The strange and special case of epinephrine
The biotech social contract stipulates that all drugs must go generic. But what if genericization is bad for public health?
Peter Kolchinsky, Ph.D.
This is the tenth in a series of articles that aim to define the biopharmaceutical industry’s social contract with America, to examine practices that deviate from that contract, and to propose refinements to healthcare policy to ensure that our continued investment in scientific progress ultimately yields affordable, effective therapeutics for future generations.
Article 1: America’s Social Contract with the Biopharmaceutical Industry
Article 2: What happens when a drug won’t go generic?
Article 3: Protecting Off-Patent Sole-source Drugs from Price-Jacking
Article 4: Why wait for Generics? In praise of me-too drugs
Article 5: False Heroes — How PBMs Add Insult to the Injury of Insurance Cost-Sharing
Op-Ed: Let’s Throw a Patent-Burning Party
Article 6: The favors they do us: Charging less in other countries makes drugs more affordable in America
Article 7: Hard Negotiating Tactics: Compulsory Licensing and Willingness to Deny
Article 8: Unintended Consequences of “Fairness”: Critically examining the idea of the US referencing EU prices
Article 9: Direct-to-Consumer (DTC) Advertising: misnamed, misunderstood, and underappreciated
Article 10: The strange and special case of epinephrine
Please see Important Disclosures for Readers at the end.
A child has accidentally eaten a peanut or been stung by a bee. Her throat is swelling shut. Seconds count. An epinephrine injection can hit pause on the reaction, buying time to get other treatment, maybe even get to an ER. Recommended for treating anaphylaxis for 40 years¹, originally the product was available in vials. One had to carry around a separate syringe, insert the syringe into the vial, draw up the drug into the syringe, making sure to get the dose right, maybe pause to push the air out of it if you were sloppy in drawing up the drug, and then inject. Imagine a panicked parent doing this as a wild-eyed child’s throat swells. Or an adult having to do this to herself while experiencing anaphylaxis. Tick, tick, tick. Seconds count… precious air, life itself, is on the line… don’t screw up.
In this context, it’s easy to see how putting epinephrine into a pre-filled auto-injector was a meaningful medical advance. The EpiPen, the first such product, was approved in 1987. The EpiPen needs to be armed by removing a trigger lock and then pressed to the thigh to activate and held there for several seconds as it delivers a dose. EpiPen has remained the dominant product (but not the only one) in this market since then, passing from one company to another until ending up at Mylan in 2007, where it has remained. Heavy promotion and price increases have grown public awareness, EpiPen availability, and Mylan revenues.
The biotech social contract would stipulate that EpiPen’s on-patent lifetime should probably be over by now, the mortgage paid off. That’s basically happening. In 2017, Mylan introduced an authorized generic version of the EpiPen, at a 50% discount to the branded price. In August 2018, the FDA approved a generic EpiPen from Teva, introducing the first true competition that will help continue to drive down price.
Who educates the market, and the public?
While the reformulation of epinephrine to an auto-injector represents a meaningful upgrade, there was a significant secondary benefit to the rebirth of epinephrine as the branded EpiPen: companies selling the EpiPen had a motive to educate society about anaphylaxis and the benefits of the auto-injector. Mylan especially embarked on a marketing and lobbying campaign, sometimes derided as self-serving² (which seems like an oddly tautological accusation to lob at a for-profit company³). Mylan educated the public, healthcare professionals, teachers, restaurant staff, airlines, police, and many others about food allergies and insect stings, how to recognize anaphylaxis, and how and when to administer the EpiPen. Mylan gave away free EpiPens to some schools to get them started on being allergy-prepared provided that they reordered annually (since the EpiPens expire after a year). Many schools and restaurants now stock EpiPens and some even know how to use them, thanks in large part to Mylan’s profit motive. Along the way, schools started to create allergen-free tables in their cafeterias, helping to prevent the need for EpiPens.
Parents with children who have food allergies are constantly on alert for death where others happily see a snack. We wonder why any airlines still serve bowls of nuts on planes, from which there is no escape even if an EpiPen were to buy a child an extra 15 minutes of breath. Every accidental exposure is an opportunity for more education. But who will fund the campaign to boost awareness of the seriousness of food allergies and anaphylaxis once the EpiPen goes generic?
There’s a possibility that allergy awareness and instruction in the proper use of epinephrine auto-injectors will transition to a social responsibility — much like CPR and instruction in the use of defibrillators has become more common. But I am not prepared to bet on it.
Generic companies will compete with one another to serve whatever demand exists for epi-autoinjectors, but any one generic company will not invest in marketing and education. Without any assurance that new customers will necessarily buy the generic product from them, that investment would be foolish. Whenever a drug goes generic, the message patients and physicians hear switches from a loud “Let me teach you why you have to buy my expensive product” to a whispered “we’ll sell you an inexpensive product if it occurs to you that you need it.” Will society be better off in this case?
