EpiPen: A Case Study of Government Harm

EpipenMuch has been written about the dramatic price hikes for EpiPens, which inject a drug that counters severe allergic reactions (anaphylactic shock). According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

Both Carroll and the Wall Street Journal have described how government has allowed EpiPen’’s manufacturer to hike prices so much. EpiPen is complicated, being both a drug and a device. The drug is very inexpensive, and not patented. The device is protected by patents issued in 2005, which expire in 2025.

First, the government made a couple of interventions in the market that allowed the manufacturer to raise prices above the free-market level. The federal government changed its guidelines such that the EpiPens have to be sold in packages of two (while customers might prefer just one, or at least an odd number). Also, the federal government gave public-emergency grants to states on condition they stockpile EpiPens.

Further, the Food and Drug Administration has hindered other manufacturers’ ability to compete. Those with differentiated products (which do not infringe the patents) have struggled for market access. A competing device which entered the market in 2013 had to withdraw in 2015 after 26 potential malfunctions in the U.S. and Canada, in which it delivered the wrong dose. However, according to the FDA’s own report of the recall:

None of these device malfunction reports have been confirmed. In these reports, patients have described symptoms of the underlying hypersensitivity reaction. No fatal outcomes have been reported among these cases.

In hindsight, we might conclude a caution might have been a better response than a recall. By creating an environment in which EpiPen prices are higher than otherwise, the federal government may have made them unaffordable to many families. That will cause more harm than 26 unconfirmed cases of bad dosing by its now unavailable competitor.

(Sources which require subscription: Aaron E. Carroll, “The EpiPen, A Case Study in Health System Dysfunction,” , The Upshot blog, New York Times, August 25, 2016); “Anaphylactic Political Shock,” Review & Outlook editorial, Wall Street Journal, August 24, 2016.)

Comments (15)

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  1. Ron Greiner says:

    Government always knows what is best:

    –The Department of Health and Human Services recently issued rules telling doctors they can’t decline to perform gender-reassignment surgery on kids if it’s recommended by a “mental health professional.” Refusal could be a career-ender.

    How crazy is the rule? Well, for starters, most trans teens identify differently later in life — yet reassignment surgery is often irreversible, and even less-radical procedures can be harmful, as HHS’ own medical experts note.–


  2. Ron Greiner says:

    John, you are a numbers guy. Look at these new numbers about how expensive health insurance is in the USA.

    Healthcare costs are up for families, according to the 2016 Mid-Market Benefits Benchmarking Survey conducted by Scott Benefit Services.

    1. Healthcare costs for a family of four were up 4.7 percent on average in 2016 to $25,826.

    2. By 2020, the national healthcare cost for a family of four is anticipated to hit $30,632


    Obama was wrong when he said that families would save with Obamacare.

  3. Devon Herrick says:

    Great post, John. I’m going to follow up tomorrow with a longer post. I will give readers a hint of what I’m going to write about.

    The chances of an American dying of a serious allergic reaction, called anaphylaxis, in any given year is very low. About 200 people will die, or about 1 in 1.5 million. Two-thirds of anaphylaxis deaths were adults, with ages 75 – 84 being especially pronounced. Nearly 60% of deaths will be medicine related. For children with food allergies, age 0-19, the chances of dying in any given year from anaphylaxis is about 1 in 300,000. You are more likely to be murdered than die from a food allergy. You are 100 times more likely to die from an accident.

    Anaphylaxis is rarely fatal. Yet, Americans spend more than $1 billion a year on epinephrine auto-injectors — almost all of which are thrown away unused each year. This should really put some perspective on the debate whether Americans should have access to a cheap, $5 epinephrine auto-injector versus having to pay $600 for a twin pack of EpiPens that are thrown out unused every year.

  4. Allan says:

    John G.: What do they mean by stockpile? Do they mean have available in public institutions? How does one stockpile the Epi-Pen if it has an expiration date of 1 year?

    Devon: You make a good point. “About 200 people will die” Is that with or without treatment available that saves the life? How many lives would be lost to anaphylaxis if no treatment were offered?

