May 10, 2018

Years of price-gouging ensure there are no competitors to address EpiPen shortage

After dodging numerous attempts at regulation, the company that makes EpiPens has kept its competitors so small that they can’t even address the current supply backlog.

According to a Bloomberg report, patients in 45 states are unable to fill their prescriptions for EpiPens.

This shortage — the result of a multi-year saga involving the pharma-company Mylan, the FDA, and angry nut-fearing parents — highlights the challenges of reining in pharmaceutical price-gouging.

All about the market share

After Mylan bought the rights to sell EpiPens, it increased prices 550% — from $94 in 2007 to $608 in 2016. 

The hikes tripled Mylan’s stock price, but also made them reliant on EpiPen sales, which now accounted for 40% of their profits. 

After more than 700k consumers protested and prompted a Department of Justice lawsuit, Mylan introduced a cheaper generic version of the drug. But with the feds off their backs, Mylan continued to lobby against alternatives to their drugs to choke out competitors.

The FDA’s slap on the wrist didn’t hurt enough 

Legal rulings stripped Mylan’s monopoly, but after reducing their fine to a measly $465m, and lobbying for exclusive contracts, the company’s market share only fell from 95% to 71%.

Mylan joins companies like Turing Pharmaceuticals (pharma-bro Martin Shkreli’s company) and Valeant (which rebranded this week to clean up its image) that pay fines for price-gouging but continue to operate. 

Now, even though EpiPen alternatives exist (some for as low as $10), Mylan’s market control has kept competitors so small they can’t help address the current shortage. 

In the meantime, Mylan’s producer, Pfizer, says they “cannot commit to a specific time for when the supply constraint will be fully resolved.”

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.