NCPA - National Center for Policy Analysis

A Modest Proposal to Reduce the Price of EpiPens

October 3, 2016

Senior Fellow John R. Graham writes at NCPA's Health Blog.  A version of this Health Alert was published by Forbes.

Posturing politicians on Capitol Hill conducted a hearing a few days ago, in which they grilled Heather Bresch, CEO of Mylan. N.V., which makes EpiPens. Prices of EpiPens have skyrocketed in the last few years. According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

The politicians were more interested in wagging their fingers and tut-tutting at Ms. Bresch for the amount of money she has made, than actually figuring out a way to lower the price of EpiPens. (By the way, Ms. Bresch testified she has no intention of reducing prices in response to their badgering.) 

Devon Herrick of the National Center for Policy Analysis recommends EpiPens be made available over-the counter (OTC). Herrick explains that about one billion dollars' worth of EpiPens are thrown out unused in the United States, because they need to be immediately at hand but expire after about a year.  Pharmacies have evolved into very consumer-friendly retail environments -- almost more like supermarkets or department stores than old-chemists' shops. If patients knew they could walk in and pick up EpiPens from the pharmacy, they would not need to stockpile as many injectors as they do when they have to go to a physician for a prescription.

Does this sound too risky? Not in Canada, where both EpiPen and its competitor, Adrenaclick, are sold OTC. An EpiPen sells for about $80 (U.S.), about one eighth the price in the United States. Before you start rhapsodizing about the benefits of a single-payer, government-monopoly health system like Canada's, please note even prescription drugs are not covered by most provinces' health plans and OTC drugs hardly at all. Some Canadians have employer-based coverage that includes EpiPens, but they are not subject to government price controls. The free market is at work.

However, even in Canada the federal government decides whether a drug is available by prescription or OTC. If American politicians ever decide to do something even more fundamental to free up competition, here is a proposal they should be debating: Eliminate the FDA's power to decide how a drug is distributed.

The Durham-Humphrey Amendment gave the Food and Drug Administration the power to decide whether a drug is available only by prescription or OTC. The law passed in 1951, half a century after the FDA was instituted. Even if you believe Congress should prevent drugs from being available until the FDA has proven their "safety and efficacy," that does not necessarily imply the FDA should decide whether the drug should be prescribed or dispensed OTC.

The Durham-Humphrey Amendment was passed to increase control over the distribution of amphetamines, but it quickly metastasized to a general federal control over prescribing. Whether it solved the inappropriate consumption of amphetamines is not the topic of this column, but the continuing flurry of legislation attempting to control the opioid epidemic suggests government has not quite figured out how to deal with drug abuse.

Anyway, what would happen if manufacturers had the responsibility to decide how to distribute their drugs, via prescription or OTC? EpiPen has one (much less expensive) competing product, Adrenaclick (manufactured by Amedra Pharmaceuticals). However, EpiPen is better known than Adrenaclick, and is used colloquially (and wrongly) as a generic name (like Coke and Kleenex are similarly abused).

So, it is hard to break through doctors' prescribing habits to induce them to prescribe the less expensive Adrenackick (especially because U.S. doctors are notoriously ill informed about how much their patients will have to pay for drugs). I suspect if it were free to do so, Amedra might move Adrenaclick OTC to get closer to patients.

Because so many patients are now paying full price for their prescriptions, this move would grab patients' attention, and Mylan would likely have to respond by moving EpiPen OTC, too. Prices would plummet, because of a decrease in government power. A hearing on the benefits of repealing the Durham-Humphrey Amendment would be a better use of these politicians' time than more show-trials of pharmaceutical executives who know how to play the system to perfection.

 

 

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