Business Review Board / August 21, 2018

FDA Injects EpiPen With Needed Dose of Competition

The agency ends Mylan’s monopoly on the emergency delivery device by approving a generic.

President Donald Trump’s Food and Drug Administration (FDA) recently injected some much-needed competition into the pharmaceutical industry. The FDA approved the first generic competitor to Mylan’s EpiPen, granting the Israeli pharmaceutical company Teva the right to sell its drug-injector system. Back in 2016, Mylan drastically increased the price of a two-pack of EpiPens, kept on hand by millions of Americans for emergency injections of epinephrine, to more than $600. Mylan was able to engage in this price gouging due to its essential monopoly on the drug’s delivery device.

However, Mylan was only able to maintain these grossly inflated prices with help from the FDA. As The Wall Street Journal explains:

The agency had not articulated standards for a class of drugs known as “complex generics” such as inhalers, which are more fraught than proving similarity to, say, a molecule pill. Mylan thus had no direct competition, though it now sells its own generic copy.

Other injectors are on the market but a pharmacist can’t substitute these versions thanks to issues as minor as the instructions for the device, though there is no clinical distinction. Companies like Teva have spent years ensnared in FDA processes, and in the meantime Mylan could increase prices without market consequences.

As current FDA Commissioner Scott Gottlieb explained to Congress in 2016, drugmakers were caught in a “Catch-22” regarding FDA regulations — in order to gain approval as a generic, their drug-injection device had to be exactly the same as the EpiPen, while other FDA regulations make it almost impossible for competitors to secure branding as alternatives.

Gottlieb has now clarified the regulations, paving the way for the FDA to prioritize approvals for complex generics. The Journal notes, “On all the evidence, products face the sharpest price decline when two generics are competing with the branded version. More drugmakers will jump into a market if they see an opportunity to make money and a regulatory agency that doesn’t construct needless barriers to entry.”

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