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The Causes of the EpiPen Problem

The EpiPen has been much in the news. The product, which provides an immediate dose of adrenalin to address an anaphylactic reaction, has risen in price by 400 percent over the last several years. For Hillary Clinton and left wing sites like Vox, this is an argument against drug companies and the free market.  What is needed is more government regulation in the form of price regulation.

But it turns out that the problem is the result of bad regulation. When a company sells a product at excessive prices, the normal reaction in free markets is for a competitor to enter the market, which then reduces the prices. But this has not happened in this market due to the FDA.

Various companies have attempted to market competitors to the EpiPen. One, Teva Pharmaceuticals, had their product rejected by FDA based on claimed deficiencies.  But the FDA apparently has not made clear what those deficiencies are. Another, Adamis, was rejected by the FDA on the ground that additional studies were needed, even though the company had already done several studies supporting the product.

There actually is a competitor to EpiPen that has been approved – Adrenaclick – but it appears to be blocked by a different law. While prescriptions for drugs can be filled by pharmacies with a cheaper generic, in many states that cannot be done for medical devices, which the Adrenaclick is classified as. So unless doctors specify the Adrenaclick, which is not well known, the pharmacy cannot provide that to the patient, even though it is cheaper than the EpiPen.

There appear to be other causes for the lack of competition, including patent infringement suits and questionable settlements of patent infringement suits that appear to be camouflaged antitrust violations. Thus, the matter appears to be quite complicated.

Yet, the EpiPen technology does not appear to be all that difficult. And in Europe, there are at least eight competitors to the Epipen. It is not clear why they are not approved here. Many people recommend a drug approval system that would allow drugs approved in Europe (or other economically advanced countries) to be automatically approved here (or at least given a strong presumption).  But that would greatly decrease the FDA’s power and is opposed by it.

The EpiPen controversy is a great opportunity to highlight the problems with the FDA’s power in this area (along with the other impediments to competition). And while the controversy should force the FDA to loosen its restrictions as to this product, it would be better if it focused attention on the general problems created by the FDA. Unfortunately, when people put the blame on the lack of regulation, they just avoid addressing the real problem here.

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