[adocracy]

It's unfortunate the NYT story doesn't get into the billings process as part of the dysfunction. It makes me wonder how the pricing is then negotiated with the insurance companies. Did they set the retail price so high because the insurance companies were refusing to pay a workable price? Mylan has already commented that most EpiPens are paid through insurance, and there's the "billed rate" and "paid rate" on claims reports which often shows outrageous retail prices by health providers and then the negotiated rate the insurance company actually paid. Mylan's "quick" offer of a $300 discount to individual payers appears to keep in line with this and potentially not impact the insurance claim issue, but does anyone have any evidence that this theory is mistaken?

[cheriot]

If that's the case, then the market equilibrium makes un/underinsured patients collateral damage in a battle between pharmaceutical and insurance companies. That's a massive market failure that's killing its victims.

Here's my capitalist suggestion: figure out how much the pharmaceutical company stands to earn from life saving medication. Then let the government purchase the rights and put them in the public domain. The variable costs of producing these things is so low that we can treat every one for nearly the same price as treating only the rich.

[ende]

This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition?

The government created this problem, not the market, and yet people again clamor for more government intervention.

[etendue]

I'm not clear as to why you say that alternative injectors were "arbitrarily denied approval": Auvi-Q was voluntarily recalled because it didn't reliably dispense an accurate dose, Teva's was rightfully rejected AB rating because it was not identical to the EpiPen in use, and the FDA is well within it's regulatory scope in requiring Adamis provide a usability study and stress-testing for their pre-filled syringes.

The lack of competition to the EpiPen (note that there are other injectors, just not a generic to the EpiPen) is, as I see it, a statement that even simple medical devices are a hard problem. The problems that these companies have had are quality and design failures (in the PLM sense) that are on the companies to correct.

[gwright]

What seems to be missing is a more sophisticated understanding of risk and a legal framework that substitutes the risk assessment of individual patients (or parents) for a one-size-fits-all decision by a bureaucracy.

We are hearing stories now of people going with fewer EpiPen's because of the cost. Is that a better situation than Auvi-Q's sometimes in-accurate dose? I don't know but it is a question that comes to mind.

The government apparently requires purchase of two EpiPens to reduce the risk in case a single dosage is insufficient, but this doubles the cost. Now some people purchase two (one package) instead of four (two packages) and perhaps they won't have any EpiPen at all when they need one because they can't have one at home, at school, at camp, at Grandma's house and so on.

Should pharmacists be able to substitute the AdrenaClick with the patients approval? The law prevents that. Perhaps trusting pharmacists (a highly regulated profession already) to make that decision would be better than patients purchasing fewer EpiPens due to cost.

[etendue]

> What seems to be missing is a more sophisticated understanding of risk and a legal framework that substitutes the risk assessment of individual patients (or parents) for a one-size-fits-all decision by a bureaucracy.

I guess I disagree that this understanding is lacking, in fact, I find that medical professionals (including those in regulatory bodies, of which there are many) have an excellent understanding of risk/benefits.

> We are hearing stories now of people going with fewer EpiPen's because of the cost. Is that a better situation than Auvi-Q's sometimes in-accurate dose? I don't know but it is a question that comes to mind.

It is unacceptable to market a device that does not work as designed, especially when the malfunction is unpredictable or results in uncertainty that makes treatment more complicated. Why should Auvi-Q be different?

> The government apparently requires purchase of two EpiPens to reduce the risk in case a single dosage is insufficient, but this doubles the cost.

The government makes no such requirement. NIAID guidelines (http://www.aaaai.org/Aaaai/media/MediaLibrary/PDF%20Document...) recommend that a physician prescribe for two auto-injector doses as a part of first-line treatment. Two doses makes sense, especially with a device like this: as the saying goes, two is one and one is none. A package of two auto-injectors doubles the BOM cost, but that is a small fraction of the average transaction cost or retail cost. Mylan smartly switched to selling in packs of two to capitalize on the updated guidelines, I suspect to make their cost increases more defendable. I don't like their profiteering, but I can't fault their marketing decision.

