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Drug price issue not as simple as we think
The rising price of a life-saving injection device is getting the attention of consumer advocates and members of Congress.
EpiPens are used to treat food allergy reactions in what can be life-or-death emergencies. There's no generic version of the device, and no direct competitor.
Mylan N.V., a generic and specialty pharmaceutical company, bought rights to the device in 2007 and has raised the price 461 percent from $56.64 to $317.82, sold in two-packs.
Meanwhile, Mylan's stock price climbed from $13.29 in 2007 to a high of $47.59 this year, and total compensation for CEO Heather Bresch went from $2.5 million to $18.9 million, a 671 percent increase.
The changing health insurance landscape made the price of the devices more apparent to families with high deductibles, who now pay more out-0f-pocket expenses that used to be covered by insurance.
Schools are feeling the pinch as well, since nine in 10 have one or more students with food allergies, and the pens expire after a year and must be replaced.
Nearly 6 percent of children have food allergies, according to the Centers for Disease Control and Prevention, and up to 18 percent of them have reactions after eating something at school.
Mylan execs would probably say "thanks, but no thanks" should Martin Shkreli offer to come to their defense, but that's just what he did on a CBSN online show.
Shkreli is infamous for overseeing a price hike from $13.50 to $750 a pill for pyrimethamine, the only medication for treating toxoplasmosis, an infection contracted from cat parasites that can cause birth defects. It's also used in treatment of HIV infections, some cancers and malaria.
Shkreli is awaiting a jury trial, accused of taking stock from a biotech company he founded to pay off debts from unrelated business transactions, a charge of which he insists he'll be cleared.
Still, he made compelling points.
As a generic company, headquartered in the U.K., Mylan makes pennies on the dollar for most of its drugs, and EpiPen profits enable the company to continue providing other drugs at steep discounts.
Insurance companies should be glad to pay the price of the EpiPen, since the alternative is an ambulance trip and emergency room visit with costs in five figures, Shkreli said.
If families are truly unable to afford the price of EpiPens, he said, Medicaid should step in to cover the cost.
Higher prices can also result in better medications, Shkreli said, citing a drug used to treat multiple sclerosis, for which there is a relatively small demand.
After a company raised the price from perhaps $500 a year to $30,000, and the potential market became more profitable, other companies stepped up to produce more effective alternatives, he said.
We all want affordable medical care, and Martin Shkreli's opinion isn't likely to carry much weight with policy makers.
But we do want effective drugs, and many of us have profitable drug companies as part of our 401Ks.
The alternative is a complete government takeover of drug research and supply, and we all know how that is likely to turn out.