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Growing call for FTC to investigate EpiPen maker over price rises

By Jim Spencer • Aug 24, 2016 at 6:53 PM

WASHINGTON — Joining a host of lawmakers calling for an accounting, U.S. Sen. Amy Klobuchar of Minnesota has asked the Federal Trade Commission to investigate whether a drug company violated antitrust laws by steeply increasing the price of a product that treats people suffering from severe allergic reactions.

After hearing from constituents, Klobuchar, whose daughter has nut allergies, questioned Mylan pharmaceutical’s decision to push the price of its EpiPen from $100 in 2008 to $500-$600 in 2016.

“There does not appear to be any justification for the continual price increases of EpiPen,” Klobuchar, a Democrat, wrote to FTC chairwoman Edith Ramirez. “Manufacturing costs for the product have been stable and Mylan does not need to recover the product’s research and development costs because the product was on the market years before Mylan acquired it in 2007.”

In an interview, Klobuchar called epinephrine auto-injectors like the EpiPen a “life preserver” for millions of people, including her child. She called the Mylan price increases an application of “raw market power” by a company that controls virtually all auto-injector sales since competitors recalled or failed to get approval for similar products.

Klobuchar spoke out about the EpiPen pricing in a Saturday Facebook posting that generated big digital buzz, then followed up with a news release Monday, the same day she sent her letter to Ramizez.

Other senators and representatives are speaking out, including Charles Grassley, R-Iowa, Mark Warner, D-Va., and Richard Blumenthal, (D-Va., who on Tuesday sent letters to Mylan CEO Heather Bresch, the daughter of Sen. Joe Manchin, D-W.Va.

“There is huge pressure here, and I hope they bring the price down with school starting,” Klobuchar said.

In any case, she also wants to determine if “systemic changes” in drug pricing policies are in order.

Mylan declined to say if it was considering lowering the price of EpiPens. In reaction to media reports of price increases and the concerns of Klobuchar and others, the company offered a lengthy explanation on its website to show that the product was affordable.

Among other things, Mylan said that in 2015 nearly 80 percent of “commercially insured patients” using a company-issued savings coupon got EpiPens “for $0.” The company also touted an “EpiPen4Schools initiative” that it said has distributed more than 700,000 free EpiPens since 2012.

The growing criticism of Mylan’s pricing caught Wall Street’s attention Tuesday, sending the company’s shares down nearly 5 percent and slicing its market value by more than $1.2 billion.

“Some families don’t have insurance,” Klobuchar said. “They have to pay the whole amount. Other families have really high deductibles. So they are essentially paying the whole amount because the copay doesn’t hit yet … Insurance companies are paying it or the government is paying for it through Medicare or Medicaid. Someone is paying this cost.

As ranking member of the antitrust subcommittee of the Senate Judiciary Committee, Klobuchar said an examination of pricing is warranted.

“Just the fact that they have monopoly power and they increase the price is not enough to say that’s illegal,” she explained. Antitrust laws are triggered if a company uses its market control to limit the trade of competitors. “So that’s what we’ll look at.”

In addition to the FTC investigation, Klobuchar called for a Judiciary Committee hearing on EpiPen pricing that she hopes can produce the political inertia needed to pass four bipartisan bills which she has co-sponsored. The legislation is meant to increase lower drug prices by increasing competition for all kinds of pharmaceuticals. The pharmaceutical lobby opposes all four bills.

One bills allows Medicare to negotiate drug prices with pharmaceutical companies. A second allows reimportation of U.S.-made drugs from Canada, where drug prices are significantly lower than the U.S. For instance, in Canada EpiPens cost less than half of what they cost in the U.S., Klobuchar’s staff said.

The other two pieces of legislation address generic drugs. One forbids makers of brand name drugs from paying to delay introduction of generics. The second speeds up the generic drug approval process.

The issue of drug pricing pushes a hot button. Klobuchar’s Facebook posting about EpiPens quickly drew 5,000 shares. People with tales of EpiPen pricing continue to contact her office.

“At my State Fair booth I’m going to collect more stories,” Klobuchar said. “You have to get the real world experiences of people to make the case.


©2016 Star Tribune (Minneapolis)

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EpiPen pricing fuels new debate over drug pricing

By Steve Twedt and Len Boselovic

Pittsburgh Post-Gazette (TNS)

Calls for generic drug giant Mylan to change the pricing of its lifesaving epinephrine auto-injector EpiPen have gained support from a third senator, further reigniting a broader national debate about the cost of prescription drugs.

