What can justify such enormous price increases for a common, life-saving drug? The chutzpah of a pharmaceutical company and a system where the market isn't working.

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I was taking some vacation days last week when the Mylan EpiPen scandal reached boiling temperature. The drug-maker has increased the price of the life-saving EpiPen by 400 percent since it acquired rights to it in 2007. Now a two-pack retails for more than $600.

Heather Bresch, Mylan’s chief executive, sputtered through an explanation on CNBC, including, “No one’s more frustrated than me…” I can think of a few who would be more frustrated: patients, including children, whose lives might depend on quick access to the epinephrine auto-injector made for use in emergencies from allergic reactions.

If you’ve been following the story, you also know that Bresch is the daughter of West Virginia Sen. Joe Manchin, a Democrat. She also presided over Mylan becoming a legal tax cheat, moving its incorporation to the Netherlands for tax purposes but insisting on all the privileges of doing business as a domestic firm. Rich fodder can be had on all angles. The best take-down I’ve seen is from LA Times columnist Michael Hiltzik. Corporate governance issues have been raised, too.

Now Mylan is offering a less expensive generic version  and hoping the problem goes away. It won’t, nor should it.

Americans pay far more for drugs than citizens of other advanced nations. That’s because those countries have state-run healthcare systems that drive hard bargains with Big Pharma. Here, Big Pharma has such enormous political power that it was written into the Medicare D law that the federal government couldn’t negotiate the best prices for seniors’ drugs.

In her 2006 book “Money-Driven Medicine,” Maggie Mahar demolished the industry argument that it needs the high prices as incentives for research. In fact, most spending is on marketing, as even a casual TV watcher notices, plus returning hefty premiums to shareholders. It is part of the broader problem of “rent-seeking,” where companies hang on to patents far beyond what is reasonable to keep out competitors and keep prices high.

Outrage is cheap. Real policy change is needed, or the market failure of American healthcare will continue.


Today’s Econ Haiku:

Seattle tear-downs

Not all of them were treasures

Now we get boxed schlock