Kudos to Mylan NV (NASDAQ:MYL) for offering discounts on the exorbitant price on EpiPen for patients with a high out-of-pocket costs, though the actual price remains the same. The auto-injecting device delivers a jolt of epinephrine (adrenaline) into the bloodstream of people who experience intense, life-threatening allergic reactions.
On the other hand, it would have been nice if Mylan would have voluntarily taken the initiative to lower its EpiPen prices rather than being shamed into doing so.
Be that as it may, don’t think for a minute the pharma industry’s epidemic of overpriced drugs is limited to the aforementioned Mylan, Turing Pharmaceuticals and Valeant. The practice is still rampant despite the fact that the federal government has begun demonizing the most offensive drug price hikes.
Here’s a closer look at the price-gouging you may have not yet heard about.
Overpriced Drugs: Sovaldi, from Gilead Sciences, Inc. (NASDAQ:GILD)
Giving credit where it’s due, hepatitis C drug Sovaldi, from Gilead Sciences, Inc. (NASDAQ:GILD), is something of a miracle cure for the disease … as much as it can be cured, anyway. Then again, with an initial price tag of $84,000 for the typical treatment regimen, it ought to be something of a cure.
Gilead has since offered price breaks to pharma benefits managers in exchange for exclusivity. Make no mistake though. Sovaldi still doesn’t cost anywhere near its retail price to make.
Gilead defends the still-high price, saying the value of the drug to the patient justifies its high cost. Most U.S. consumers wouldn’t have a problem with the premise either were it not for the fact that the exact same drug treatment regimen costs $900 in Egypt.
Sovaldi’s sister hepatitis C drug Harvoni is equally overpriced.
Overpriced Drugs: Acthar Gel, from Mallinckrodt PLC (NYSE:MNK)
In its defense, it was Questcor Pharmaceuticals rather than Mallinckrodt PLC (NYSE:MNK) that was responsible for the bulk of the price hike multiple sclerosis and spasm treatment Acthar Gel has seen since 2005.
Then again, the fat margins Questcor was enjoying with Acthar Gel is a big part of the reason Mallinckrodt bought the company in the first place.
The damage? In 2005, one vial of Acthar Gel cost $1235. Today, one vial sells for $35,000.
A full-year’s treatment can cost $300,000.
Overpriced Drugs: Tykerb, from Novartis AG (ADR) (NYSE:NVS)
Rarely does a pharma company reveal the specifics on what it costs to make a specific drug. Sometimes though, if it’s not revealed it can at least be deduced.
The company officially defended the cost by explaining “We invest in developing novel and current treatments to find ways to make more cancers survivable. This is challenging and risky and needs to be taken into consideration when discussing pricing of treatments.”
The point is well-taken, but it leaves the patient on the hook for all the risks Novartis chose to take, while Novartis reaps all the benefit if those risks work out.
Overpriced Drugs: Nexium, from Pfizer Inc. (NYSE:PFE)
While there’s a certain amount of compassionate logic behind the idea that wealthier nations’ citizens should somehow subsidize the overseas sales of life-saving or misery-ending drugs like Sovaldi or cancer-fighting Gleevec, the pharma industry hasn’t limited overpriced drugs to just the must-haves and higher-end treatments.
Low-end and even some OTC drugs cost U.S. consumers significantly more than the exact same drug would overseas.
Case in point? Acid reflux treatment Nexium, for the time being made by Pfizer Inc. (NYSE:PFE). It costs an insurer (when covered by insurance, which isn’t often any more) about $215 for a typical one-month supply, but the same number of the same capsules would only cost $23 in the Netherlands.
It would cost less than $50 in the United Kingdom and Canada.
Overpriced Drugs: Praluent, from Sanofi SA (ADR) (NYSE:SNY) and Regeneron Pharmaceuticals Inc (NASDAQ:REGN)
Last but not least, though Pfizer’s Lipitor was arguably one of the most successful drugs before it lost its patent protection (and the most successful cholesterol fighting drug), even in its heyday it only cost about $1,500 per year.
Like all the rest, Regeneron and Sanofi have defended the cost by pointing out the value it brings and the cost to develop it. The Institute for Clinical and Economic Review (ICER) crunched its own numbers though, and came up with an annual value of between $3,600 and $4,800.
The Last Word on Overpriced Drugs From Big Pharma
In their defense, consumers do indeed benefit from the expensive R&D done by pharmaceutical companies, and those organizations deserve to profit for the work they do, and the risks they and their investors take.
At issue is the balance between profits and patients. As much as anything else, this is an indictment of a healthcare and insurance system that is largely unchecked and overly complicated.
As the Mylan CEO bluntly described it, “The system incentivizes higher prices.”
She’s not wrong, though interestingly, Mylan charged higher and higher prices on the EpiPen anyway.
Political willpower and social willpower (or lack thereof) are just as much to blame as corporate greed.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.