Mylan appears to be offering its “authorized generic” in response to complaints about the cost of its brand-name drug, not fear of competition from rivals. It currently controls the market. Pembroke’s Fein said Mylan miscalculated when it raised EpiPen’s price tag from about $100 to $600 over the past decade.
During that time, the firm failed to notice that insurance coverage had changed, Fein said. Instead of flat-dollar copayments, a growing number of consumers now have prescription deductibles they must meet first. That means some consumers are on the hook for the full $600. “They behaved as if everyone had good insurance,” said Fein. And the firm still seems to argue that raising its prices would not hurt most consumers, noting that many had flat copayments of less than $100. But, as the price rose, their insurer or the employer who provides coverage made up the difference, helping fuel premium and deductible increases.
“Premiums are an out-of-pocket cost,” said Schondelmeyer. “That’s what Mylan and other manufacturers have ignored.”
Do authorized generics reduce competition, which is supposed to help lower prices?
Some generic companies argue that is the case, saying a brand-name company jumping in ahead of rivals makes it less attractive for generic makers to bring their own products to market or challenge existing patents held by brand-name companies. But a 2011 Federal Trade Commission report found that authorized generics did not “measurably” reduce the number of patent challenges. The study also said the presence of authorized generics actually resulted in retail generic prices that were 4 to 8 percent lower than they would have been without.
KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation. Julie Appleby reports on the health care law’s implementation, health care treatments and costs, trends in health insurance, and policy affecting hospitals and other medical providers. Her stories have appeared in USA Today, the Washington Post, the Philadelphia Inquirer, MSNBC and others. Before joining KHN, Appleby spent 10 years covering the health care industry and policy at USA Today. She also worked at the San Francisco Chronicle, The Financial Times in London and the Contra Costa Times in Walnut Creek, Calif. She serves on the board of the Association of Health Care Journalists and has a Master of Public Health degree.