Greed has a price. And as Mylan is finding out, the cost can be especially high when it attaches to a lifesaving medical device.
Not only is the company under well-deserved fire for its decision to increase the price of the ubiquitous EpiPen to levels that make it unaffordable for some users, but now it is also under investigation. New York State Attorney General Eric T. Schneiderman says a preliminary probe indicates that Mylan may have added anti-competitive terms to sales contracts with local school districts that bought the pens for use on students.
EpiPens inject a dose of epinephrine as an antidote to potentially fatal allergic reactions. They save lives. Mylan, which acquired the product nine years ago, has been on a price-gouging free-for-all since then, raising the price by 500 percent. Today, the prescription-only device – used by millions of Americans and wisely kept in large supply by many schools – runs more than $600 for a two-pack. Scandalous doesn’t begin to describe it.
What is more, the drug itself is inexpensive, costing only around $1 per dose. But the delivery system – the “pen” in EpiPen – is proprietary, giving the company the opportunity to explore its capacity for avarice in a way that has made Americans recoil. And made Schneiderman take notice.
A source familiar with the matter told Bloomberg News that Schneiderman’s investigation will focus on whether Mylan locked schools into anti-competitive contracts in order to purchase the EpiPens at an affordable price. In a statement Tuesday, Mylan said that the company’s EpiPen4Schools program doesn’t have any purchase requirements for participation.
“Previously, schools who wished to purchase EpiPen Auto-Injectors – beyond those they were eligible to receive free under the program – could elect to do so at a certain discount level with a limited purchase restriction, but such restriction no longer remains,” according to Mylan’s statement.
That certainly sounds like some requirement was once in effect. Whether that amounts to the kind of antitrust violation that Schneiderman is investigating is uncertain, but the attorney general has been active in consumer protection issues.
Schneiderman is also a politician, of course. Some will speculate whether his investigation includes a political component and, the truth is, it might. But it won’t matter if, in fact, his office uncovers violations of competitive requirements. That would be a problem under any circumstance, but an especially egregious one given the unjustified price increases in a unique life-or-death product.
Of course, Mylan could have avoided all of this if only it had kept its greed in check. Couldn’t it have lived with a 200 percent price increase? Or 300 percent? Even 50 percent would be an enormous increase and would have padded the company’s bottom line without identifying itself as a corporate no-goodnik and attracting the attention of New York’s top law enforcement official.
It’s not just New York, either. In Iowa, Republican Sen. Chuck Grassley has asked the state’s Democratic attorney general, Tom Miller, to review whether taxpayers overpaid for EpiPens under a Medicaid rebate program. Grassley said a similar situation in Minnesota may have resulted in that state’s taxpayers overpaying for EpiPens by more than $4 million in a single year.
Mylan is now a target. The company has already taken a hit to its reputation. It remains to be seen if it will also take a hit in the courtroom.