THE COLLEGE HILL INDEPENDENT


A Tough Pill to Swallow

Big Pharma and the brand name bubble

by Dolma Ombadykow

Illustration by Maggie Tseng

published September 16, 2016


At the end of August, the pharmaceutical company Mylan made headlines for raising the cost of the EpiPen to over $300. The EpiPen, a plastic auto-injector used during anaphylactic shock in response to an allergic reaction or asthma attack, contains 0.3 milliliters of epinephrine. This volume has an average wholesale cost of just under $1, with the container and needle adding an estimated $3 to the total manufacturing price. Sold exclusively in packs of two, people at risk for anaphylactic shock are required to shell out over $600 for access to the EpiPen product, which has only a one-year shelf life. 


This cost increase can be largely attributed to Mylan’s strategic awareness initiatives, and they’re not alone. Data from BBC News suggests that nine out of 10 major pharmaceutical drug companies spend more money on marketing than research and development. When Mylan acquired the EpiPen from the pharmaceutical company Merck in 2007, the product (then $57) was held under strict FDA regulations that limited marketing to patients with a history of anaphylaxis. In 2008, Mylan increased their lobbying budget fivefold. By the end of that same year, the FDA had relabeled the EpiPen to extend drug access to additionally include people at potential risk for anaphylaxis. Since then, public awareness campaigns funded by Mylan around the reality of childhood allergies have highlighted the EpiPen as the only trusted treatment for anaphylaxis, with these campaigns further encouraging parents to stock EpiPens everywhere their child spends time: in the car, at home, school, their grandparent’s house—the list goes on. More than this, Mylan’s lobbying efforts in Congress and their initiatives within public schools have ensured that the company will always make a profit at the hands of worried parents and local school systems. The results of Mylan’s lobbying efforts are staggering: while an average 150 people die from anaphylaxis each year in the US, an estimated 3.6 million prescriptions were filled for the EpiPen in 2015, according to the Wall Street Journal.


Through arguing for the necessity of the EpiPen and essentializing the product through name brand recognition marketing (akin to the work of Kleenex and Band-Aid), Mylan has established an estimated 99% control of the epinephrine market. To challenge this hold, two alternatives to the EpiPen have appeared in recent years. However, in late 2015, Sanofi’s Auvi-Q, the leading alternative, was recalled due to inconsistent drug volume in its injectors. The only alternative left on the market, Adrenaclick, doubly suffers from an unfamiliar dispensing apparatus and a lack of name recognition. Coupled with the 20% increase in reported childhood allergies in the US in the last 15 years, the recall of Auvi-Q created the perfect storm for Mylan’s opportunistic monopoly, allowing them to drive up costs with no real competition to keep prices down.
As Vox reported this month, the US is the only developed country in the world that allows drug companies to set their own prices, “maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would.” The more than 400% increase in cost for the medication since 2007 has made the EpiPen a billion dollar product, and this upward trend mirrors pay raises among executives across the company, with CEO Heather Bresch’s personal salary rising from 2.4 million to 18.9 million since 2007—a 687% increase. In an interview with CNBC last month, Bresch responded to critics of the price increase by claiming, “no one is more frustrated than I am.” 


This month, Mylan introduced a “$0 copay card,” which provides low or no cost options to patients with good insurance coverage. Despite its name, however, the savings program only reduces the market price for the EpiPen by $100 for underinsured patients. Additionally, Mylan is working to produce a generic alternative that would be available at half the market price, with accessibility similarly limited to those with low-deductible insurance plans. While each of these solutions attempt to recover Mylan’s public image, they do little to actually bring treatments to low-income and underinsured patients. 

