The skyrocketing cost of EpiPens is not just socking consumers, it’s also siphoning more money from the government, which spent more than 10 times as much on the allergy treatment in 2014 than it did seven years prior, a nonpartisan analysis said Tuesday.
Medicare’s prescription drug program spent just shy of $88 million on the devices in 2014 compared to $7 million in 2007, which is when EpiPen’s price began a steady rise, the Kaiser Family Foundation said.
The news comes as Congress continues to probe Mylan Pharmaceuticals, the EpiPen’s manufacturer.
Mylan CEO Heather Bresch is slated to testify to the House Oversight Committee on Wednesday about the hike in price from about $100 in 2009 to more than $600 now.
Lawmakers expect more forthcoming testimony from Mrs. Bresch, the daughter of Sen. Joe Manchin, West Virginia Democrat, than they received from Martin Shkreli, the former Turing Pharmaceuticals CEO who enraged House investigators this year by refusing to say why he jacked up the price of a decades-old drug more than fiftyfold. He repeatedly invoked his Fifth Amendment right to silence in a February hearing, then mocked lawmakers later.
In prepared testimony, Mrs. Bresch says Mylan has pored more than $1 billion into improving EpiPen and making it more available, and that the company reaps only $267 of the $608 list price, known in pharma-speak as the wholesale acquisition price.
SEE ALSO: Congress set to grill Mylan CEO over skyrocketing cost of EpiPens
House investigators will also hear from Doug Throckmorton, deputy director at the FDA’s Center for Drug Evaluation and Research, who will testify on the agency’s efforts to approve a generic version of the auto-injector.
On Tuesday, more than a dozen GOP senators asked the Health and Human Services Department’s inspector general to investigate why drugs like the EpiPen are effectively classified as a generic drug for Medicaid reimbursement purposes, even though Mylan holds a monopoly on the device.
Manufacturers pay states a bigger rebate on brand-name drugs (23.1 percent) than for generic drugs (13 percent), so the label might be forcing states to overpay, lawmakers said.
For its part, Mylan says the EpiPen is classified as a “non-innovator” drug, so its rebate schedule is consistent with written guidance from the federal government, although the government recently required the drugmaker to reapply to the Centers for Medicare and Medicaid Services by April 1 to affirm its status.
Mylan acquired the EpiPen in 2007, but the firm’s gradual price increases over the last several years didn’t create a firestorm until this year, as Congress became impatient with headline-grabbing spikes in prescription drug costs.
The EpiPen situation burst into the open on the cusp of the new school year, as parents made sure their children had the devices on hand. Many schools also stockpile the devices, so lawmakers are worried about the implications of price hikes for both school and household budgets.
They also said public programs like Medicare and Medicaid were likely taking a hit, so Kaiser crunched the numbers.
“Although the total cost of the EpiPen to Medicare and beneficiaries may seem modest relative to the cost of more expensive specialty drugs and biologics, our analysis demonstrates that EpiPen price increases have translated into higher spending for Medicare Part D plans, enrollees, and the program overall,” Kaiser said.
The foundation said Medicare spending per EpiPen prescription in 2014 increased by 34 percent, or four times the rate of increase in per capita spending under the program, and 14 times larger than the 2.4-percent increase in medical-care price inflation.
And while the number of Part D enrollees using the auto-injectors did increase, from 80,000 in 2007 to 211,000 in 2014, that spike paled in comparison to the spending bump, 164 percent compared to 1,151 percent.
Kaiser said it was difficult to gauge actual plan costs compared to total Part D spending, since Medicare doesn’t disclose drug-specific rebates.
Using average rebates reported by actuaries from 2007 to 2014, Kaiser assumed EpiPen spending would have increased from $6.4 million to $75.3 million.
In a statement, Mylan said those rebates increased by 440 percent between 2010 and 2015, “which would significantly reduce the increase hypothesized by the report.”
“Given their significance, any analysis that does not take these specific rebates into account is fundamentally flawed,” it said, also noting that Kaiser made estimates based on a small percentage of claims, and that its decision to offer a generic version will significantly reduce costs.
Under pressure, Mylan also offered direct assistance to people with high out-of-pocket costs, while expanding its program for the uninsured and under-insured, so many more families would not have to pay anything for the EpiPens.
“Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full WAC price or more,” Mrs. Bresch says in her written testimony. “We never intended this. We listened and focused on this issue and came up with a sustainable solution.”
Yet lawmakers who called for an investigation into the company’s pricing said the moves amounted to a partial remedy, or “baby step.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
Please read our comment policy before commenting.