The EpiPen Episode’s Silver Lining

By Chris Gallagher
September 1, 2016

Silver lining signIn the long run EpiPen’s widely publicized pricing imbroglio may result in more political support for today’s wobbly life science commercialization. Its two pillars – patents and pricing predictability  – are presently under attack from anti-patent advocates and price control activists who typically rely for support on prevalent public ignorance of patent law arcana, drug pricing’s complexity and politically motivated congressional apathy. But fueled by social media, public outrage has triggered a public airing of EpiPen’s retail pricing dynamic. The increased press coverage has been very informative. Drug pricing’s many influencers have been so obscured by the distribution chain’s convoluted entanglements, third party payment systems and press laziness, its multi-faceted beneficiaries have been operating without much public awareness. As a result, it has been easier for price controllers and anti-patent activists to focus lawmakers’ sole attention on highly visible retail drug prices rather than taking time to understand the influence of the many contributory components underlying them. Because of the EpiPen episode’s extensive press coverage, much of the public and even the press now better understand why eliminating patent protection and single solution price control “cures” for abusive pricing of prescription drugs will impair future drug development, they will miss the mark, and will do more harm than good.

The EpiPen’s pricing publicity has injected wider interest and transparency into the complex drug pricing issue. Public outrage has pierced the clouds obscuring prescription drug pricing, enabling a silver lining of increased public understanding to emerge. Through social media and front-page news coverage (like Andrew Pollack’s excellent New York Times piece), we are being tutored in plain language on the pricing and distribution contributions made by: increased health insurance deductibles and co-pays, pharmacy benefit managers, drug retailers, Medicare “donut holes,” Affordable Care Act Exchange abandonments, physician prescription directives, consumer discount and coupon rigmarole, generic pricing practices and even the slow-moving FDA. Echoing familiar misuse of anecdotal patent troll abuses, anti-patent advocates and prescription drug price controllers have focused lawmaker attention on admittedly abusive conduct by a few drug manufacturers in order to blame high prices solely on patents and/or to install price controls on all prescription drugs. Now the press is engaged, the public is paying attention and lawmakers can no longer vote blindly while hiding behind their “busy schedules”. In short the real issues affecting life science commercialization have attained new political priority. And not a moment too soon.

An over-narrow anti-patent directive is now driving Ban-ki moon’s UN High Level Panel on Medicinal Access to issue an oversimplified, misleading final Report. The Panel either must reach beyond its confining anti- patent premise or reach a dangerously narrow anti-patent conclusion. Colombia, Thailand, India and other nations advocate compulsory licensing. The issue even has publicized voluntary and involuntary U.S. subsidization of world health care. Here at home, EpiPen hullabaloo has highlighted the madness of mindlessly imposing priced-based Bayh-Dole march-in and other silver-bullet pricing solutions on a life science commercialization dynamic already enervated by SCOTUS and the America Invents Act. EpiPen’s social media explosion has all but preempted the recently initiated “Campaign for Sustainable RX Pricing” quest for more public dialogue about prescription drug pricing. But most important, it has made politicians grapple with the issue, forcing them to face-up to the folly of continuing their decade-long budgetary flat-lining of NIH, CDC and FDA budgets, while Zika creeps across the Gulf Coast, cancer moonshots are unfunded, Ebola spreads, precision medicine initiatives flounder and drug-resistant superbugs lie in wait at our local healthcare facilities while partisan wrangling over socially contentious “life/choice” issues prolongs inadequate support to contain actual ongoing carnage.

EpiPen’s eruptive timing was important. Had Congress been in town, lawmakers would have filled the front pages with populist blather. Had Mylan been less forthcoming about the retail drug supply chain, the press would have been less likely to look into its composition. Had Mylan’s CEO not been a sitting Senator’s daughter, gossipy Hill reporters would have been bored. If health insurer withdrawals from ACA exchanges had not led to higher consumer costs and rates to match, and most important, if anaphylaxis did not simultaneously threaten the lives so many children and bust the back-to-school budgets of more than 15 million middle American families, the multi component drug pricing issues might have been buried on news papers’ back pages. EpiPen pulled these issues out of hiding into the light of public concern where oversimplified self-serving solutions tend to wilt.

