The astronomical price rise of allergy drug EpiPen has triggered public outrage, and the focus has moved to the factors that resulted in such extreme price increases with scant respect to social sensitivity and public consequences.

For millions of parents, EpiPen has been an indispensable drug for saving their school-going children from extreme allergic reactions.

So, it was natural that the public outcry against the essential allergy drug's 400 percent price hike led the media and other stakeholders to cry themselves hoarse while looking for the villains who drove prices to such crazy levels.

After Mylan NV acquired the "EpiPen" in 2007, it pushed up the allergy drug's price five times over, and the injectable double pen now costs $600-plus.

Regarding the origin of the steep EpiPen price hike, inferences drawn from Mylan NV's regulatory filings attest that the company's incentive system for top executives must be blamed for the mess. The executives were asked to chase high targets and escalate earnings per share, and they found the easy way out in jacking up the prices.

Mylan NV's award of $82 million to the top five executives had a mandate that the star product EpiPen must achieve 90 percent of its 2018 earnings target.

Referring to the EpiPen price rise, an analyst said it was evident that the high EPS targets would have been unattainable without a drastic price rise.

"They are being compensated very heavily on hitting [earnings per share] targets," Ronny Gal, an analyst at Sanford C. Bernstein & Co. told the Wall Street Journal.

Certainly, it was a demanding goal and required an average of 16 percent of annual growth to earn 90 percent of the revenue from a single generic drug.

Some reports also found fault in the greed of top bosses in the outrageous price increases. EpiPen has been soaring since 2007, and the price jumped fivefold. During the same period, Mylan's CEO, Heather Bresch, saw her pay jump many times, with her pay hike eventually becoming sevenfold.

London's Independent carried an exclusive report that showed many examples of reckless pharma price drives. It mentioned Turing Pharmaceuticals owner Martin Shkreli, who purchased the manufacturing license of antiparasitic drug Daraprim used by HIV patients and drove the price up from $13 a tablet to $750. Tech Times has also reported about the spiraling costs of cancer drugs.

Noting that both avarice and market failure are spiraling essential drug prices, the source said market failure is accentuated by the failure of other generic players in being unable to thwart the market fleecing of a few by expanding supply.

Photo: Greg Friese | Flickr

ⓒ 2021 TECHTIMES.com All rights reserved. Do not reproduce without permission.
Tags: