In the final weeks of summer, a new villain emerged in the eyes of many Americans- Mylan Pharmaceuticals. Mylan Pharmaceutical Company raised the prices of the EpiPen to over $600 for a pack of two pens, a 400% increase since Mylan took on the project in 2007. The CEO of Mylan, Heather Bresch, had to explain to the nation why the steep hike in price was necessary. Bresch defended the increase, saying that it was mostly caused by the heavier use of high-deductible plans, which caused higher out of pocket costs, increasing the wholesale cost of EpiPen. However, this explanation did little to appease most EpiPen users, parents of children with severe allergies, or the American public at large, because it became obvious that much of the cost came from other factors that had nothing to do with the drug itself.
There were a number of factors other than high-deductible costs that the media and law-makers quickly pointed to as the reasons for the increase in EpiPen’s price. First, as the price of the EpiPen increased, so did the salaries of top executives at Mylan. Bresch earned just under $2.5 million when Mylan first acquired the EpiPen. Her salary is now $19 million, a 600% increase in the eight years since Mylan acquired the Epipen. Secondly, it became clear that the $600 price tag was not the result of production and other costs because, amid heavy criticism, Mylan offered a $300 generic alternative to the EpiPen. Finally, Mylan has quickly gained a monopoly over emergency auto-injectors when its only competitor Sanofi’s Auvi-Q recalled its entire supply last fall, leaving Mylan to increase the price without fear of consumers switching to another product. This dominance in the market has been the subject of a call by Senator Blumenthal (D-CT) and Senator Klobuchar (D-MN) for the FTC to investigate Mylan. While this extreme episode of drug pricing points to a number of more serious problems in the pharmaceutical world there is a more immediate question about how the FDA should react.
The FDA’s Mission is to protect the public’s health by ensuring the safety, efficiency, and security of human drugs. The FDA is also responsible for advancing public health by helping to speed innovations that make medicines more effective, safer, and more affordable. So the question becomes, in the face of price gauging, does the FDA have an obligation to accelerate generic drug applications? The FDA has worked since 2012 to reduce its 2,868 generic drug application backlog and has to some degree. The FDA approved 1,551 generic applications since 2012, but many applications have also been rejected for “major deficiencies”, a response received by Teva Pharmaceuticals. In March, the FDA rejected a generic version of the EpiPen created by Teva Pharmaceuticals. The FDA rejected the application due to “major deficiencies” in the application, which will delay the release of the drug until at least 2017.
However, accelerating drug applications more than FDA already has may be difficult if the agency does not have the money or personnel to evaluate the applications, which in the area of generic drugs has tripled in the last ten years. Additionally, the FDA has already made serious policy efforts to accelerate certain generic drug applications, particularly “sole-source” application vouchers. Sole-source generic drugs are those applications in which there is currently only one manufacturer on the market. The FDA is making a concerted effort to get competition out onto the market, but as the FDA’s mission statement also requires it to approve safe and effective drugs.
Although accelerated applications can be beneficial to create more options for consumers, the FDA also has to be aware of safety consequences. This is exactly the argument made by Progressive think-tank, American Progress, who warns that faster drug approvals will only help pharmaceutical companies, not patients. The organization’s report on this issue, released last March, states “this approach would lead to additional drugs entering the market with little evidence to support safety and effectiveness.” It also states that the FDA’s drug approval process is actually one of the fasted in the world, therefore putting the blame on FDA is a faulty argument.
It is clear there have been efforts by the FDA to get more competition out on the market, but it has to do so cautiously because availability isn’t the only concern. Also, it’s clear that even if backlogged applications are part of the drug pricing problem, it’s a small part. The FDA should continue to employ the methods it is already using to decrease its generic drug backlog. However, as more generic drug applications continue to come into the FDA, it should be careful not to bow to the pressure of the generic drug companies and politicians to lower safety standards in order to increase efficiency.