In another move to quell outrage over its price increases, the maker of the EpiPen said Monday that it would introduce a generic version of the product, with a price about half of the existing EpiPen's.
The company, Mylan, said that the generic EpiPen would be available in several weeks and be identical to the existing product, which is used to treat severe allergic reactions. But it would have a wholesale list price of $300 for a pack of two, compared with just above $600 for the existing product.
Under pressure, Mylan announced last week that it would increase the financial assistance it provided to commercially insured patients to help with their out-of-pocket costs. It also said it would broaden the eligibility for uninsured patients to receive free products.
Those two measures, however, did not stem the public furor, in part because the company kept the list price the same, meaning the overall cost to the health system, mostly borne by insurers and taxpayers, would remain the same.
The introduction of the generic comes in addition to those other measures, which will remain in effect, Mylan said.
While the other measures would reduce costs only for consumers, the generic introduction would introduce savings for insurers and federal health programs like Medicare and Medicaid.
"We understand the deep frustration and concerns associated with the cost of the EpiPen to the patient, and have always shared the public's desire to ensure that this important product be accessible to anyone who needs it," Heather Bresch, chief executive of Mylan, said in a statement, calling the company's move "an extraordinary commercial response."
The new move could help mollify critics, although some are likely to point out that even at $300, the generic would still be triple the price of the EpiPen in 2007, when Mylan acquired the product and began steadily raising its price from around $100 for a pair, with the price increases accelerating in recent years.
Critics might also wonder why the company just does not reduce the price across the board rather than introduce an identical generic.
The company suggested in its news release that the move required an agreement from its manufacturing partner, Pfizer. The company also said last week that merely reducing the list price of the drug would not necessarily mean that patients would pay less, since the out-of-pocket costs for patients are set by pharmacy benefit managers and insurers.
"Because of the complexity and opaqueness of today's branded pharmaceutical supply chain and the increased shifting of costs to patients as a result of high-deductible health plans, we determined that bypassing the brand system in this case and offering an additional alternative was the best option," Bresch said in her statement.
Mylan has repeatedly pointed to high-deductible health plans, which leave patients with more out-of-pocket costs, as the main reason that patients are suddenly noticing higher prices for EpiPens.
The move to offer a generic is somewhat unusual. While brand-name drug companies sometimes start selling so-called authorized generic versions of their own products, it is usually to undercut an outside generic competitor.
In this case, Mylan faces no immediate generic threat. However, other companies, sensing opportunities, are looking at developing less expensive products that, like EpiPen, provide a rapid injection of epinephrine to counter anaphylactic shock that can occur from a bee sting, peanut allergy or other cause.
And pressure is mounting on the Food and Drug Administration, which rejected a generic version from Teva earlier this year, to perhaps be more accommodating in letting alternatives on the market.
Epinephrine, the drug, is already generic. But it is the combination of the drug with an easy-to-use auto-injector that can reliably deliver the right amount of drug when used by the patient or caregiver under emergency circumstances that has proved difficult to master. Sanofi removed a nongeneric competitor to EpiPen, called Auvi-Q, from the market last year because of dosing problems.
Introducing a generic might have less effect on Mylan's finances than simply cutting the price of the existing EpiPen. The term EpiPen is so familiar that many doctors write prescriptions for it rather than for a generic epinephrine auto-injector. Pharmacists in many states will be able to substitute the generic version but in some cases they may not, leaving Mylan with higher revenue than if it had cut the price across the board.
Ronny Gal, an analyst at Sanford C. Bernstein & Co., said in a note Monday that the action was a "smart (and real) move" that would be "quite costly" for the company. He estimated that Mylan's overall revenue per epinephrine auto-injector prescription would be reduced by around 25 percent to about $280. However, he said the move could be good for Mylan shareholders by alleviating the downward pressure on the stock because of the pricing controversy.
