Who’s Really to Blame for the EpiPen Controversy?


September 8, 2016 10:58AM

If you have turned on the news in the past few weeks, you have undoubtedly seen the controversy over EpiPen’s price hike. People are enraged that Mylan Pharmaceutical, the company that produces EpiPens, increased the price of the product by over 500% within the past 8 years. The EpiPen, a device used to combat allergic reactions, is a necessity for families and individuals all around the world who fear severe symptoms and possible death due to an allergic reaction. Although politicians on both sides of the aisle have criticized Mylan’s decision to charge $600 for a two-pack of EpiPens, they have not acknowledged the real cause of Mylan’s ability to raise prices so significantly, the government.

Although many people have been quick to jump to conclusions and characterize Mylan as a greedy corporation, there is more to the story. For some brief background, Mylan Pharmaceuticals coined the term EpiPen and now essentially has a monopoly over the multi-billion dollar market. It should come as no surprise that a company with a monopoly can increase prices without losing many customers and thus without hurting their bottom line.

Many competitors have tried to enter EpiPen market; however those interested in entering found that the barriers to entry were too high and the complicated and demanding regulations set forth by the FDA were too onerous or expensive to meet. The EpiPen, an auto-injector, is a syringe like device loaded with a dose of a particular drug, which in this case is epinephrine. In 2015, after Sanofi Pharmaceutical Company’s auto-injector’s delivered only a few incorrect doses, the FDA pressured them to withdraw their product from the market. In February 2016, the FDA rejected an application from another pharmaceutical company, TEVA, who wanted to introduce a generic EpiPen (an auto-injector loaded with epinephrine) into the market. Most recently, the FDA prohibited another potential competitor to Mylan from entering the market by forcing the company to expand their patient trials and reliability studies. All of these examples show how the FDA has, through regulations, forced competitors out of the market and essentially handed Mylan a monopoly over the multi-billion dollar epinephrine market.

The 1984 Waxman-Hatch Act, which got rid of the regulatory hurdles for generic copies of patented drugs, shows the benefits of less government involvement in healthcare. Due to this act, generic drugs now account for 84% of all prescriptions (from 19% in 1984) and their prices are down 70% over the past eight years (branded prices have risen 164%). The decline in prices is due to the fact that competition increased when regulatory hurdles were slashed.

It is also important to note that over the past eight years, Mylan has spent millions lobbying Congress and donating to political campaigns around the country. Mylan has clearly had a significant influence over the regulatory processes that govern the market it now dominates. The media and consumers should not just place blame on Mylan for these outrageous price increases, but should place blame on the mouth that has fed it and allowed it to turn into what it is today–the government.