New York A.G. Launches Antitrust Investigation Into Mylan, Maker of the EpiPen

The New York Attorney General's office has launched an investigation into Mylan Pharmaceuticals, the manufacturer of the EpiPen, whose price has increased nearly 550 percent over eight years.

At issue is whether Mylan's sales contracts with schools had potentially anti-competitive terms. The Attorney General's office said a preliminary review revealed the company might have inserted such terms into the contracts. The EpiPen is used to treat severe allergic reactions.

“No child’s life should be put at risk because a parent, school, or healthcare provider cannot afford a simple, life-saving device because of a drug-maker’s anti-competitive practices,”Attorney General Eric T. Schneiderman said in a press release. “If Mylan engaged in anti-competitive business practices, or violated antitrust laws with the intent and effect of limiting lower cost competition, we will hold them accountable. Allergy sufferers have enough concerns to worry about — the availability of life-saving medical treatment should not be one of them. I will bring the full resources of my office to this critical investigation.”

EpiPen's presence in schools has made it a household name, the Washington Post explains. In 2013, President Obama signed the School Access to Emergency Epinephrine Act, referred to by the White House as the "EpiPen Law." The law authorized the Department of Health and Human Services to give funding preferences to states for asthma-treatment grants if they maintained an emergency supply of EpiPens, train personnel to administer the drug and ensure trained personnel are available at all times of the day to administer epinephrine.

David Maris, a Wells Fargo analyst, told the Washington Post the move helped market EpiPens and promote them as the trusted product in schools. Through the EpiPen4Schools program, Mylan has given away more than 700,000 free EpiPens to schools nationwide.

Amid criticism from lawmakers and consumers of the whopping price of the EpiPen, Mylan announced that it would would launch a generic alternative at a 50 percent discount of the list price. The generic EpiPen will cost $300 per two-pack carton and will be identical to the branded medicine.

In addition, Mylan has said it will offer financial help to customers and will expand the number of low-income patients eligible to receive company subsidies. As the New York Times noted, the steps to offer financial assistance did not do much to quell public outrage, as the overall cost to the health system would remain the same. The list price for a pack of two EpiPens is $608.

Defending the rising prices, Mylan CEO Heather Bresch said in an interview with CNBC that it wasn't a Mylan issue or an EpiPen issue but rather a health care issue. "The irony is that the system incentivizes higher prices," she said.

Experts say Mylan has been able to raise its prices because of the lack of any real competition.

The Wall Street Journal notes one of the company's most recent price increases came after the recall of a competitor, Auvi-Q. Teva Pharmaceuticals has planned to launch a generic version but doesn't expect a product before 2017.

This report will be updated.

Image Credit: Greg Friese via Flickr Creative Commons