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Price gouging by maker of EpiPens threatens access to lifesaving device

For those who wonder why governments meddle in free markets, the story of the EpiPen offers a crystal-clear example not only of why it happens, but when it becomes inevitable.

When a company that owns a virtual monopoly on a lifesaving medical product engages in virulent price gouging – of the sort that can result in deaths – people push back. Those people influence their legislators and when enough of them decide that enough is enough, government provides a solution.

It may not be the best solution, given the nature of lawmaking. It could have unintended consequences, medically and economically, and it could create political divisions. Nevertheless, it would represent a predictable and, generally speaking, plausible response to greed that threatens lives.

That’s the track that Mylan, which manufactures the EpiPen, has been on since the company acquired the lifesaving injection device nine years ago. EpiPens deliver epinephrine, a drug that reverses potentially fatal consequences of a severe allergic reaction, including swelling and closing of the airways. Until 2007, when Mylan acquired it, the EpiPen was reasonably priced, with pharmacies paying less than $100 for a set of two.

Today, after a series of creeping price increases, the cost tops $600 for a prescription-only device that is needed by millions of Americans, and is frequently kept in large supplies in schools.

The drug, itself, is inexpensive, costing about $1 per dose. What has allowed the price to balloon is the proprietary delivery system – the “pen” that delivers the correct dose with a quick jab. Many people keep more than two so they are available at several locations. Adding to the expense for consumers is the fact that the EpiPens expire after a year and need to be replaced.

Mylan is being justly named in the same breath as Martin Shkreli, formerly CEO of Turing Pharmaceuticals. There, Shkreli raised the price of the drug Daraprim to $750 from just $18 – and virtually overnight. The drug is used to treat cancer patients and others.

The blowback against Mylan was swift.

Members of Congress from both parties are demanding explanations. Sen. Chuck Grassley, R-Iowa, noted in a letter that the soaring cost has prompted “some first responders to consider making their own kits with epinephrine vials and syringes.”

He went on: “I am concerned that the substantial price increase could limit access to a much-needed medication. In addition, it could create an unsafe situation for patients as people, untrained in medical procedures, are incentivized to make their own kits from raw materials,” he said.

It’s a sensible worry.

Outside of Washington, a petition demands action by Congress. On social media, “Stop the EpiPen Price Gouging,” has collected more than 48,000 signatures. And the head of the Allergy & Asthma Network, Tonya Winders, said her group is working to make the EpiPen a more broadly covered expense.

In response to the firestorm, Mylan Thursday offered discounts on EpiPens to some consumers. That is not good enough. It should roll the price back to a reasonable level.

Heather Bresch, CEO of Mylan, tried to deflect the criticism by laughably trying to blame the company’s price gouging on the health care system. In an interview with CNBC, she said, “This system needs to be fixed. No one knows what anything costs.”

The health system does need to be looked at, but the latest price hike for EpiPens is an example of greed, pure and simple.

One solution to this problem could be competition. It’s out there, but encountering difficulties with critical issues such as correct dosage. If another product becomes readily available and at a fair price, perhaps Mylan’s price will come down. But it won’t happen before giving itself a giant black eye and tempting Washington to wade further into the question of how to deliver health care.

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