New York Launches Antitrust Investigation Into EpiPen Schools Program

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Amid calls for drugmaker Mylan to drop the price of emergency allergy treatment EpiPen, the attorney general for the state of New York has launched an antitrust investigation into a program that helps to put EpiPens in schools, potentially to the detriment of competition. At the same time, U.S. lawmakers are pushing regulators for a federal antitrust probe on the program.

EpiPen4Schools is a program that launched in 2012, offering discounts to schools that want — or are required by state law — to have epinephrine auto-injectors on hand to treat anaphylaxis. Some 65,000 schools are reportedly part of EpiPen4Schools.

Last week, StatNews turned up a document [PDF] that appears to require that schools participating in the EpiPen4Schools program exclusively use the Mylan product.

Among the conditions listed on the document, the school must agree that “it will not in the next twelve (12) months purchase any products that are competitive products to EpiPen® Auto-Injectors.”

So, if a school wants to supplement its stock beyond the EpiPens provided through the program, it would appear that it would not be permitted to purchase any lower-cost equivalent.

New York Attorney General Eric Schneiderman revealed today that this office is investigating potential state-level antitrust violations of such a requirement.

“No child’s life should be put at risk because a parent, school, or healthcare provider cannot afford a simple, life-saving device because of a drug-maker’s anti-competitive practices,” said Schneiderman. “If Mylan engaged in anti-competitive business practices, or violated antitrust laws with the intent and effect of limiting lower cost competition, we will hold them accountable. Allergy sufferers have enough concerns to worry about—the availability of life-saving medical treatment should not be one of them.”

At the same time, at least three federal lawmakers have called on regulators to look into the program.

In a letter sent this morning to Federal Trade Commission Chair Edith Ramirez, Sen. Richard Blumenthal (CT) and Amy Klobuchar (MN) reference the exclusivity condition in the EpiPen4Schools certification document.

“We believe this kind of exclusionary conduct may violate Section 5 of the FTC Act, which bans unfair methods of competition, or Section 2 of the Sherman Act, which prohibits attempts to acquire or maintain a monopoly,” write the senators, who call on the FTC to look into whether or not Mylan “deliberately engaged in exclusionary practices to hinder its competitors and maintain its monopoly position in the market for EpiPen Auto-Injectors.”

According to the senators, in 2015 schools in the EpiPen4Schools program saved around $350 off the list price for EpiPen. However, the senators are concerned that these savings may have come at the expense of competition.

“Providing discounts on the condition that the customer not purchase a competitor’s goods is the kind of conduct that can violate the antitrust laws when taken by a monopolist,” they write in their letter. “Employing strategies to coerce or induce schools into exclusive dealings by providing large discounts from monopoly prices harms consumer welfare and the competitive process when it stifles competition and protects a monopoly, and Mylan has provided no cognizable business justification to date.”

The senators contend that a dose of epinephrine only costs around $1, but they note that Mylan’s list price for a twin pack of EpiPens is now $600. The company does offer discounting and coupon programs, and recently announced it will soon be releasing a generic version at half the list price.

They acknowledge that there may indeed be a justification for the high price of the drug, and there may be an explanation for the exclusivity clause, but, “given EpiPen’s dominance and the dramatic price increases, these questions require fact finding and legal analysis, and not theoretical constructs.”

The senators’ letter came on the heels of a similar message [PDF] sent last week by Rep. Tammy Duckworth (IL) to U.S. Attorney General Loretta Lynch.

“I am particularly concerned that Mylan’s EpiPen4Schools Program may unreasonably suppress competition using aggressive, anticompetitive contractual stipulations that prohibit local educational agencies from purchasing a competitor’s product for a specified duration of time as a condition for participating in Mylan’s program,” wrote the Congresswoman. “Combined with Mylan’s market dominant status, such exclusionary contract requirements threaten to unreasonably restrain competition and may promote an unlawful monopoly in the market for these types of products.”

[NOTE: This story has been updated to include information regarding the New York antitrust investigation.]

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