Creates monopolies
driving up healthcare costs
The Lack of EpiPen
Competitors Is the FDA's Fault by Tyler Durden Aug
25, 2016 Submitted by Jonathan Newman via the Mises Institute,
There’s a new bout of outrage over an expensive medicine or medical
treatment. While the good in question changes each time,
the blame always seems to fall on greedy corporations who just aren’t regulated
enough. Free markets and capitalism are the scapegoat, even when nothing
remotely resembling unhampered markets in health care is in place in the United
States.
This time, it’s the EpiPen, a device that easily and safely injects epinephrine to
quickly open up airways for people undergoing severe anaphylaxis because of an
extreme allergy. It has saved the lives of countless people who are allergic to
bee stings, certain foods, or other drugs because it can be administered on the
spot by somebody without any medical training.
EpiPen is sold
by Mylan, and the price for a pack of two has increased from about $100 in 2007
to over $600 as of May 2016. Mylan has
tried to quell the storm by pointing out that many of their customers pay
nothing for the drug because of insurance. Their deflection has been unsuccessful.
The economist looks for competitors in cases like this. A firm cannot just willy-nilly raise
their prices without a competing firm leaping in to give consumers what they
want at a lower price. As it turns out,
Mylan has a great friend who keeps would-be competitors out of the market, or
at least makes it so difficult for them that they eventually go out of
business. That friend is the FDA.
With the FDA, patents, and cozy insurance relationships, Mylan has been
able to steadily increase the price of EpiPens without significant market
repercussions. Though, the
current backlash may push many patients and doctors to look for alternatives.
The only problem is that alternatives are few and far between because of
government interventions.
Epinephrine is extremely cheap—just a few cents per dose. The complications come from producing
the easy auto-injecting devices. Mylan “owns” their auto-injector device design, so
competitors must find work-arounds in their devices to deliver the epinephrine
into the patient’s body. This task,
coupled with the tangled mess of FDA red tape, has proven to be difficult for
would-be EpiPen competitors. It’s like expecting somebody to come up
with a new way to play baseball without bases, balls, gloves, or bats, but
still getting the game approved by the MLB as a baseball game substitute.
A French pharmaceutical company offered an electronic device that
actually talks people through the steps of administering the drug, but it was recalled because of concerns about it
delivering the required dose. Just this year, Teva Pharmaceutical’s attempt at
bringing a generic epinephrine injector to market in the US was blocked by the FDA.
Adrenaclick and Twinject were unable to get insurance companies on board and so
discontinued their injectors in 2012.
Adrenaclick has since come back, but it is still not covered by many
insurance plans, and the FDA has made it illegal for pharmacies to substitute
Adrenaclick as a generic alternative to EpiPen. Another company tried to
sidestep the whole auto-injector patent barrier by offering prefilled syringes,
but the FDA has stalled them, too.
Mylan has been repeatedly protected from competition, and it has
repeatedly (and predictably) increased the price of EpiPens in response. Allowing all of these companies to
compete in producing epinephrine auto-injectors would be the best course for
all of the many patients who want a cheaper solution for severe allergic
reactions.
One thing is
for sure: capitalism is not to blame.
Government regulations have choked this market and many others. What we need is a big dose of freedom.
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