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Mylan is certainly not alone in their price gouging. Martin Shkreli, foul-mouthed “Big Pharma Bro” and former CEO of Turing Pharmaceuticals, raised the cost of Daraprim nearly 6000% in September 2015, similarly capitalizing on a product with no viable alternatives. Exorbitantly priced brand name drugs have become an industry standard, and according to a report published by Market Watch in April 2016, five of the ten most expensive prescription drugs in the US are treatments for Hepatitis C. Sovaldi, at $84,000 a month, is the most expensive in the country, followed by the second ranked Harvoni, at $79,200. Both made by Gilead, the two drugs have controlled the market for Hepatitis C since Sovaldi’s FDA approval in 2013. With a curative success rate of up to 95%, older technologies (at lower price points) simply can’t compete, and strict patenting laws ensure that generic alternatives won’t become available until 2029, when Sovaldi’s patent expires.


Hepatitis C-related deaths outnumber all other deaths due to infectious disease in the country, with an estimated five million Americans currently affected. Since 2010, the rate of infection has increased by more than 150%, following trends of increased injection drug use among young people across the country. The mortality rate of people infected with Hepatitis C is expected to triple by 2030. 


In September 2015, the New York Times reported that while Medicaid coverage provides discounts for Sovaldi, the cost still hovers around an average $600 per pill, while Gilead promises to provide an average 46% discount for those without insurance coverage, bringing the average cost to $540 per pill depending on eligibility. In order to receive discounts from either payer, however, patients must abstain from the use of drugs or alcohol for a full year, have advanced liver disease (but not too advanced, depending on the payer), and be prescribed the treatment course by an infectious disease specialist. 


Limiting discounted treatment options to patients with advanced liver disease, who otherwise have an estimated five or fewer years to live without treatment, presents a massive failure to address the larger issue. Acute Hepatitis C leads to chronic infection in 85% of cases, with chronic infection then leading to advanced liver disease a quarter of the time. Further, acute Hepatitis C is often asymptomatic, which increases the likelihood of developing chronic infection due to little medical intervention, resulting in an increased risk for developing irreversible cirrhosis (when healthy liver tissue is replaced with scar tissue, preventing proper liver function).


While acute and chronic forms of the infection can be reversed by Gilead’s options before cirrhosis occurs, the costly drugs are not available to patients as a method of prevention. Instead, a patient’s liver must have just the right amount of cirrhotic tissue before they can be deemed ‘sick enough’ to be graced by the treatment discount—not to mention that the average discounted price of $540 per pill for 12 weeks of treatment still costs over $45,000, about 87% of the average annual income in the US. Cost for treatment, compounded by other risk factors and a general stigma around the diagnosis, means that Hepatitis C-related liver disease is disproportionately left untreated in minority populations living below the poverty line. Beyond this, African Americans are twice as likely to be infected as the general population. Despite these staggering numbers, however, a study published in the American Journal of Public Health in 2008 found that African Americans were only 38% as likely to receive antiviral treatment than white patients, with the treatment discrepancy strongly suggesting provider bias among physicians, as well as the outrageous price tag, as barriers to care. 


Systemic roadblocks that limit access to care have become a matter of life or death. This past month, a Pennsylvania court deemed that the state prison system’s Hepatitis C protocol, which has provided treatment for only five of the 6,000 prisoners currently infected, is unconstitutional. Citing budget restrictions, the state prison system effectively waits for prisoners to “be on the verge of death” before providing Gilead’s drug, according to an attorney working on the case of Mumia Abu-Jamal, the former Black Panther, who was denied antiviral treatment last year.  

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Gilead has justified Sovaldi’s price tag in part due to their $11 billion acquisition of Pharmasset, the company that originally developed the drug, in 2011. A Senate investigation into Gilead in 2014 found that the treatment cost was set “simply to make money,” according to a Democracy Now! report. This industry-wide trend of corralling patents for life-saving medications clearly privileges the financial wealth of pharmaceutical companies and the nebulous intellectual property rights attached to the drug development process above the health and survival of people in need.


