Wednesday, August 31, 2016

On EpiPens

Ever since an unfortunate encounter with some smoked salmon imported from China, I have been buying EpiPens for 10 years.  Fortunately the state health plan has shielded me from the tremendous price increases that Mylan has been imposing, now up to $600 for a two-pack.

Most of the discussions in the mass media have been of the predictable shame-shame-on-you variety.   Scolding pharma is a good way to vent, but does it really get to the heart of the issue?  Wouldn't any company raise prices 600% if they could get away with it?  I do not normally pull items from other economics blogs, but this article from Slate Star Codex that is featured today on Marginal Revolution is both informative and (in parts) hilarious.

Here are the informative parts:
1) A number of companies have developed EpiPen substitutes but they keep getting rejected by the FDA.  In contract there are eight competing EpiPen-like products in the EU.
2) There is an approved substitute called Adrenaclick but most doctors are unaware of it and keep prescribing the EpiPen.
3) Mylan spends heavily on lobbying to keep things the way they are.

Here is the funny part:

Imagine that the government creates the Furniture and Desk Association, an agency which declares that only IKEA is allowed to sell chairs. IKEA responds by charging $300 per chair. Other companies try to sell stools or sofas, but get bogged down for years in litigation over whether these technically count as “chairs”. When a few of them win their court cases, the FDA shoots them down anyway for vague reasons it refuses to share, or because they haven’t done studies showing that their chairs will not break, or because the studies that showed their chairs will not break didn’t include a high enough number of morbidly obese people so we can’t be sure they won’t break. Finally, Target spends tens of millions of dollars on lawyers and gets the okay to compete with IKEA, but people can only get Target chairs if they have a note signed by a professional interior designer saying that their room needs a “comfort-producing seating implement” and which absolutely definitely does not mention “chairs” anywhere, because otherwise a child who was used to sitting on IKEA chairs might sit down on a Target chair the wrong way, get confused, fall off, and break her head.

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