> Should pharmacists be able to substitute the AdrenaClick with the patients approval? The law prevents that. Perhaps trusting pharmacists (a highly regulated profession already) to make that decision would be better than patients purchasing fewer EpiPens due to cost.

Generally speaking, I think pharmacists in the US should have an enhanced role in patient care, similar to their counterparts overseas. They are highly trained, as you rightfully point out, and they generally have a better understanding of pharmaceuticals and interactions than their MD colleagues. In this case, they are already able to point out to a prescribing physician that alternatives like Adrenaclick exist, they just cannot modify the script on their own. Actually, this might be a case where electronic prescribing systems make things worse by limiting the physician/pharmacist interaction.

[ende]

> Auvi-Q was voluntarily recalled because it didn't reliably dispense an accurate dose

In 26 unconfirmed cases. Auvi-Q wasn't recalled because of device failure, but because of -potential- device failure. EpiPen is not immune to device failure either: http://adc.bmj.com/content/98/Suppl_1/A42.3

The FDA needs to be maintaining a standard in device quality, but it also needs to make those assessments free of any potential bias and it also needs to be held responsible for denying a fair competitive market to consumers.

[maxerickson]

I'm always clamoring for better government intervention.

There's a whole bunch of places that have governments heavily involved in pricing Epipens, places that pay a lot less than the US.

[cheriot]

If there's shady politics involved in this one then perhaps there are additional solutions needed. For another example, there's the cure for Hep C that costs $84,000.

[maxerickson]

The Hep C cure is an extremely valuable innovation.

I certainly hope that lots of people receive the cure in a rapid fashion, but I'm not sure that it really falls to the innovator to provide it to them.

(lots of payers (insurance and national healthcare systems) are paying high fees for it because it makes sense for them over the medium term to do so; it represents a cost savings)

As a society we should still probably seek cheaper ways of finding such cures, but it doesn't make a whole lot of sense to bemoan a new, better and cheaper treatment.

[cheriot]

Did you see my original comment?

The point is to get the innovator payed in a way that justifies their investment AND help everyone that can be helped. I'm not bemoaning or blaming; the point is to design a better system. Right now paying the innovator requires limiting availability for no good reason.

[ende]

I once saw someone propose an 'X-prize' style system of publicly funded incentive based competitions for medical device and pharma research. Interesting idea.

[adocracy]

It's an interesting concept to suggest an effective put option for the government, based perhaps on the auditable costs of successful R&D. But this would probably have to work both ways - also including a put option in favor of pharma for R&D that was unsuccessful. R&D spending would become more transparent as a result (inflated, perhaps, to try to hedge against the government intervening on a hugely profitable opportunity), but in any event still entirely recoupable. Different sort of risk/reward algorithm at play, but feasible.

[JoeAltmaier]

Lets go further: nationalize drug companies. Do this to all the drugs.

[ccvannorman]

Hear, hear! One can argue against this saying Capitalism is the panacea of the market, but one only needs to look at ANY OTHER FIRST WORLD NATION (99% of them have nationalized health care and pay less to get better care than us) to see that we're CLEARLY doing it wrong here.

[privateersman]

I would be interested to see how the output of drug companies change after they are nationalised. Like would they focus on simple solutions that solve problems (rather than expensive solutions that hide problems)? And would they struggle at being yet another public service with a huge budget to be cut. Will their best staff move abroad for better salaries? Stuff like that.

[shubb]

I suspect surgery can give us some interesting insights here.

My understanding is that surgery research mostly takes place at university hospitals. I think that, outside medical devices, there isn't the same kind of non-practising science industry behind surgery research - it's all done by surgeons at research hospitals.

Research hospitals tend to be university hospitals and outside (and even inside) the US, university hospitals tend to be loosely government controlled.

So if we want to know what state controlled medical research could look like, I guess we just look to surgery.

[cheriot]

Maybe someone more familiar with the biotech industry will comment, but it's my impression there have been some market success as well. Keeping that incentive to innovate is important.

[JoeAltmaier]

Ha! Like they've been innovating in antibiotics for 40 years? In case folks have not been paying attention, zero innovation occurred there.

