You could almost hear the sigh of relief from patients when the FDA earlier this month approved Teva Pharmaceutical’s application to market the first generic versions of EpiPen and EpiPen Jr. in the U.S.
That decision came at the end of a wild few years for EpiPen, the brand name of the epinephrine auto-injector used for the emergency treatment of life-threatening allergic reactions, and its maker, Mylan. The company acquired the drug in 2007, and some time later began quietly increasing its price. By 2015, Mylan had increased the average wholesale price of EpiPen from $56.63 to $317.82.
When news of the price hike broke in 2016, the public outcry attracted the attention of the media and lawmakers, ultimately leading to a congressional investigation. In October 2016, Mylan agreed to a $465 million settlement with the Justice Department on an issue related to the possibility of inadequate Medicaid rebates. A few months later, Mylan responded to critics by releasing its own “authorized generic” version of EpiPen at half the price.
Unexplained and dramatic price hikes have become routine for older branded drugs when there is limited competition, as was the case for EpiPen. The entry of Teva’s generic version sparked suggestions that the increased competition will drive down prices. Yet that may not be the case.
At least two generic manufacturers are needed before significant cost savings occur, with incremental price decreases following the entry of each subsequent generic. A recent analysis found that even more competition is required — up to three generic manufacturers — before there is a substantial drop in price.
An example of how a single generic competitor has minimal impact on price involves Syprine (trientine hydrochloride), a drug developed in the 1960s for treating Wilson’s disease. Teva Pharmaceutical — the same company that will be marketing the generic EpiPen — introduced a generic competitor to Valeant Pharmaceutical’s branded version after Valeant raised the price of Syprine from $652 in 2010 to more than $21,000 in 2015, a practice that has become common in noncompetitive markets. The introduction of Teva’s generic decreased the price of the drug, but the generic version still cost more than $18,000, well above what it had cost five years earlier.
Other recent examples of “first generics” that did little to substantially bring down drug costs include Neoprofen (ibuprofen lysine), used for the treatment of patent ductus arteriosus in premature infants, and Biltricide (praziquantel), an anti-parasitic drug used mainly in immigrant and refugee populations. In both of these cases, the generic manufacturer priced the drug only slightly lower than the price of the brand-name drug.
In fact, our research has shown that when there is only one generic manufacturer competing, continued price hikes can still occur. That was the case with flucytosine, a drug used to treat cryptococcal meningitis, for which the price increased 1,864 percent between 2005 and 2014. This isn’t surprising, since drug manufacturers — both brand name and generic — price drugs as high as the market will bear.
It is unlikely that an additional generic EpiPen will be on the market anytime soon. Since epinephrine auto-injection is a “complex generic” — owing to the fact that it is a combination of a drug and a device (the auto-injector) — creating a so-called therapeutic equivalent is expensive and difficult. This can limit generic competition. As a case in point, the FDA rejected Teva Pharmaceutical’s application for a generic EpiPen in 2016. It wasn’t until after the FDA issued guidance regarding complex generic applications in late 2017 that Teva was able to bring its generic EpiPen to market.
Although the FDA’s approval of a generic EpiPen is a welcome step in the right direction, we are less optimistic than others that it will significantly reduce the price of this lifesaving drug.
Meaningful generic competition, although theoretically a solution to excessive drug pricing, has yet to arrive on a scale that will substantially decrease rising drug prices, including EpiPen. Without other competitors, history tells us not to expect significant cost savings anytime soon for this much-needed medicine.
Jonathan D. Alpern, M.D., is a staff physician with HealthPartners Infectious Diseases and Travel and Tropical Medicine and an assistant professor of medicine at the University of Minnesota. William M. Stauffer, M.D., is a professor of medicine and pediatrics in the Division of Infectious Diseases and International Medicine at the University of Minnesota.