The fact is we have been treated to a highly publicized health pricing tutorial using a live case study to learn about the many drivers of retail drug pricing. Yes, the EpiPen increases happened,  and yes other abuses will  happen again. But the public and the industry both are wiser to the political power of social media coupled with parental outrage. There likely will be congressional hearings. Predictably they will feature more  bloviating than information. But this elevated awareness will definitely ease explaining the life science innovation ecosystem to lawmakers, the only way to save life science research commercialization and its medical and economic public benefit from destructive interference. Consensus green shoots are emerging . Press coverage now reiterates that competition is the key to containing prescription drug pricing.  Price abuse is possible only where competition is impossible. And where such is the case, public outrage channeled through social media can contain it. None of these constraints will cripple life science commercialization. Misguided sweeping congressional imperatives will.

Much needed innovative drugs cannot be developed without limited, but reliable, patent protection. Where these two commercialization pillars are appropriately balanced, reasonable pricing will follow. Where market demand is such that they are out of balance and public pressure fails to exert its containment capacity, comprehensive stakeholder dialogue is needed. Even within this narrowed arena such discussions will take time, but time spent conducting it will be time spent wisely. Meanwhile the safest and smartest short road to successfully managing retail drug costs will be to encourage and enable more competition by pressuring Congress to do its job by adequately funding NIH, CDC and FDA so they can do their jobs. In light of present needs is no longer politically defensible to prolong the decade-long budgetary compression of these agencies, whose very purpose is to carry out existing congressional directives enacted to timely respond to public health needs and to encourage life science innovation and reasonable pricing while striking appropriate balance between their conceptual cross purposes .

The Author

Chris Gallagher

Chris Gallagher is President of IP Strategic.com and a perennial selection to The Best Lawyers in America. Having spent years as one of the most influential and highly regarded advocates in the New Hampshire Legislature and state administrative agencies, Chris is now focused primarily on federal policies in Washington, DC. Chris has been involved in nearly every substantial New Hampshire economic regulatory initiative over the last 25 years. He has served as general counsel for the New Hampshire Bankers Association and has represented New Hampshire utilities, hospitals, insurers, aggregate manufacturers and numerous other entities. This experience provides him with a uniquely respected voice on Capitol Hill, enabling him to communicate effectively with members whose federal decision-making must reflect and respect the complexities of their home-state constituents.

A frequent speaker and commentator in local and national media on policy issues, regarding financial services, privacy, business and government, Chris has testified on financial services issues before U.S. House and Senate Committees and has been a panelist in Capitol Hill briefings on intellectual property issues. He can be reached at chris@ipstrategic.com

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 11 Comments comments.

  1. Prizzi's Glory September 1, 2016 11:39 am

    The price of the Epipen is completely unrelated to patent protection.

    It is amazing that Mylan is so dominating the market in a technology that has been around since the 1970s. Insurance companies and doctors have been asleep at the wheel. It is hard to fault Mylan for taking advantage.

    It is obvious why Mylan is introducing a generic Epipen to compete with its own Epipen. Now that the adrenaline auto-injector market has been identified as low-hanging fruit, Mylan has to discourage movement to non-Mylan lower cost alternatives.

    http://www.wsj.com/articles/mylan-to-launch-cheaper-generic-epipen-alternative-1472467730

  2. Erich Spangenberg September 2, 2016 5:34 am

    Wow–have you read the Epipen patents currently in the Orange Book? Epinephrine was discovered in late 1800’s and first commercialized in early 1900’s. The indication has been known since at least 1940. The patents that protect Epipen have nothing to do with the drug–they cover how the drug is delivered and the novelty appears to be the plastic cap on the device.

    I do not think you can use Epipen as an example of how patents are needed to promote innovation in pharma. The drug and indication have been known for 70 years. The Epipen patents are classic evergreen (zombie) patents–albeit probably valid and at minimum hard to knock out because of the number of claims. In the case of Epipen the USPTO is probably not to blame–the FDA has bent over backwards to stifle generic competition by denying generics.

    I do not think Mylan is evil–I think the USPTO and FDA facilitate corporate welfare and Mylan graciously accepts and pays back the favor through lobbyists and revolving door hiring policies.

  3. Anon September 2, 2016 6:08 am

    Erich,

    You send a mixed message, on the hand claiming that patents are not to blame, and on the other including the ad hominems “zombie patent” and “classic evergreening.”

