Thanks, Mylan. Your EpiPen pricing saga puts pharma’s winning copay coupons under interrogation

Sen. Elizabeth Warren (D-MA) and 19 other senators wrote a letter to Mylan CEO Heather Bresch calling pharma's copay coupons a "complex shell game" to keep costs high.

Question expensive stickers or price hikes, and drugmakers often point to their copay coupons and assistance programs that keep patients' costs low. Mylan ($MYL) certainly did last week, when its extreme EpiPen price hikes touched off a firestorm: It rolled out new copay assistance programs to douse the flames.

Didn't work, unfortunately for Mylan--and unfortunately for the rest of the drugmakers that rely on copay discounts and other programs to woo patients to new brands or keep them on old ones when generics make their debuts. In fact, it stirred up Sen. Elizabeth Warren's curiosity.

The senator now has a series of questions for Mylan about its copay assistance--questions other drugmakers will want to ponder because they might face the same ones soon enough. And if Warren successfully paints pharma's copay programs as self-interested--rather than altruistic--that would undermine their use as a defense against pricing criticism. 

Mylan's copay moves are only part of the “complex shell game” cited by Warren (D-MA) and 19 other senators who wrote to the drugmaker's CEO, Heather Bresch, requesting more info. They also questioned Mylan's new authorized generic and its EpiPen4Schools program. While Mylan says new patient assistance will “immediately reduce patients' out-of-pocket costs,” the senators see it another way.

“When patients receive short-term co-pay assistance for expensive drugs, they may be insulated from price hikes, but insurance companies, the government and employers still bear the burden of these excessive prices,” the senators wrote. “In turn, these costs are eventually passed on to consumers in the form of higher premiums.”

In a statement, Mylan said "we have acknowledged receipt of letters from Congressional offices and intend to respond to them.”

While Mylan is not implicated in the other cases, the inquiry into its access programs runs parallel to a number of federal investigations into pharma’s patient assistance ties. Drugmakers including Gilead ($GILD), Biogen ($BIIB), Jazz ($JAZZ) and Celgene ($CELG) have been thrust into the Justice Department's spotlight in recent months as prosecutors probe their relationships with patient assistance charities. Before that, Questcor drew fire for its links with the Chronic Disease Fund, and the CDF replaced its administrators afterward.

At the time, Questcor’s CEO said its donations to the charity were “the same thing everybody else is doing.”

Mylan's attempt to deflect attention away from price hikes and toward its patient assistance is not a new tactic. As one Valeant Pharmaceuticals ($VRX) marketing exec said in a document recently unsealed in another congressional investigation, it’s "kind of hard to paint us as greedy if we have removed financial barriers for patients."

If Warren and her group are successful in prying out details about copay assistance, they would be among the few. Payers don't have all the information they'd like. In fact, one of the reasons CVS Health ($CVS) and Express Scripts ($ESRX) initially introduced exclusionary formularies was to kick off me-too and aging meds that depended heavily on copay programs.

But the payers' power to combat such programs has been limited, partly because patients do want access, and, as Bernstein analyst Ronny Gal points out, partly because drugmakers are secretive about their workings.

"Insurers are generally aware of the practice, but don't have all the details. Drug companies prefer it would remain that way--why tell your clients you are getting around their utilization management tools?"

The senators' letter to Mylan is only the latest from lawmakers questioning Mylan’s EpiPen pricing practices. Just the day before, House Committee on Oversight and Government Reform Chairman Jason Chaffetz and Ranking Member Elijah Cummings wrote to Bresch to demand information on EpiPen’s pricing history, production costs, ad spending and profit margins.

- here's the letter

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