As outrage splashed across the internet late last month over the price surge of the Epi-Pen, it wasn’t the first and certainly won’t be the last time drug companies have attempted to price-gouge consumers.
Unless you’ve been living under a rock, you’ve likely heard of the huge jump in price last month for the life-saving medication, EpiPen, by drug company, Mylan. Since 2007, the drug has increased upwards of 500% to $608 for a two-dose pack according to data from Truven Health Analytics.
Headed by CEO, Heather Bresch, (who may or may not have a MBA degree) Mylan bought the rights to EpiPen in 2007 and has since steadily turned up the price of the medication which is used as a lifeline for people who suffer an allergic emergency. As the EpiPen jumped up, unsurprisingly, so did Mylan’s stock prices and Bresch’s salary. Her annual income increased by $16 million.
The ethics and humanity of Bresch has been called into question as her company shovels more money onto its profits. In 2015, Mylan made $9.2 billion as company executives saw hefty increases in their paychecks.
If the EpiPen story seems familiar, it’s because it is. For decades, pharmaceutical companies have cornered the market on particular drugs and set sky-rocket prices. In 2015, the American public spent $310 billion on medicines, an 8.5 percent increase from the year before. The U.S. beats out the rest of the world (by miles) for spending the most per capita on prescription drugs.
One of the most notorious examples of price hikes starred the all-around deplorable CEO of Turing Pharmaceuticals, Martin Shkreli. His company hiked the price of an HIV medication, Daraprim, from $13.50 to $750 for a single pill in 2015. Later that year, Shkreli was indicted on conspiracy charges by the federal government for allegedly fleecing another company, Retrophin, out of millions.
Although the greed and corruption of sleazy CEOs are partially to blame for the uptick in the prices of prescription medications, the Food and Drug Administration shares some of the responsibility. In 2006, the FDA launched a plan to reduce the number of unapproved drugs on the market but the initiative quickly backfired.
Here’s what happened: To incentivize drug companies to test medications, the FDA began granting exclusivity to manufacturers. It may seem like a good idea to call for more scrutiny but instead, most drug companies began using the FDA’s initiative to do minimal safety and efficacy testing in order to gain exclusive rights to medications (which mean they get all the profits). And you guessed it, numerous drug companies are jacking up the prices the moment their monopoly kicks in.
A particularly grotesque example of unnecessary price gouging occurred in 2009 when the FDA ordered generic forms of colchicine off the market. For literally thousands of years, colchicine has been used to treat gout and was offered as a generic drug in the U.S. for more than 200 years. Because the ancient drug was grandfathered in and never officially approved by the FDA, the government body awarded URL Pharma, based in Philadelphia, three years of exclusivity for testing the drug.
According to the New England Journal of Medicine, URL Pharma raised the price of the drug from $.09 to a whopping $4.85 per pill. A medicine derived from a plant and used by the Ancient Romans, colchicine went from affordable to a bonafide money maker.
Moreover, the prescription price hikes are far from over. This year, drug maker, Gilead Sciences increased the price of multiple medicines. Cayston, an antibiotic and Ranexa, which treats chest pain were each slapped with a 10 percent jump. If the name Gilead sticks out, it’s because the company made headlines and garnered national outrage when it raised the price of its Hepatitis C pill, Harvoni to $1,100 per pill and $94,000 for a full course of treatment. The math on that one is maddening.
For decades, the fight for affordable health care in the United States has been a fiery topic for both politicians and the public but unless actual oversight goes into place, consumers can expect their health to drain their wallets. In the meantime, making smarter choices is a good place to start.