FDA regs promote monopolies, discourage generics

Thursday, August 25, 2016
Chris Woodward (OneNewsNow.com)

EpiPen injectorA doctor thinks the company behind the EpiPen is acting like a monopolist – but the story doesn't end there.

The EpiPen is an epinephrine injector to use in the event of an allergic reaction. It's made by Mylan N.V., and the company has hiked prices as frequently as three times a year over the past nine years, pushing its list price for a package of two syringes to more than $600.

In the crosshairs over severe price hikes for its EpiPen, Mylan says it will expand programs that lower out-of-pocket costs by as much as half.

Read more ...

"Mylan, in this case, has been given a perpetual monopoly around its product – and they're behaving like a monopolist," says Scott Gottlieb, M.D. and resident fellow at American Enterprise Institute. "I think the issue is why do they have this monopoly in perpetuity?"

Gottlieb points to regulatory problems that, in his opinion, have impeded competitors from coming on to the market.


"There are clearly a number of companies that have competitive products," he says. "There are also companies that had products on the market that were taken off the market by regulators. And so that's why Mylan was able to maintain this monopoly and be in a position to take these price increases."

Senator Chuck Grassley (R-Iowa) and other members of Congress want more information from Mylan. Grassley, himself, wrote the company to ask for an explanation of a 400-percent increase in the price since 2007.

That said, will government involvement will help or hurt the situation? Gottlieb responds:

"I think the policymakers are going to try to shame the company to sort of strong-arm it to lower its price or maybe not take additional price increases, but they're also going to try to use this episode as a way to galvanize the public to get behind more intrusive measures. A lot of policymakers have been pursuing the authority ... to impose price controls on drug-makers – and I think this is going to become, unfortunately, a poster child for those proponents of those policies, which I think are bad policies."

According to Gottlieb, there's a reason why the government allows certain drug-makers to have monopolies on certain products and earn monopoly rewards in those products.

"We want to create an incentive to invest capital to develop those products," he explains. "And there's a reason why we want very vigorous competition after legitimate intellectual property has expired in those products, because we want consumers to have the benefits that come from low-cost goods."

But the problem, Gottlieb says, is that the system is not working. "We designed a system to allow vigorous competition when legitimate intellectual property has expired on products – and in this case, the legitimate intellectual property has expired, but we don't have vigorous competition. And I consider that a regulatory failure."

Coincidentally, just before news for the EpiPen situation broke, Gottlieb wrote an article in the Wall Street Journal called "How Obama's FDA Keeps Generic Drugs Off The Market."

Meanwhile, consumers and users of the EpiPen are not holding back comments. A OneNewsNow reader says it's "terrible how these companies only think about money and not the people."

That frustration may only increase, as more information is reported about the substantial pay increase for Mylan's CEO in recent years. As for those inquiries from federal lawmakers, that situation may be awkward, as the CEO of Mylan is the daughter of Senator Joe Manchin (D-West Virginia).


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