The Mercenary Markets of US Healthcare

Jul 19, 2016

Credit Satoru Kobayashi / Flikr

I never thought that I’d consider buying drugs from Canada. For years I’ve heard rumors about people getting medications from over the border, and now I find myself considering it. You see, we spent $2800 of our health plan’s $3500 deductible on Epipens this Spring. And since those Epipens are only good for about a year, we’ll spend another $2800 (or more) next Spring. And then again the Spring after that. And so on.

We’ve heard rumors that we could get the same number of Epipens by the same manufacturer (Mylan) for $900 in Canada. That means that we could drive to Toronto, check in to a nice Harbourfront hotel, spend the weekend taking in the city, catch up with a couple of old friends, buy the Epipens, drive home, and still save around $1000. It’s tempting. 

12 years ago this wouldn’t have been tempting. In 2004, Epipens cost about $100 a piece in the US. In the intervening years that price has soared to somewhere around $600 list price. While Mylan, who purchased the manufacturing rights in 2007, has claimed that this has to do with changes to the product, you would be forgiven for being skeptical. Their profit margin on Epipens reportedly went from 9% in 2008 to 55% in 2014.

Part of what allows the price to be so high is the lack of competitors. There is one, recently introduced competitor, but it has a more sophisticated design (it’s shaped like a credit card) and includes audio instructions. It’s also priced at the same point. More importantly, the company has had to recall ALL of their epinpenephren products because of a design failure. 

A generic version of the Epipen, something which would be of tremendous benefit to food allergy sufferers, was rejected by the FDA earlier this year. And so allergy sufferers are left to buy Epipens from Mylan. That or trust their kids to carry syringes around with them all day.

Mylan’s behavior here reminds me of Martin Shkreli's behavior as CEO of Turing Pharmaceuticals. Shkreli and Turing Pharmaceuticals, like Mylan, secured a monopoly on an indispensable drug. Like Mylan, Shkreli and Turing Pharmaceuticals also jacked up the price for no better reason than they could. One key difference: Martin Shkreli and Turing Pharmaceuticals were vilified by the media and the public, while Mylan enjoys media coverage focusing on its ingenuity and cleverness. The best explanation of this difference is that Mylan raised their prices over a number of years and combined it with a PR campaign while Shkreli and Turing raised the price all at once. It seems that the CEO of Mylan may have, and Shrkeli probably did not, know of the story of the old bull and the young bull, which I first heard in the film Colors (warning: explicit language).

And so I’m left to consider heading to Canada to buy Epipens next Spring. We could make a vacation out of it and that would be nice. Of course, I’d prefer to spend our vacation time doing things we want to do. But an Epipen could mean the difference between life and death for my kids. And economically, it makes more sense to get them from Canada. And I’d prefer to limit how much I help the profit margins of a company like Mylan. 

If there’s a case to be made for socialized medicine and/or price controls on medications, like they have in Canada and elsewhere  this is it: If we restrict the US market we might be able to keep the Martin Shrkelis and the Mylans of the world from screwing us.

 

Abraham Schwab is an associate professor of philosophy and medical ethicist at IPFW.

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