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If you're going to overcharge the U.S. government, you don't want to get caught:
Mylan NV for years overcharged the U.S. Medicaid health program to buy its EpiPen shot, the government said Wednesday, despite being told that it needed to give bigger discounts under the law. From 2011 to 2015, the joint state-federal program for the poor spent about $797 million on EpiPens, the Centers for Medicare and Medicaid Services, or CMS, said in a letter Wednesday. That included rebates of about 13 percent, but the U.S. should have been getting a larger discount of at least 23.1 percent.
While the agency didn't say exactly how much Mylan had overcharged, the amount could be substantial. Under law, companies are required to give [Medicaid] back any price increases they take on brand drugs above the rate of inflation, in addition to the 23.1 percent discount. Mylan, after acquiring the drug in 2007, has raised the price of EpiPen by about sixfold, to over $600 for a package of two. The government has in the past "expressly told Mylan that the product is incorrectly classified," CMS said in the letter, which came in response to an inquiry by Congress. "This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen."
Previously:
EpiPen's Price Increased 400% since 2008
AllergyStop: $50 EpiPen is Production-Ready but...
(Score: 2) by wisnoskij on Thursday October 06 2016, @12:29PM
From my understanding this entire thing comes down to if it is a proprietary drug. If they are the only source then they get paid X for it, if they are not they are paid Y for it. Where X >Y, and X is what they were getting paid. Now the drug absolutely is not exclusive, but the EpiPen is a combination of the opensource drug and the delivery method, which is proprietary and sold only through them.
(Score: 2, Informative) by Anonymous Coward on Thursday October 06 2016, @01:02PM
If, as you say, it comes down to legal arguments about sole vs multi sources, I think that would be a shame.
Seems to me that a 6x price hike of a mature product, over 9 years, combined with exorbitant executive pay (at expense of stock holders) should be the topics of interest? Or in simple words, follow the money.
(Score: 3, Insightful) by bob_super on Thursday October 06 2016, @04:26PM
As long as you follow the exact letter of the law, it's not illegal to be a greedy heartless asshole.
But if you attract too much attention by being a greedy heartless asshole, you'd better make sure that you did indeed follow every rule to the letter.
Or have a Senator for a dad. Or provided the right amount of campaign contributions.
(Score: 3, Interesting) by Nerdfest on Thursday October 06 2016, @06:47PM
The punishment for this kind of douche-baggery should be immediate transfer of the patent to the public domain.
(Score: 1) by Francis on Thursday October 06 2016, @01:53PM
This probably wouldn't have been an issue if the medicare was allowed to negotiate over medication prices or contract with pharmaceutical companies to provide medications that were out of patent protection, but only being provided by a single source that wasn't providing reasonable prices.
You've got to love those free market conservatives that literally wouldn't recognize a free market if it jump up and bit them on the ass.
(Score: 2) by tangomargarine on Thursday October 06 2016, @02:23PM
Not being an economist, I'm not sure whether to observe that
A) the free market inevitably converges on monopolies, or
B) our government just can't keep its hands out of the market by giving specific companies advantages which help them become monopolies.
Into which patents and various other things come into play.
P.S: For anyone saying that the U.S. isn't a free market economy, show me a country that is or STFU.
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: 1) by Francis on Thursday October 06 2016, @08:31PM
According to Adam Smith the original source for the notion of the free market, a free market will always converge on a single source monopoly covering all legal economic activity if the government doesn't step in and regulate the activity.
As for the US being a free market economy, we absolutely aren't and the lack of other countries with free market economies is not a reasonable argument to make.
(Score: 3, Interesting) by tangomargarine on Thursday October 06 2016, @02:21PM
I think it can be explained much more simply: Greed.
I guess the government getting them cheaper is a good thing, but why are they so damn expensive in the first place? Yeah yeah, make back the cost of research. The proprietary part is an *injector* for crying out loud, not a genetically-engineered cloned superchimp or something. How long ago did they first release them? Talk about your payback periods. . . . Presumably they'd say that they still need that income to research all their other massively overpriced new drugs.
Here's a crazy idea: How about a reasonable price (ergo a reasonable profit margin, not gouging people for all they're worth) that's a flat rate for everyone?
"Is that really true?" "I just spent the last hour telling you to think for yourself! Didn't you hear anything I said?"
(Score: 5, Funny) by GreatAuntAnesthesia on Thursday October 06 2016, @02:40PM
The proprietary part is an *injector* for crying out loud, not a genetically-engineered cloned superchimp or something.
- OK Mr Reynolds, so you're here for your flu jab, is that right?
- Yes Doctor.
- Good. Now Mr Reynolds, you may remember that when you booked this appointment, you ticked the box to take part in a trial for an experimental new drug delivery method called GECS-C.
- What's that banging noise? I think it's coming from next door.
- Never mind that, Mr Reynolds. As I say, we have this experimental new drug delivery method, which...
- It sounds like someone is throwing furniture at the ceiling. And what is that ungodly screeching sound?
- Yes yes, we'll come to that soon enough. The point is, you may get your vaccination administered via the experimental method, or you may be in the control group which will have it administered by traditional means. But we won't be telling you which group you are in until the trial is concluded. Do you understand?
