Heather Bresch, chief executive of pharmaceutical heavyweight Mylan, testified before lawmakers Wednesday that her company acted ethically and fairly when it jacked up the price of life-saving EpiPens by more than 500%.<\/p>\n
While saying she was troubled \u201cthat the EpiPen product has become a source of controversy,\u201d Bresch told skeptical members of the House Committee on Oversight and Government Reform that \u201cprice and access exist in a balance, and we believe we have struck that balance.\u201d<\/p>\n
That\u2019s a bold stance considering that each $300 EpiPen contains about a dollar\u2019s worth of epinephrine and Mylan didn\u2019t even invent the plastic injector that delivers the drug. It purchased rights to manufacture and sell EpiPens in 2007 as part of a $6.6-billion acquisition of Merck\u2019s generic-drug operations.<\/p>\n
At the time of the merger, people were able to buy EpiPens for about $50 each. Mylan now sells EpiPens in packs of two for more than $600.<\/p>\n
It\u2019s easy to assume that greed is solely to blame for runaway drug prices \u2014 and companies like Mylan do nothing to challenge that perception.<\/p>\n
The reality, however, is more complicated.<\/p>\n
When Bresch talked about drug prices and access existing \u201cin a balance,\u201d she was referring to what the pharmaceutical industry calls value-based pricing.<\/p>\n
This is what you get when you price a drug not just commensurate with its research and development, production and marketing, but also reflecting the drug\u2019s importance to patients. And that\u2019s a very slippery concept.<\/p>\n
What a pharmaceutical company is basically saying with value-based pricing is that a patient\u2019s life would be a whole lot worse without their drug, so that should be worth something, right? Maybe a big<\/em> something.<\/p>\n \u201cThere are a lot of moral and ethical issues that come up when you talk about value-based pricing of drugs,\u201d said Robert L. Stein, a professor of pharmacy law and ethics at Claremont\u2019s Keck Graduate Institute.<\/p>\n \u201cMost other consumer products are discretionary or there are alternative sources,\u201d he said. \u201cWhen you talk about pharmaceuticals, especially newer pharmaceuticals, there aren\u2019t a lot of options.\u201d<\/p>\n The poster child in this regard is Gilead\u2019s hepatitis C drug Sovaldi, which carried a list price of about $1,000 a pill when it was introduced in 2014. A second-generation version of the drug, Harvoni, cost more than $1,100 a pill. The latest version, Epclusa, sells for closer to $900 a pill.<\/p>\n These are astonishing numbers. But Gilead\u2019s drugs effectively cure patients of hepatitis C, so who\u2019s to say they\u2019re not worth every penny? More than 3 million Americans are estimated to have hepatitis C.<\/p>\n \u201cWe believe the price of Harvoni reflects the value of the medicine,\u201d Gilead said in a 2014 statement defending its pricing. \u201cUnlike long-term or indefinite treatments for other chronic diseases, Harvoni offers a cure at a price that will significantly reduce hepatitis C treatment costs now and deliver significant health care savings to the health care system over the long term.\u201d<\/p>\n That\u2019s one way of looking at it. Another is that Gilead justifies its crazy-high prices by arguing that because it would be more expensive to treat hepatitis on an ongoing basis, they can charge whatever they please as long as it\u2019s less than that amount.<\/p>\n This is a problem.<\/p>\n \u201cValue is one thing, but another consideration is whether society can afford that value,\u201d said Gerard Anderson, a professor of health policy and management at Johns Hopkins University. \u201cIf you charge more than people can afford, people die.\u201d<\/p>\n He compared lifesaving prescription meds to water.<\/p>\n \u201cIf a water company charged the value of water, they could charge whatever they like, an infinite amount,\u201d Anderson said. \u201cWe couldn\u2019t exist without water. That\u2019s why we don\u2019t allow the water company to charge the value of water.\u201d<\/p>\n It\u2019s a tricky business. There\u2019s almost no limit to the value of a drug to someone who\u2019s sick. So with value-based pricing, the door is wide open to abusing patients.<\/p>\n At the same time, we\u2019re all better off if drug companies are financially motivated to do the costly research and development necessary to innovate and come up with new cures and treatments.<\/p>\n Stein at the Keck Graduate Institute said the only way to deal with the problem might be to approach every drug on a case-by-case basis, rather than imposing price caps across the entire industry.<\/p>\n \u201cWhen is a drug price unconscionable?\u201d he said. \u201cIt\u2019s like Supreme Court Justice Potter Stewart said about pornography: You know it when you see it.\u201d<\/p>\n Jason Doctor, director of health informatics at USC\u2019s Schaeffer Center for Health Policy and Economics, said Mylan\u2019s Bresch crossed that line when she raised the price of EpiPens more than a dozen times since 2008.<\/p>\n \u201cShe operated from an oversimplified model that did not account for the value people place on protecting children from harm,\u201d he said. \u201cThis is a treasured societal norm. \u00a0When\u00a0the price she set for EpiPens violated that norm, people got angry, even though the price was legal.\u201d<\/p>\n Bresch made nearly $19 million last year. She told lawmakers that this was \u201cin the middle\u201d of what drug-industry CEOs make.<\/p>\n On the other hand, most other top-tier pharmaceutical CEOs haven\u2019t been subjected to sitting before lawmakers as their company is pilloried for being “sickening,” “disgusting” and showing “blatant disrespect” for the needs of families.<\/p>\n Bresch seems decidedly overvalued.<\/p>\n