What’s been happening?
Mylan NV (MYL: NASDAQ) is an American pharmaceutical company that has been under the spotlight for the wrong reason over the last couple of years. One only needs to look at the chart to see the outrageous increases in the price of EpiPens. The EpiPen is an automatic injector that delivers a dose of epinephrine through a quick jab in the thigh. It is a life-saving device for people who have various allergies as it deters the deadly symptoms of anaphylactic shock. The necessity of this device is observed through EpiPen’s market share of such devices in the United States which reached 85% by the first half of 2015. In 2016, the last price hike to $608.61 drew widespread criticism which prompted senators and the US government to finally investigate Mylan’s business practices.
A key question raised by Congress was the classification of EpiPen as a generic drug rather than a branded product. Under the former definition, a company only needs to pay 13% Medicaid rebate to the government but that amount jumps to 23.1% in the latter case. The US Department of Justice probed this issue further which led to a $465 million settlement agreed upon by Mylan while admitting to no wrongdoing.
What Now? Another pending issue…
Mylan NV announced this week that the Federal Trade Commission (FTC) has officially launched an investigation into whether Mylan’s EpiPen has violated any antitrust laws. If Mylan is found guilty of the illegal act of blocking competition from entering the same market as EpiPen, it’ll be another bitter pill (lawsuits and settlements) for them to swallow.
The company stated that it had been contacted several months ago by the FTC for more information surrounding this matter as part of a “preliminary investigation”. No further details were diclosed by Mylan who only said that such suggestions that it prevented generic competition were “without merit”.
Mylan’s EpiPen saga continues. There’s no set date for when the FTC examination will conclude but new threats are already appearing on the horizon. CVS is a competitor who released an EpiPen alternative known as “Adrenaclick”. The product was previously priced at under $300 USD for a two-pack. Last month, Adrenaclick’s costs were renegotiated by CVS with its manufacturer and consequently lowered to $110. That’s a big difference compared to the $600 plus price tag for EpiPen. Amid the growing scrutiny towards Mylan, it’s worth noting that company has rolled out a generic version of EpiPen priced at $300 which is significantly cheaper than the branded EpiPen.
In mid-January, the pharmaceutical industry received some more criticism from President Donald Trump who accused the pharmaceutical industry of “getting away with murder”. Following the election last year, he had already mentioned that he was “going to bring down the drug prices”. Such words may be an indication that there may be upcoming government intervention in bidding procedures and drug prices in an effort to lower prices for the public.