    Improvement patents deserve more respect than that.

    That which preceded the improvement is available to all, the patented improvement deserves protection. There is zero need for ad hominem here to make the point that the prior non-patented non-improved version being blocked or stifled is the true problem.

  4. Prizzi's Glory September 2, 2016 7:33 am

    The epinephrine auto-injector market is characterized by immense insurer-doctor-patient inertia. There are a good number of Epipen alternatives that are less expensive and simply not prescribed.

  5. Erich Spangenberg September 2, 2016 7:50 am

    Anon–

    Classic Evergreening–I use that phrase because that is what it is. Mylan did not discover the drug; did not determine the drug treated the indication; they acquired it. There was no investment in R&D–and certainly did not increase R&D 461% from the time they acquired Epipen in 2007. They invented a new way to stifle competition by using the Orange Book for patents that do nothing to improve efficacy. This is “Classic Evergreening.”

    Zombie Patents: It is a phrase coined by Kyle Bass to describe stage III and state III+ evergreening. These Epipen patents are classic stage IV+ patents and “Zombie Patents.” Did not say they were not novel/invalid–but their novelty does NOTHING to improve efficacy; they simply extend exclusivity on a drug that was know for over 100 years and an indication that has been known for over 70 years.

    Good for Mylan. Corporate welfare courtesy of USPTO, FDA and Congress. Bad for patients and taxpayers.

  6. Anon September 2, 2016 9:07 am

    Erich,

    Your “defense” of ad hominems only furthers the distance between the worthwhile portion of your post and an attack on patents (it just does not matter where you obtain the “definitions” of your ad hominem attacks, but that you persevere is most telling).

    Thanks for showing your true colors.

  7. Anon September 3, 2016 7:43 am

    Erich,

    Reading a bit more on the “evergreening” phenomenon, I ran across this:

    http://hls.harvard.edu/content/uploads/2009/10/2010-debunking-the-evergreening-patents-myth-harv-l-record.pdf

    which you might find of interest.

  8. Anon September 3, 2016 7:51 am

    I also came across this:

    http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0148939

    Which is probably more in line with your views. The problem of course with such views is that this represents more of a general anti-patent (anti-incremental improvement patent, of which MOST patents are of this type), than a “true” ill-intention (or illegal, or even immoral) activity.

    From the conclusion of this article:

    Whether this constitutes “evergreening” depends on whether these incremental innovations and the years of extra patent protection they confer are proportionately matched by therapeutic improvements in the standard of care, which is highly debatable.

    That is just NOT the proper metric of a patent – there is no such requirement for any additional “proportionately matched therapeutic improvement in ANY larger context. This type of wanting “extra,” and then being indignant and wanting to hurl ad hominem when the extra is not there is a logical fallacy.

    And this is coming from someone who has no love of Big Pharma. I have several other “beefs” with Big Pharma including possession of claimed utility far too early in the process as well as the rampant excuse of “but the development process costs so much.” This “evergreening” though, is just not a legitimate complaint, as ALL industries engage in incremental improvements, which patent law fully provides for.

  9. Appearance of ... September 3, 2016 12:02 pm

    I am wondering if the trademark “EpiPen” has now become a genericized word for this type of device. That is, the device has acquired substantial market dominance, so that the name has now become the product itself, rather than an indicator of the source of the product. If so, then EpiPen loses trademark protection.

  10. Anon September 3, 2016 12:45 pm

    Appearance of,

    That’s an interesting question, but since there is only one source (as I understand it), the risk of “genericide” is abated because there IS only one source.

    Now if there were multiple sources and the name referred generically to any of the sources, then you may have a valid point. I think though that the current problem on the patent side is that there is no other source (even for earlier versions).

  11. Prizzi's Glory September 6, 2016 3:11 pm

    Here is wikipedia’s discussion of epinephrine autoinjector availability.

    As of 2015, the following epinephrine autoinjectors were available in various parts of Europe: Adrenalina WZF, Adrenaline (epinephrine) 1 in 1000 solution for injection BP auto-injector, Altellus, Anapen, Emerade, EpiPen, Fastjekt, FastPen, and Jext.[64] As of 2014, three branded products were available in the US: Adrenaclick, Auvi-Q, and EpiPen.[5] As of 2005 epinephrine autoinjectors were not available in most of the developing world.[5]