Sen. Richard Blumenthal, D-Conn., joined Sens. Charles Grassley, R-Iowa, and Amy Klobuchar, D-Minn., in questioning why the cost of the auto-injector has risen from just under $60 when Mylan acquired it in 2007 to about $600 for a pair now.

In a news release, Mr. Blumenthal demanded Mylan “take immediate action to lower the price of EpiPens for all Americans that rely on this product for their health and safety,” adding that his office has been contacted by dozens of constituents “who urgently require your life-saving product but fear that its skyrocketing price has put it out of reach.”

Mr. Grassley on Monday sent a letter to Cecil-based Mylan CEO Heather Bresch asking her to explain the price increases for the auto-injector, which is used for emergency treatment of severe food or bee sting allergies, and Ms. Klobuchar called on the Federal Trade Commission to investigate whether Mylan had moved to block competitors from entering the epinephrine injection market.

The scrutiny comes at a time of heightened attention and criticism of pharmaceutical companies’ product pricing, an issue brought to the fore last fall when then-Turing Pharmaceutical CEO Martin Shkreli proposed increasing the price of its drug to treat the parasitic infection toxoplasmosis from $13.50 a pill to $750.

About the same time, but receiving less attention, a report by Bloomberg Business Week described how Mylan’s 2007 acquisition of EpiPen from Merck KGaA turned a drug with yearly revenues of $200 million into “a $1 billion-a-year product that clobbers its rivals and provides about 40 percent of Mylan’s operating profits.”

One possible rival, Sanofi US, voluntarily recalled its Auvi-Q epinephrine injector last fall due to dosage accuracy problems which the company said “may include failure to deliver drug.”

With EpiPen’s current “near-monopoly on the market,” Fortune reported this week that Mylan’s auto-injector has netted annual sales of more than $1.3 billion.

S&P Capital IQ analyst Jeffrey Loo does not expect the outrage over EpiPen’s price increase will have a long-term impact on Mylan or the drug industry. He said that high drug prices “have always been a contentious issue” and that Congress routinely holds hearings whenever drug prices surge.

“Mylan’s the latest one with EpiPen. Clearly, from a public relations view, it’s a black cloud,” Mr. Loo said. “But they have a virtual monopoly in that marketplace, so it’s not going to impact their sales. In time, I think this will blow over.”

He said Mylan benefited not only from the Auvi-Q recall as well as rival Teva’s failure to launch a competing version of the drug. Mylan shares closed Tuesday down $2.28, nearly five percent, at $45.62.

During the company’s Aug. 9 earnings call, Mylan CEO Heather Bresch defended the EpiPen’s pricing, saying, “If you look on an annual basis, as a lifesaving drug, to have a WAC [wholesale acquisition cost] price at just under $600, I think that you can see it falls as not an expensive product.”

She also noted the emergence of high-deductible insurance plans has meant that some customers’ plans leave them responsible for the EpiPen’s full cost instead of a lower copayment.

As a result, “As employers shift more cost to employees and make that everything’s got to come out of pocket before you hit your deductible is where you’re seeing a lot of noise around EpiPen.”

Mylan did not return a phone message Tuesday seeking comment. However, in a statement posted on the company’s website Monday, Mylan officials said that in 2015 nearly 80 percent of commercially insured patients using a special savings card got the auto-injector at no cost.

They also pointed to one program which has distributed more than 700,000 EpiPen auto-injectors free to more than 65,000 schools and another which offers consumers up to $100 off for a two-pack carton.

Although Pennsylvania does not require that school districts keep EpiPens on-site, “Any school can apply and if a school physician writes a script, it’s provided free of charge” by Mylan, said Kathy Verbel, the Monroe County-based president-elect of the Pennsylvania Association of School Nurses and Practitioners.

She added that Mylan “also provides educational material” for using the injectors.

EpiPen is the clear leader in Mylan’s specialty drug segment, where net sales in the second quarter this year increased 33 percent to $402.5 million compared with the same three-month period in 2015.

Ms. Bresch said during the Aug. 9 earnings call that EpiPen “will be a very, very important product for a very long time” while adding that “as we continue to grow… EpiPen from a true dollar contribution will just continue to shrink” so the company is not overly reliant on the EpiPen brand.

“But I can tell you that there’s every bit of focus on the role EpiPen plays in the lives and saving lives and then getting to as many patients as we possibly can,” she said.

Steve Twedt: [email protected] or 412-263-1963. Len Boselovic: [email protected] or 412-263-1941.


©2016 the Pittsburgh Post-Gazette

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