Currently its all about restless legs and secondary asthma relief and snake-oil mixtures of drugs rebranded under goofy names.

The drug companies have largely abdicated their responsibilities. For profit. What remains are money-making shells. Can't we just do without them? They are adding friction at this point.

[cheriot]

Antibiotics do provide a good case for increased public research. I suspect medicine will always have parts that are done better publicly and others better in private hands.

For example, a tour guide in one poor country I visited mentioned that he knew guides that were trained doctors. Because good tour guides there make more money than doctors. Coincidentally, they also have a shortage of doctors. Kind of like America having a shortage of teachers when governments set the salary.

[GunboatDiplomat]

I think it would make more sense to simply have a government owned corporation who's sole purpose is to produce generic drugs on which the patent has expired.

[maxerickson]

The market for drugs like that generally functions quite well. Like a cash price of ~$5 a month well.

(The dustup over Martin Shkreli raising the price of Daraprim only happened because there were very few users of the drug)

[cheriot]

Some drugs, like the cure for Hepatitis C, need to be available more widely before the patent runs out. It's a cure and only people that can come up with $84,000 dollars.

[yostrovs]

How about nationalizing all companies? Start with farmers since food is even more important than drugs. Make sure to throw away history books first.

[gwright]

Why is this 'market failure'?

It is government regulations and legal prohibitions that have created a situation in which there is no competition. The market didn't create that situation, the government did. It is no surprise the price goes up in a market where competition is effectively prohibited.

There are a few solutions: * adjust the regulatory framework to allow competition to emerge * strengthen the regulatory framework and set a price by law * apply public pressure against the sole provider into modifying their pricing

The last one is arguably the 'market' at work. The first two are just doubling down on a regulatory framework.

In any case, 'regulatory failure' seems like a much better description of the situation than 'market failure'.

[adocracy]

I don't agree here. It's both. It's a market failure when the price point (or transparency around the prices) doesn't convince new entrants to persevere through the existing regulatory process. It's market failure when the interests of all stake holders aren't successfully incorporated into the pricing. It's not a regulatory failure that the FDA has higher standards than the offered alternatives - we can't lower standards just to encourage new entrants. But it IS a regulatory failure when the FDA doesn't communicate with the FTC such that unnatural monopolies aren't controlled for, or that the FDA/FTC isn't communicating to the pharma industry that new entrants are required in order to prevent such monopolies from occurring. The FTC should be more "cross-border" effective with the government's own agencies.

[glenra]

> we can't lower standards just to encourage new entrants.

Why the heck not?

Two obvious reform options are:

(1) New rule: any medical device or medicine officially approved for use in any of (large list of countries deemed to have competent regulators) automatically is legal to use in the US as well. Seed the list with all of Europe and Japan, gradually consider adding new countries as seems appropriate.

(2) Make FDA approval optional. If a manufacturer thinks a drug and/or device works and is willing to accept the standard liability risk of selling it they can automatically do so, with the only caveat that it must include a prominent "not yet approved by the FDA" label until the product actually has finished getting approved. This label can also include a paragraph or two of more specific warning text and/or a URL to find more info if the FDA has specific concerns.

[adocracy]

(2) is untenable. A company could theoretically widely distribute a drug with unknown effects/consequences, only to find after the fact that it negatively affects >10% of patients causing death and disability in major numbers. File for bankruptcy and disappear with no ability for the sufferors to get lifetime care compensation? Catastrophic, with no recourse.

[glenra]

Why would major numbers of people take an unproven drug with unknown effects/consequences? Seems like a self-limiting problem.

When a drug is unknown and unproven, relatively few people will take it unless they have pretty good reason to think it's really effective or they are really desperate - which are exactly the situations in which you'd want people trying the drug to see if it works. If there's already a known and proven and cost-effective drug that works, people would take that instead.

The FDA alternative is that lots of people go without drugs that - even though they're safe and effective - never get to market because proving them so to the FDA's satisfaction is so expensive and time-consuming as to be not worth doing.

A lack of new drugs causes death and disability too. Me, I'd rather err on the side of too many rather than too few drug options available for people to solve their problems with.