    • Devon Herrick says:

      That is the approximate number who die. Some of were injected with epinephrine, some were not. Just over a third of anaphylaxis patients either die in the ER or a hospital.

      It’s hard to say how many would die if no treatment were offered. By some estimates there are 200,000 cases of anaphylaxis each year, so your odds of death are rather small (200,000/200).

    • What better stockpile than a stockpile of goods with an expiry date! If I were the manufacturer of EpiPens, I’d argue the inventory would have to be turned over every month, not every year!

      • Allan says:

        The pharmacies can have older stock. In the past they tried to sell me an Epi-Pen that had less than 7 months left before the expiration date. I couldn’t find any pharmacy in the area that had a longer expiration date so I waited a month or so for new ones to come in.

  5. ColoComment says:

    Link re: stockpiling in schools. (And, yes, they should be replaced upon expiration at the one-year mark.)

    The stats for children may be 1 in 300k, but I have an 8-yo granddaughter who is allergic to peanuts (and possibly but untested, to other legumes), and her brother, at 6-yo, is allergic to tree nuts. It may very well be that their odds of dying from anaphylaxis are slim, but should they take that risk when there is [erstwhile affordable,] available instant & effective treatment?

    Both children have been coached from the time of diagnosis of allergy to be aware of what they eat and what other people serve them. But that defensive posture can easily be breached through inadvertent error: I worked with a fellow who ate a nut-less brownie that had merely been cut on the same cutting board that had been used for walnut brownies: in the course of just a few minutes his entire face and neck swelled and his breathing was impaired. He used his EpiPen and in short order began to experience relief (we still drove him to the ER to be checked out.)

    I completely understand the economics of what Devon says re: chance of allergic reaction and/or death v. cost of EpiPen. However, the yuuuge recent increase in the cost of EpiPens is driven by lack of competition (due to whatever cause), not recovery of R&D or IP acquisition costs, or product development.

    That description of the Sanofi product recall suggests that Sanofi perhaps was being extra risk-of-lawsuit averse in withdrawing its product from the market. I wonder….

    • Devon Herrick says:

      I’m not suggesting nobody should buy EpiPens. Quite the contrary. Everyone should have a generic epinephrine auto-injector in their medicine cabinet. It should be available OTC. The FDA acts like the technology is as sensitive as an implantable defibrillator. If a patent goes into cardiac fibrillation or their heart stops, if they do not get an appropriate jolt, they will die with seconds. Anaphylaxis is much slower. I talked to someone who had an anaphylactic reaction after eating shellfish, while taking antibiotics and then going for a 7-mile run. These are all known risk factors or triggers. Over the course of an hour she became increasingly sick but still had to make her way back to her car. She ended up going to the emergency room by ambulance. But the reaction progressed for more than one hour.
      Even if the reliability of an auto-injector is slightly reduced by allowing almost any qualified firm to make them for OTC sales, the public would be safer. The reason is that today epinephrine auto-injectors are so expensive that the stockpile is very low. The technology is simple; epinephrine auto-injectors are about as complex as a retractable ball point pen. They should sell in a twin-pack at CVS for $20. Of course, the quality would likely not go down, just the profit margin of the firm that sells the EpiPen.

      • ColoComment says:

        Yes to all you say. Especially: “It should be available OTC. The FDA acts like the technology is as sensitive as an implantable defibrillator.”

  6. Lee Benham says:

    is anyone else not finding the NCPA in google searches? it used to come up right away with ncpa health blog now I get nothing. not even a search of national center for policy analysis

    • Ron Greiner says:


      It’s not like the NCPA blog was saying negative things about Obamacare and needed to be stopped.

      Like all non-taxed think tanks and the nation’s media the NCPA is not talking about Obamacare before the election.

      There must have been a memo to keep your non-taxed status.

    • Barry Carol says:

      I had that happen for several days last week but now it’s back to normal.

  7. […] recently wrote a post describing EpiPen as a “Case Study in Government Harm,” describing how the government had made it possible for the manufacturer to increase prices […]