Friday, August 26, 2016

The EpiPen Price Outcry

EpiPen prices have increased like crazy over the last few years, and the media has been all over the story in the last week or so. It shouldn't be a surprise to anyone when this sort of thing happens.
An EpiPen is an auto-injection device that administers epinephrine to treat anaphylactic shock, usually from an allergic reaction. The actual epinephrine is really cheap, around a dollar's worth according to Wikipedia. But an EpiPen was $97 in 2007, and the price has gone up to $600 for a package of two in 2016. There's certainly some value in having the drug available in a pre-measured dosage that's easy to administer, so the 2007 price makes some sense. Hard to see what justification there is for the huge jump since then, though.

There's all kinds of stories in the news about this, usually featuring footage of potential allergy-victim kids and their worried parents. Congress is getting involved, demanding to know why the price is so high. (Not taking any actual action, mind you. Just a lot of talk and posturing for the cameras.)

I don't get why anyone is surprised by this or any other health care price increase. All that the manufacturer Mylan is doing is following the incentives that we've built into our health care system. They've produced a product, protected it with patents, marketed it to consumers, and are making as much money from it as they can. (Some of that was done by the prior owner before Mylan bought the rights in 2007, but it's the same incentives either way.) Consumers get hit with the cost, either directly or indirectly through insurance.

Having said that, I do see why people aren't happy. I wouldn't be either, if I had to spend hundreds of dollars on something that I might need to save my life in an emergency. But going after Mylan won't fix the problem, even if they end up reducing the price in this specific case. The incentives in the system are still going to push companies to do similar things in other areas. And not all of those will lend themselves easily to media-friendly shots of kids and parents that drum up outrage from the public.

If we want to fix the problem, the incentives in the system need to be changed. Health care products and services need to come from organizations that have patient health as their top priority, not a profit motive.

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