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Epipen (Adrenaclick) Price War

2017-01-13

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CVS has introduced a generic version of the essential emergency self-injector Epipen (containing epinephrine for acute allergic crises) that is said to cost $109.99, approximately what the Epipen cost before Mylan purchased the rights to the product and increased the price to $600.

This is a good example of the evils of privatization.  A company with a competitive advantage (the exclusive rights to produce a medicine essential to the welfare of many Americans) raises the price repeatedly and without cost justification to benefit their bottom line profits.  There are no upsides to the situation: the company with the advantage does nothing to compensate for the inflated and unjustifiable price, and there are no benefits offered to the general public to use up the profits contemplated:  all profits go the the stockholders.

Here the profit motive, basic to capitalism, has distorted the price of an essential (life-saving) drug and caused difficulties for the public, particularly those who can ill afford to purchase a product that they require to occasionally save their lives.

This is not “privatization” per se because the government never had a hand in producing the product; however, the development of epinephrine (adrenaline), an essential drug that comes in many forms, was done by scientists many years ago who had support from the government in one indirect way or another.

Here is a story in NBC News on the likely motivation for the price hike by Mylan: their CEO’s pay was raised 600 percent afterwards.  The story points out that as Mylan made a succession of price increases for the drug from its purchase in 2007, its stock prices more than tripled and pay for top executives was increased proportionately.  In addition, sales of the drug provided 40 percent of the company’s operating profits in 2014, according to Bloomberg News.  The Bloomberg article also discusses the heavy marketing applied by Mylan to the sales of Epipen.

The reports on this product are available from a number of sources; the earliest appear to be from Ars Technica and Market Watch.  There are also stories in  United Press International,  USA Today and NBC News.   There are stories in the Huffington Post,  Daily Kos (a Democratic organ), and an ad from CVS itself.   If you want Donald’s screed on the subject, try this story in USA Today.  Russia Today (RT) has a story claiming that Mylan will lose $800 million this year due to the introduction of CVS’ generic version.  Norman DeGreve, the chief marketing officer for CVS, posted the story on Twitter at 5:45 AM yesterday.

In other news, last December 23, Mr. DeGreve posted a chart from Nielsen showing that younger Americans have suddenly stopped watching television.

(The image above is the picture of the day from Wikimedia Commons: Block P, Speicherstadt, Germany.)

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