Big Pharma, Today's, And Every Day's, Corporate Criminals

Yesterday, I wrote about how the big pharmaceutical opioid producers were finally being sued around the country for their part in creating the opioid addiction epidemic that is tearing communities apart across the nation.

Today, we return to another pharmaceutical criminal, Mylan Pharmaceuticals, the maker of EpiPens, the drug and delivery devices used to treat severe allergic reactions. You may remember Mylan from the stories that came out last summer concerning their massive price-gouging before their patent expired in 2015. Between 2009 and 2016, the price for EpiPens increased by over 600% without any substantial change in the product. These massive price increases were initially driven by a lawsuit which would end Mylan's patent protection that was settled in 2012 and which would allow a generic competitor starting in 2015. The company ran into even more good fortune when the generic drug and delivery device could not get FDA approval, allowing Mylan to extend their monopolistic price-gouging into 2016.

On Wednesday, the inspector general the the Department of Health and Human Services released its own study about how much the government overpaid Mylan for Epipens through the price-gouging of the Medicaid program. Incredibly, EpiPens were actually considered a generic product under Medicaid, meaning that the Mylan had to pay a far lower rebate for prescriptions written under Medicaid. According to the inspector general, this resulted in Medicaid having paid over $1.3 billion more that it should have for Mylan's product.

It's quite an arrangement that Mylan had. In the regular world, it was considered brand-name product that could demand the outrageous prices it was asking. Under Medicaid, however, it was considered a generic, lowering the rebates it owed under Medicaid. I guess at this point we should mention that the CEO for Mylan for a number of years was the daughter of West Virginia Senator Joe Manchin. You can draw your own conclusions.

These massive price hikes by the drug makers have actually begun to anger the pharmacy benefit manager (PBM) oligopoly of Express Scripts, Medco and Caremark as they suffer the customer and Congressional blowback from these price increases. Express Scripts has now sued Kaleo, the maker Evzio, the injectable overdose treatment, claiming the company owes them nearly $15 million. Normally, the PBMs are happy when the price of a drug goes up because that means they can pocket even more money in rebates from the drug manufacturer as the middleman of an essentially larger transaction. In theory, those rebates are supposed to be passed on to health plans, but there is no real mechanism to track that.

In this case, Kaleo raised the price of the typical two doses of Evzio from $937.50 in January of 2016 to $4,687.50 in April of that year. In response to the deserved criticism the company received for this price-gouging in the middle of the opioid epidemic, Kaleo created a program that provides support to those that cannot afford it and those uninsured with incomes less than $100,000. Critics claim that all this does is raise the price of the drug for those covered by insurance. While that issue is driving part of this suit, Express Scripts simply claims Kaleo is a "deadbeat dad" and not paying its bills.

Of course, Express Scripts has also been on the other side of these suits, as it was sued by Anthem for $15 billion for overcharging the health insurer for prescription drugs.

Then today, we learned that Pfizer has raised prices on over 100 drugs, including Lyrica and Viagra, by 20% this year alone. Please tell me what has changed in those 100 drugs or the current economic climate that would require a hike of that magnitude.

The entire prescription drug industry is dominated by monopolies and oligopolies. The drug makers receive patents for the products they produce, ensuring a monopoly for an extended period. The PBMs are an oligopoly themselves that provide no transparency on how they negotiate prices and rebates with those drug producers and how much of that flow of money the PBMs actually pocket. And then the health insurers are their own oligopoly, driving up the cost of insurance in virtual unison. With a set up like that, it is no surprise that health costs in the US far outstrip any other developed country and produce far worse results for patients, but certainly not for the monopolies involved.