How Smart Marketing Transformed EpiPen Into A Billion-Dollar Product
ROBERT SIEGEL, HOST:
When someone has a serious allergic reaction, a dose of epinephrine or adrenaline can save a life. The EpiPen has become the go-to solution. A slick marketing campaign is part of the reason why. That campaign included lobbying Congress to get EpiPens in schools. Forty-seven states now suggest or mandate that schools have such devices on hand. You can also find them on cruise ships, at Disney theme parks and in homes across America. As the popularity of EpiPens has grown, so has the cost. The wholesale price of the drug has increased by about 400 percent as it has been heavily marketed. Bloomberg News reporter Cynthia Koons uncovered this story, and she joins us now. Welcome to the program.
CYNTHIA KOONS: Hi. Thanks for having me.
SIEGEL: This story starts in 2007 when the drugmaker Mylan bought EpiPen from a German drug company. Revenue from EpiPen sales has gone, as you report, from $2 million a year to a billion dollars over that time. How was Mylan able to boost sales that much?
KOONS: So Mylan really cornered the market with EpiPen. They started with a product that, when they originally acquired it, they didn't even know if they wanted to keep it. And they ended up taking it in house and building a multipronged marketing strategy to make it, really, the go-to product for patients with severe allergies. And it's, in some ways, recognized as the only product of its kind. Although there are other products on the market, nobody's really been able to crack Mylan's dominance in this space.
And they used the legislative effort to get the Pen into schools and have it be sort of a household name among families. They're looking at other markets, such as getting it into restaurants and getting it into other common public areas where we would see defibrillators. So what they're trying to do is build this model where EpiPen becomes an essential life-saving tool that's widely distributed and readily available and so people, patients and potential patients down the road know the brand.
SIEGEL: Since 2007, Mylan has boosted sales, and also, the price has gone up. It used to be $57 for a dose wholesale. How much has it gone up?
KOONS: Nowadays, after insurance discounts, a package of two EpiPens costs about $415.
SIEGEL: And you can't go to the pharmacy and buy a single EpiPen.
KOONS: No. Mylan only sells them in two-packs now, partly because in 2010, there were some federal guidelines that said patients who have severe allergies have to carry two pens rather than just one. There are instances where someone could have an allergic reaction, and they might need a second EpiPen.
So that's the thinking behind the guidelines, and Mylan had capitalized on the guidelines by moving to selling two packs. But the problem for consumers, as if, say you're a parent and your child looses one of their EpiPens, you can't just buy one replacement pen. You have to buy two. So that's how these significant prices can become really painful for families when they're restocking Pens.
SIEGEL: Yes. You write about one woman who has allergies and who had real sticker shock at the price of EpiPens. She went to Canada to buy instead. You get them a lot cheaper there.
KOONS: Yeah. Last year when she went to Canada, she was able to get a single EpiPen for $100. And then she had to rely on one expired EpiPen and the one Pen she bought in Canada. And she said that was pretty much the best she could do. That's how it works. It's just much cheaper in Canada because there are different mechanisms in place to keep a cap on drug prices.
SIEGEL: Is it fair to say that Mylan is charging so much more for an EpiPen simply because they can, because there's no competition preventing them from doing so?
KOONS: Well, certainly that's how it appears. But they would argue that they put a lot of effort into advocating for awareness. And truth be told, the rate of people with allergies has been on the rise. That is an issue. But by and large, there is no mechanism to control what drugmakers want to charge for their products. And really, the gatekeepers are the insurers and the pharmacy benefit managers in terms of holding back what sort of price increases these drugmakers pass on.
And the problem has become more evident because more people have higher deductible policies that are forcing them to shoulder more of the costs. But hundreds of drugs a year go up in price, and consumers would never necessarily see that. They go, and they pay a co-pay. And the prices are absorbed and then either passed on through higher insurance premiums or negotiated through rebates inside the system that we don't really see. So the practice of pushing up the price is very common in the pharmaceutical industry.
SIEGEL: Cynthia Koons's story in Bloomberg Businessweek is called "How Marketing Turned The EpiPen Into A Billion-Dollar Business." Thanks for talking with us today.
KOONS: Thank you.