In response to critics of the high treatment costs, Gilead struck deals with generic drug companies in 91 developing countries to offer treatment at a lower price point. Per Gilead’s agreement with local generic drug companies in India, for example, the cost of a full treatment course is set at $900, just 2% of the American price tag. However, Indian officials have argued the cost is still overwhelmingly out of reach for the majority of the nation, with the average national income hovering around $1500 annually. These national contracts require that patients provide proof of residence before providing access to the medication, ultimately disqualifying refugees and other migrant populations, as well as people living in “middle-income nations,” like Brazil and China, which still hold largely disproportionate distributions of wealth. As Gilead has done in the US and elsewhere, pricing access to treatment based on assumed wealth and average annual income not only defines the right to health -on capitalist terms, it also reifies geopolitical boundary-making as a determinant to health in the first place. As we’ve seen with Hepatitis C and other costly diseases, leaving the fates of millions to the ebb and flow of consumer markets becomes a luxury of the healthy and wealthy. 


In late 2015, The World Health Organization (WHO) added Sovaldi and Harvoni to their “essential medicines” list, which identifies drugs that they believe should be affordable and accessible to all, regardless of national affiliation, insurance coverage, or ability to pay. This falls in line with the WHO’s preamble, written in 1948, which identifies health as a human right. Doing so has had major implications for the global health efforts of the new millennium, as have generic drug interventions more broadly. In the late 1990s, for example, a multi-year patent battle between US pharmaceutical giants and the South African government erupted in response to pandemic levels of HIV/AIDS in the region. In this instance, campaigns for cheaper drug options cited the World Trade Organization’s agreement on intellectual property rights, which provides governments the right to override patents and engage in compulsory licensing only in the case of emergencies.


In the US, generic drug companies have gone a long way towards improving access to affordable healthcare, especially for under-insured patients. Before the patent expired in 2009, Imitrex, a medication used for the treatment of migraines, was priced between $30 and $40 per pill. Though paling in comparison to the cost of Hepatitis C or HIV/AIDS treatment, the cost of Imitrex meant that people experiencing otherwise debilitating migraines would have to pay nearly $100 a day to pharmaceutical companies in order to continue work, far exceeding the federal minimum wage, which promised a little more than $65 for the average eight hour workday in 2009. When the patent expired, the copay for underinsured patients dropped to an average $15 for a pack of 9 pills (about 4% the cost per pill compared to the brand name), improving access to the drug by leaps and bounds.


However, as is the case with Sovaldi and other new-to-market drugs, access to affordable generics is still overwhelmingly limited, with US intellectual property rights privileging the financial wealth of drug developers over the bodily health of its citizens. Additionally, generic alternatives aren’t always the carbon copy drug that they’re made out to be. Though the Price Competition and Patent Extension Act of 1984 simplified the process for bioequivalent generic drugs to come to market after patents held by original drug developers expire, extensive research into complications around the aesthetic quality of medications have shown that the physical appearance of generic drugs, in addition to the re-naming of these alternatives, often produce lower treatment outcomes. In a study of over 10,000 heart attack patients published in the Annals of Internal Medicine, the research indicated a strong correlation among patients halting medication after switching to a generic pill that looked different from the drugs they were used to. The patenting act of 1984 upholds the original drug developer’s right to a unique appearance, called “trade dress,” to identify the product’s manufacturer, meaning that generic alternatives must look physically different from their brand name counterpart. 


Compounded by extensive marketing efforts and the household recognition that provides a leg up to brand name drugs in the first place, some pharmaceutical companies have even begun producing their own “authorized generics,” providing virtually equivalent drug options at a lower cost and under a different name. With these moves coming from makers like Mylan, which recently announced plans for the release of a similarly “generic” EpiPen for half the cost of its increased name-brand price after last month’s uproar, the guise of the generic drug continues to falter to the profiteering of Big Pharma. And while this pressure from the public may have forced Mylan to make an effort to readjust their costly prescriptions, it’s hard to imagine a similar public outcry against Hepatitis C drugs like Gilead’s, in which the image being propagated of those who need the drugs are not young children.

DOLMA OMBADYKOW B’17 thinks pharmaceutical bureaucracy is intentionally opaque.