A day after Mylan was one of six pharmaceutical companies named in a multi-state lawsuit alleging price-fixing on generic drugs, the maker of high-priced emergency allergy treatment EpiPen announced that the generic version of the popular epinephrine auto-injector is finally hitting the market, giving people a lower-cost (but still pricey) option for buying the drug.
Mylan first said it would introduce the generic in August, amid growing outrage over the soaring cost of EpiPen. The sticker price for a twin-pack of the medication had jumped by around 600% since Mylan acquired EpiPen as part of the company’s purchase of Merck’s generic drug business in 2007.
In testimony before Congress this September, Mylan CEO Heather Bresch — daughter of West Virginia Senator Joe Manchin — initially claimed that while the company charges $608 for a twin-pack of EpiPens, Mylan only makes a profit of about $50 per EpiPen.
According to Bresch, more than half of the sticker price for EpiPen goes out the window because of fees and rebates. She calculated that the company actually only received $274 per twin-pack.
This claim raised questions about the pricing of the generic version. First, if Mylan is making so little off the brand-name version, how could it possibly make a profit from the generic? Bresch said the company would — in addition to selling the generic through retail pharmacies — be selling the generic EpiPen directly to consumers for $300.
As Rep. Jason Chaffetz (UT) pointed out to Bresch — if Mylan is selling the generic direct to consumers for $300, but only grossing $274 for the brand-name, doesn’t that indicate that the company will actually be making more money from these direct-to-consumer sales for a drug that is supposed to be 50% off? Bresch replied that, between retail and direct sales the company expects to gross around $200 per twin-pack of the generic.
The company has set up a website to market the generic with an appropriately bland, but complicated, URL: www.my-generic-epinephrine-auto-injector.com.
In addition to the soaring price of EpiPen, the drug has been at the center of a number of state and federal allegations of fraud and overcharging.
The Center for Medicare & Medicaid Services confirmed in October that EpiPen had been miscategorized with the Medicaid program for years, meaning the company paid significantly smaller rebates to Medicaid than the program was due.
Then, almost immediately and without explanation, Mylan revealed that it had agreed to pay $465 million to settle these allegations.
That deal has been heavily criticized by lawmakers who say that not only is the $465 million much lower than some estimates of what Medicaid overpaid for EpiPen, but that Mylan will pay this as a pre-tax penalty, meaning the company will pay lower taxes as a result. Additionally, Mylan apparently does not have to admit to any wrongdoing as part of the deal.
Sen. Elizabeth Warren (MA) called the settlement “shamefully weak.”
Mylan, whose control of the epinephrine auto-injector market won’t be diminished by this generic, could soon face competition. The Auvi-Q injector — removed from U.S. shelves after a 2015 recall found problems with dosing consistency — is slated to return to pharmacies in the coming months. It’s hoped that having another major player in this market will keep prices from going up.
Speaking of pricing and competition, Mylan — unrelated to EpiPen — is now one of six drug company defendants in a lawsuit filed yesterday by the attorneys general of 20 states. That lawsuit alleges that the drug companies colluded to illegally divvy up the market, and fix market-wide prices, on two generic drugs: an antibiotic doxycycline hyclate, and glyburide, a drug used to treat diabetes.