the price of the drug, which had been around for decades, from $13.50 to $750 for one tablet. Shkreli, CEO of Turing Pharmaceuticals, regretted not raising it even more because people had to buy it or probably die. There was some satisfaction when the U.S. attorney in Brooklyn had Shkreli arrested. But his arrest had nothing to do with exploiting sick people. He was charged with securities fraud because he used drug profits to pay off investors who had lost money with his hedge fund.

To understand why no one messes with pharmaceutical profits, except to complain occasionally, you only have to switch on any TV channel and watch commercials for an hour. You know who pays the freight for public discourse.

Congressmen scored some points against EpiPen's blithe chief saleswoman, CEO Heather Bresch, but in the end it was her day, not theirs. The super-polite Rep. Elijah Cummings, D-Md., asked Bresch if she could confirm that her base annual salary was $18.9 million and that the EpiPen alone brought profits of "hundreds and hundreds of millions of dollars a year" for her company. She replied sweetly, yes and yes.

While Mylan was jacking up EpiPen's price annually, Bresch's salary went from $2.4 million to $18.9 million. Mylan's income was spent on more than executive pay. It spent lavishly on ads to promote what it called "increased anaphylaxis awareness": persuading people they needed easy access to EpiPens to avert their allergic child's sudden death.
Maybe a new president and Congress will be different. Donald Trump sided with Democrats on letting Medicare and Medicaid negotiate with drug companies and buy drugs from countries with socialized medicine, but otherwise he says only that he'll solve the problem as soon as he repeals Obamacare and ends health insurance for 20 million people. Big Pharma flushed lots of money into presidential campaigns, Hillary Clinton's more than any other, but she has been more critical than others of the whopping prices of generic and new drugs. She laid out a long list of things she would do to control drug prices, including getting Congress to levy stiff fines on companies that raise prices unjustifiably and importing vital drugs from countries with high safety standards.
You read it here first. None of it will happen.

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Speaking of EpiPen

  • EpiPen lesson

    September 29, 2016
    Congressional Republicans and Democrats staged a rousing display of rage against the CEO whose company gouged a fortune from families whose kids and sometimes grownups need the lifesaving properties of the drug EpiPen. /more/
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