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The maker of EpiPen isn't out of the woods yet

Mylan CEO Heather Bresch
CNBC screenshot
Mylan Pharmaceuticals said Thursday that it would be giving a $300 "savings card" discount for a two-pack of EpiPens amid pressure to cut the price of the drug.

Mylan has increased the price of EpiPen by 500% since it acquired the drug in 2007, and it didn't budge on the actual list price of the drug.

Not everyone applauded the move.

Rep. Elijah Cummings of Maryland and Sens. Richard Blumenthal of Connecticut and Amy Klobuchar of Minnesota all issued statements Thursday morning about Mylan's discount, with mixed feelings about what it actually resolves.

The EpiPen is a device used in emergencies to treat anaphylaxis, a severe allergic reaction that can make people go into shock, struggle to breathe, or get a skin rash. A savings card that previously covered up to $100 will now cover up to $300.

"It won't fully address the root of the problem," Klobuchar said in a statement. "The burden of the EpiPen price increases and other prescription drug increases – from insulin to naloxone – persists for American families, taxpayers, and employers."

Interestingly, Mylan, which is a generics and specialty pharmaceutical company, also owns a generic of naloxone which is used in emergencies to block the effects of opioids, a drug it has also gotten heat for over price increases.

In the House, Cummings requested that the oversight committee hold a hearing (something it has done in the past for Valeant Pharmaceuticals and Turing Pharmaceuticals).

"Nobody is buying this PR move anymore," Cummings said in a statement. "Mylan should not offer after-the-fact discounts only for a select few — it should reverse its massive price increases across the board immediately."

Blumenthal seemed to agree:

"This step seems like a PR fix more than a real remedy, masking an exorbitant and callous price hike. This baby step should be followed by actual robust action ... The only fair and effective relief is a substantial price reduction for everyone who needs access to this life-saving drug, not just a special break for people who are in particular health plans and have the extra hours in their work day to navigate a bureaucratic labyrinth of discounts. I will continue to push for a federal investigation and congressional action."

On Mylan's end, the company is calling out Congress in return for not doing enough to fix the problems that afflict the healthcare system.

"That's why Congress and the leaders of this country need to quit putting their toe in the topic and really fix the system. We have an outdated, inefficient system," Mylan CEO Heather Bresch told CNBC Thursday. "But you know what's happening? The patient is paying twice. They're paying full retail price at the counter, and they are paying higher premiums on their insurance. It was never intended that the patients would be paying list price. Never. The system wasn't built for that."

What does the savings card discount do?

This discount doesn't change the list price of the drug, which, according to Truven Health Analytics, has increased to $608.61 from $93.88 since 2007, when Mylan Pharmaceuticals bought EpiPen from Merck as part of its generics business. That's an increase of more than 500%.

For patients who were paying the list price, "this effectively reduces their out-of-pocket cost exposure by 50%," according to the company.

That's not quite true for everyone, though.

  • What the discount does change is how much people with commercial insurance and a high deductible pay. If you were at on the hook for about $600 before, that will now be cut to about $300.
  • For people without insurance, however, the card won't apply; they'd fall under a separate patient assistance program, Mylan said Thursday.
  • It also won't apply to people under government insurance programs such as Medicare or Medicaid.

That was a sticking point for Sen. Chuck Grassley of Iowa.

"The announcement today doesn't appear to change the product price," Grassley said in a statement Thursday. "The price is what Medicare, Medicaid, and insurance companies pay. It's what patients who don't get assistance cards pay. And when drug companies offer patient assistance cards, it's usually not clear how many patients benefit."

This is a move that other companies have made when faced with pricing pressure: In November, Turing Pharmaceuticals announced it was giving discounts to hospitals of up to 50% for Daraprim, while Valeant Pharmaceuticals has offered similar discounts.

So why don't drug companies lower their prices?

Mylan argued that cutting the actual list price wouldn't affect what consumers pay for the drug because the other parts of the healthcare system (insurers, pharmacy benefits managers, the pharmacy itself) still require patients to pay a certain price when they get to the pharmacy.

Here's the company's infographic:

401225 INFO
Courtesy Mylan

And the chart doesn't paint an entirely clear picture.

"It's important and deceiving at the same time," Dr. Walid Gellad, a professor of medicine at the University of Pittsburgh, told Business Insider.

It's true that all those other players are making money off the high drug price, but in the end, that list price is something Mylan sets. Say the price were to be reduced to $300, Gellad said, "the other pieces of the supply chain would still require a large percentage of that."

Even billionaire Mark Cuban had something to say about it:

Despite the public outcry over certain drugs with high prices, none of those drugs has come down from its list price. So beyond Mylan's argument, why has nobody lowered a list price if only to get rid of public pressure?

"The answer is, you don't want to be the first one who caves," Ameet Sarpatwari, an epidemiologist at Brigham and Women's Hospital, told Business Insider on Tuesday. "They're worried that it will start a chain effect."

And, really, they don't have to do it, he said: "That's the disturbing part of all of this."

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SEE ALSO: Hillary Clinton blasts 'outrageous' explosion in EpiPen pricing, and drugmakers' stocks are feeling the heat

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