Buying the maintenance plan
Building on the mortgage analogy, imagine that you buy a house with the help of a mortgage from a bank that provides free home maintenance for as long as you are paying the mortgage. The plumbing breaks, you call the service line. They even send a service team each year to winterize your pipes and clean out your gutters before winter. After 15 years, you pay off the mortgage, throw a mortgage-burning party to celebrate the occasion, and then realize that the responsibility for home maintenance falls on you. That’s what happens whenever a branded drug goes generic; society must preserve and disseminate knowledge of how to use a drug, taking that duty over from a company that previously had the incentive and revenue stream to invest in marketing and education.
And in many cases, society can indeed recognize a drug’s value and retain its lessons. Physicians receive regular training on standard-of-care treatments. Knowledge of the proper use of statins, which have all gone generic, is in fact codified in medical textbooks and guidelines. Also, primary care physicians encounter many patients every day who are taking or who need to be on statins, and so are given many opportunities to stay current on the use of these generic medications. Especially with the advent of newer, branded PCSK9 inhibitors that very effectively manage cholesterol, insurance companies constantly remind physicians to make the best use of a generic statin before considering prescribing an expensive PCSK9. Therefore, odds are that physicians will still know when and how to prescribe statins in fifty years without any of the generic manufacturers having to invest in marketing. And when physicians forget, it shouldn’t be hard to code into electronic medical data capture systems that patients with elevated cholesterol should be considered for statin therapy.
But treating anaphylaxis is different. It’s a crisis that happens suddenly, often far from any physician. Parents, teachers, and many others outside of the healthcare system must be kept aware of the symptoms of anaphylaxis and be ready, willing, and able to administer a life-saving dose of epinephrine. Attacks happen so rarely that it’s hard for any patient to become expert at recognizing the symptoms and knowing how to treat an attack, yet hesitating to give epinephrine can be deadly.
If we stick to the home maintenance analogy, treating anaphylaxis is like turning on a generator during a blackout caused by a blizzard when you rely on electrical power for heating. You don’t know when you might need it and you may never need it, yet if it fails you when you need it, it will be too late to learn how to use it, fix it, or call for service, and your family will freeze in the midst of a blizzard. That may sound dramatic, but as any parent of a child with food allergies will tell you, that analogy is not dramatic enough.
When the EpiPen is fully genericized, if no company has a profit motive to keep expanding the market for these products, are we prepared as a society to take over the cost and operation of the educational campaign? So far, that has been mostly driven by Mylan, whether directly through sales and marketing or through its funding of non-profits such as FARE (Food Allergy Research & Education). At least a portion of the money that society will save from having inexpensive generic epi-autoinjectors can be used to fund such ongoing education, but will it be done as well by the government or non-profit sector as by a profit-motivated company?
Branding generics
Currently, there is a weak law that encourages schools to consider adopting voluntary guidelines for food allergy preparedness. Importantly, the law allows undesignated EpiPens to be stocked at schools (otherwise, every EpiPen would have to be assigned to a particular patient based on a physician’s prescription and could not be used on a student unless it was theirs). Laws nationwide could be strengthened to require schools and other institutions to stock epi-autoinjectors, routinely check them to make sure they aren’t expired, and have someone on-hand who is trained to use them. California passed such a law after media coverage of a student who died of anaphylaxis at a school⁴. Inspectors, as in the food service industry, would be required to go around checking that everyone is complying with the law. That might even result in broader dissemination of epi-autoinjectors than we have today. Without regulations imposing minimum standards everywhere, for-profit companies can only be expected to do what’s profitable, which might mean paying less attention to schools in rural parts of the country that are hard for a sales rep to reach. That’s why car safety, water quality, and energy reliability are regulated. So maybe we add epi-autoinjector availability and training at schools to that list.
Maybe there will be a middle ground whereby any company manufacturing an epinephrine autoinjector will be required to have their own brand name and pharmacies would be blocked from filling a prescription for one product with an alternate product, even if they are the same. That would force every company to market its own product, something true generic companies rarely do. Ultimately each would strive to compete on marketing, winning over parents, schools, and restaurants to picking its product over those of others. This wouldn’t lead to prices as low as one sees for true generics, but it would keep one company from monopolistic price-gouging; therefore, society might get continued public awareness at reasonable costs over the long run.
Although this could work to drive marketing to consumers, I doubt it would work to drive marketing to schools and restaurants. Parents would not necessarily know which brand of epi-autoinjector a school carried. So even if Mylan spent the money to educate schools about the merits of its branded epi-autoinjector, there would be nothing to stop the school from purchasing a cheaper alternative, and parents wouldn’t even know or necessarily care. So over time, Mylan would stop wasting money on marketing epi-autoinjectors to schools, focusing instead of patients themselves.
Another idea would be for the government to require that all generic companies pay a fixed-fee per autoinjector to a third-party marketing company tasked with marketing these products to schools; the more epi-autoinjectors sold in total, the more fees the marketing company would collect (reintroducing a profit-motive). The generic companies would still compete on price to gain share. In the end, the companies able to charge the least would get the most market share and would provide the most funding towards marketing and education. The customers (or their pharmacies) would be the ones choosing which generic to buy based on price, but those prices would never be less than the cost of product plus the fixed marketing fee. The marketing company would focus on volume, not price, since they would collect a fixed dollar amount per product sold.