- Um, yes. The noise is getting... oh, what's that?
- I just need to smear this onto your face, Mr Reynolds.
- Oh. Is that the new drug delivery thingy?
- No no, Mr Reynolds, this is just mashed banana.
- Mashed..?
- It will all become clear soon enough. Now I'm going to leave the room and lock the door, and shortly afterwards then that door over there will open. When that happens Mr Reynolds, I advise you to remain completely calm, and make no sudden moves...
(Score: 2) by martyb on Thursday October 06 2016, @07:44PM
Agreed.
From what I can tell, their research costs for the EpiPen have long since been paid for; from CNBC [cnbc.com]:
See also Wikipedia's entry on the EpiPen [wikipedia.org] which notes:
Wit is intellect, dancing.
(Score: 2) by Capt. Obvious on Thursday October 06 2016, @02:22PM
You're right, the whole thing hinges on whether it's a proprietary drug. The letter goes into details as to why even though Wyden filled out the paperwork as though it was non-proprietary (generic) it actually should be classified as a proprietary drug. Their reasoning:
You seem wrong on the complexity. This seems to be a cut and dried case, albeit one that should have been fixed long ago (the wonders of the legal system, somehow filling out the paperwork incorrectly for 20 years isn't something they can stop.).
You're also wrong on the consequence. It seems generics get a rate of 13% off their average price. Proprietary drugs get 23.1% off the average price (or the best price, if that's better).
(Score: 5, Insightful) by Thexalon on Thursday October 06 2016, @01:45PM
The health care industry is one of the few places where somebody can legally say "Give me all your money or you die." So rich sociopaths like Martin Shkreli and Heather Bresch, who have never been poor or even middle class and as best as I can tell see all non-rich people as Untermensch, are boosting the prices dramatically to basically rob people of as much of their income as they can get their grubby hands on.
And this is why making health care a free market is crazy: Free markets depend on both the buyer and seller making an uncoerced choice, but in health care very few choices are uncoerced.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Thursday October 06 2016, @02:25PM
Free markets don't have patents. The health care system is full of patents and regulatory capture, from the FDA limiting competition based on what they are willing to approve and what companies get their products approved (perhaps based on backdoor dealings) to patents. Free markets would result in lower prices.
(Score: 3, Insightful) by Capt. Obvious on Thursday October 06 2016, @02:27PM
Please look up how trade secrets and contractual obligations operated pre-patent in England, and explain how that system is preferable.
(Score: 1) by khallow on Thursday October 06 2016, @05:07PM
Please look up how trade secrets and contractual obligations operated pre-patent in England, and explain how that system is preferable.
Perhaps you could tell us what the problems are supposed to be, rather than us waste our time on a unicorn hunt.
(Score: 3, Informative) by Capt. Obvious on Thursday October 06 2016, @06:55PM
Well, an exhaustive list is difficult, and frankly would be just as long to read from me as from the type of research you're declining to do. But basically you had a lack of investment in things that could not be protected by trade secret, vicious anti-compete clauses in contracts, and a high likelihood innovations would disappear as the people who knew how to do them died out.
The best paraphrase I've heard is, "patent law enforces open hardware, but in return guarantees exclusivity for a short period of time."
(Score: 0) by Anonymous Coward on Friday October 07 2016, @02:23AM
Basically you're just making things up, as is typical of IP proponents which are mostly composed of big business.
and trade secrets already exist anyways. There is zero evidence that patents encourage the revelation of trade secrets, patents are useless in this regard.
(Score: 0) by Anonymous Coward on Friday October 07 2016, @01:27PM
For a real discussion on what patents do to innovation see
https://www.techdirt.com/articles/20130503/17414322946/discussions-abolition-patents-uk-france-germany-netherlands-1869.shtml [techdirt.com]
Also see the book Against Intellectual monopoly by Boldrin and Levine.
As far as England was concerned England was doing fine until patents came along
"This power was used to raise money for the Crown, and was widely abused, as the Crown granted patents in respect of all sorts of common goods (salt, for example). Consequently, the Court began to limit the circumstances in which they could be granted. After public outcry, James I of England was forced to revoke all existing monopolies and declare that they were only to be used for "projects of new invention"."
https://en.wikipedia.org/wiki/History_of_patent_law [wikipedia.org]
It was businesses, as usual, that pushed for these monopolies and they caused so much harm that it was public outcry that lead to their restriction. Their restriction was a good thing.
Don't listen to the completely made up stories by patent supporters. IP has historically been pushed almost only by businesses that wish to limit competition (why should businesses decide laws) in their favor and the results have historically mostly been bad for the public and for innovation.
(Score: 3, Informative) by krishnoid on Thursday October 06 2016, @08:23PM
Allergist's offices and pharmacies currently have coupons to fill an Epi-pen prescription effectively for free ($0 copay). They're normally $150 or something with insurance.
I vaguely suspect this is because this issue is currently front and center. As such, if you/someone you know need to replace an old Epi-pen or get an extra one, I'd recommend calling your allergist or pharmacist ASAP before this exits the news cycle and they start jacking up the prices again.