Did outcry on social media lead to Mylan’s generic EpiPen?

GWEN IFILL: Drugmaker Mylan has been under heavy fire for its soaring price hikes for EpiPens, the lifesaving necessity for those with serious allergic reactions.

Its price has skyrocketed to as much as $600 for a set of two. At first, Mylan offered financial assistance to customers, but after mounting pressure, the company said it now will release a generic version for half the price.

To give us some perspective on how this case is different, Stephen Schondelmeyer studies this closely at the University of Minnesota, and Andrew Pollack covers pharmaceuticals for The New York Times.

Gentlemen, welcome.

Andrew Pollack, I want to start with you and ask you to explain just basically, what's the difference here? What's the big deal between a generic EpiPen and the kind that this company has been producing and selling at such a markup?

ANDREW POLLACK, The New York Times: Well, it's actually quite a bit confusing. The products are exactly the same. It's the same product.

However, they are calling one version now a generic. It will have a different package on it. It won't say EpiPen, and they will be selling it for half the list price of the branded product.

GWEN IFILL: Has that ever happened before?

ANDREW POLLACK: Well, pharmaceutical companies, brand-name pharmaceutical companies often do introduce their own generic version of their own drug. It's called an authorized generic.

This is done once an outside generic company comes into the market. This allows them to keep some of the sales, rather than having all their sales being lost to the outside generic company. What is unusual here is that Mylan does not have an immediate generic competitor for the EpiPen.

GWEN IFILL: So they're basically competing against public relations at this point.

Stephen Schondelmeyer, how did a product that cost as little as $100 in 2007 rise to $600 today?

STEPHEN SCHONDELMEYER, University of Minnesota: Well, it did that because the marketplace doesn't have any regulation, either government regulation or market regulation, that holds that down.

And, in fact, this product that — at a self-insured employer I work with, it cost them $100 for this product in 2011, and today is costing them $730. That dramatic increase just isn't seen.

And now they're calling it a generic in name. But it's not a generic, meaning an independent economic decision-maker choosing to compete with the price of the brand name. So we won't see this behave like a normal generic in the market either.

GWEN IFILL: And even if it's half the price, it will be still around $300, which is still more than it was just a short time ago, right?

STEPHEN SCHONDELMEYER: Sure, it's more than $200 than it was not too long ago.

This is sort of like if your child happens to get kidnapped, and the kidnappers call you and say we will cut the ransom in half, so you're going to save half the money. I'm not sure you would call that a savings.

GWEN IFILL: Andrew Pollack, how did this study get so much attention? It feels like we weren't talking about this at all a couple of weeks ago, and the numbers were just as high then.

ANDREW POLLACK: Yes, I think it's partly the back-to-school season is the peak buying season for these products.

This year, you had many parents buy more than in the past, having high deductible insurance plans, where, having not met their deductibles, they had to pay the entire price. This started spreading on social media, and a big furor arose.

GWEN IFILL: So, social media was the driving force behind this furor, this uprising, as it were?

ANDREW POLLACK: Yes, we — my colleague Tara had an article on this a couple of days ago.

GWEN IFILL: Tara Parker-Pope, right.

Stephen Schondelmeyer, I want to ask you a little bit about how this could have been avoided. Could this, for instance — the first thing that Mylan did was offer coupons to reduce the price. Now, today, they have talked about making available a generic version.

Is there anything other thing they could have done to bring this price down, or was this simply a force of the markets?

STEPHEN SCHONDELMEYER: Well, I think Mylan could have avoided raising it so dramatically in the first place.

This is a product they have been raising 9.9 percent at a time for two or three times a year. And then in the last two years, they started raising it 14.9 percent at a time for one or two or three times a year. The marketplace isn't going up that rapidly in terms of inflation, and most people and their resources don't go up that much.

And then they come back and say, well, this is covered by insurance, so what are people worried about? Well, nobody — the insurance company doesn't pay for this drug. The insurance company bills somebody for the drug and pays pharmacies for it, but the insurance company just processes transactions.

So, premiums for insurance are out-of-pocket costs also, and they seem to have ignored that.

GWEN IFILL: Well, you mentioned the insurance companies and the high deductibles.

Andrew Pollack, you mentioned it as well.

How much is this driven — the company says this is driven in part by the high-deductible health care plans and that is where the problem lies, not the pricing structure they create for the drug.

ANDREW POLLACK: Well, this has been sort of a perennial battle between the pharmaceutical companies, not just Mylan, and the insurers, each blaming the other.

But, in defense of the insurance companies, I mean, they say they have to take some measures because the price keeps going up. And it's part of the playbook of all the drug companies, especially those with high-priced drugs, to try to cushion the consumer and, you know, bill the insurance company.

GWEN IFILL: This does seem like we're kind of chasing our tails here. There is one — there is the price, which drives the insurance, which drives the price, and caught in the middle of all this is the person who's trying to make use of the drug.

So, Stephen Schondelmeyer, let me ask you something about why this one. We have heard lots of talk before, and on this program, we have talked about the high cost of pharmaceuticals. Is it because this is something which is used for children, and that has gotten people angry in a different way?

STEPHEN SCHONDELMEYER: Well, I think partly because it's used for children and also because this is literally a drug about life and death.

If you don't have it, there's a high probability a patient could die without access to this drug. Also, this is a drug that you have to have on hand to prevent a problem, so the patient may have to have one or two doses at home, one at their cabin up north, one or two doses at school, and a school may have 40 or 50 EpiPens.

And, technically, right now, the nurse can't use one patient's EpiPen for another patient. So we may need to look at some alternative policies of how these are used at schools, much like we have with the Naloxone, that these become readily available, and they could have a supply at the school on hand, and use it for whoever needs it at the time, rather than each patient having to have one.

GWEN IFILL: So, this is about so much more than price.

Professor Stephen Schondelmeyer at the University of Minnesota and Andrew Pollack of The New York Times, thank you both very much.

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