The profit-motive of companies selling branded drugs incentivizes marketing campaigns, including DTC advertising, that serve an important public education purpose. In the case of EpiPens, they also make the world safer for people suffering from severe allergies. I’m grateful for the awareness of anaphylaxis and EpiPens that Mylan has generated. I hope that society figures out how to maintain and expand awareness, converting DTC ads into PSAs (public service announcements), or else we may end up regressing back to the 1990s, before there was broad awareness of food allergies⁵. Even though the EpiPen was technically available, it was essentially unknown, schools didn’t carry them, and even nurses thought parents were just being over-protective when they worried about their kids’ food allergies.
If society doesn’t learn to handle maintenance of specialized educational campaigns for those products that need them, then we will be worse off when those products go generic. The patent-burning party will be bittersweet.
The Auvi-Q may buy us time
There is a new and potentially formidable rival to the EpiPen; Kaleo recently launched the Auvi-Q, which is smaller than the EpiPen, shaped to fit more easily in a pocket, and features audio instructions on how to arm and activate it. To a parent of a child with food allergies, these differences make it meaningfully better. At age three, my daughter played with the tester (no needle or drug in it), which talked her through the few steps. For a few months, she enjoyed showing everyone how to use it, administering the tester to their thighs, not something she had done with the EpiPen tester. She couldn’t read instructions and, frankly, in a moment of panic, neither would many adults. While the EpiPen is easy to use, people do make mistakes. The Auvi-Q will likely make the idea of using an epinephrine auto-injector more accessible to many people.
Per the biotech social contract, society is nearly done paying off its mortgage on the EpiPen and, as generics come to market, they will eventually drive down prices, benefitting society for the rest of time. But we have to consider whether the Auvi-Q is an upgrade worthy of another mortgage. If insurance companies refuse to cover the Auvi-Q, the Auvi-Q may fail commercially, as patients will likely opt for a well-covered generic EpiPen. But embracing and paying a premium for Auvi-Q’s advantages will likely cost billions more over the next decade.
I certainly hope that Auvi-Q becomes a successful branded product that is well-reimbursed by payors for its advantages (it is not currently well covered), both benefiting patients directly, since it’s a better product, and allowing Kaleo the resources to replace Mylan at the vanguard of the public awareness campaign, at least until Auvi-Q itself goes generic. That will buy society more time to figure out how to take over maintenance education of this therapeutic class. If Auvi-Q fails to sell well or if Kaleo is forced to compete on price with generic EpiPens, then Kaleo may not have the funds with which to take over the educational campaign from Mylan. In that scenario, society will have saved some money, but those at risk of allergies might be worse off in the long run if society fails to implement its own public education strategy.
Acknowledgements: I’m grateful to Chris Morrison for his invaluable and substantive thought-partnership and drafting/editing, to everyone who engaged with me in the constructive debates that led up to these articles, and to Erin Clutter and the RA Capital graphics team for creating artwork that so astutely captures the essence of each core concept.
Sources
¹ https://www.ncbi.nlm.nih.gov/pubmed/18691308
² https://www.newyorker.com/business/currency/how-the-maker-of-the-epipen-made-government-its-ally
³ since capitalism generally doesn’t thrive on pure altruism and companies that don’t take into account the interest of their employees and shareholders don’t last very long.
⁵ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4617537/
⁶ The product was first launched in 2013 by Sanofi, which licensed the tech in 2009 from Kaleo, then called Intelliject. Sanofi voluntarily withdrew Auvi-Q from the market in 2015 amid manufacturing problems and weak sales, subsequently returning the product back to Kaleo.
Peter Kolchinsky, Ph.D.
Peter Kolchinsky is a founder, Portfolio Manager, and Managing Director at RA Capital Management, LLC, a multi-stage investment manager dedicated to evidence-based investing in healthcare and life sciences. Peter is active in both public and private investments in companies developing drugs, medical devices, diagnostics, and research tools, and serves as a Board Member for various public and privately held companies, including Dicerna Pharmaceuticals, Inc. and Wave Life Sciences Ltd. Peter also leads the firm’s outreach and publishing efforts, which aim to make a positive social impact and spark collaboration among healthcare stakeholders, including patients, physicians, researchers, policy makers, and industry. He authored “The Entrepreneur’s Guide to a Biotech Startup”, written on the biotech social contract, and served on the Board of Global Science and Technology for the National Academy of Sciences. Peter holds a BS from Cornell University and a Ph.D. in Virology from Harvard University.
Important Disclosures for Readers
The contents of this publication are intended for informational and educational purposes. The views and opinions expressed are those of the author and are subject to change. They do not necessarily reflect the views or opinions of RA Capital Management® or any other person the author is affiliated with.
Nothing of the content should be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or product. The author and/or RA Capital Management® may hold or trade securities of the companies named in this publication or that manufacture the drugs discussed.
Designations used by companies to distinguish their products are often claimed as trademarks. All brand names and product names used in this article are trade names, service marks, trademarks or registered trademarks of their respective owners.
The author’s opinions are based upon information he considers reliable, and there is no obligation to update or correct any information provided.
© 2018 Peter Kolchinsky, Ph.D.
