Mylan NV said on Thursday it would reduce the out-of-pocket costs of its emergency EpiPen allergy injection for some patients amid a wave of criticism from lawmakers and the public over the product's rapidly escalating price.
The list price of the drug will remain the same, but the company said it would increase the maximum copay assistance program to $300 from $100 for patients who pay for the 2-pak in cash or who are covered by a commercial health insurer.
The price of EpiPen has skyrocketed to $600 from $100 since it was acquired by Mylan in 2007.
Mylan also said it is doubling the eligibility for its patient assistance program, which will eliminate out-of-pocket costs for uninsured and under-insured patients and families.
Government paid programs are not eligible for the copay assistance program.
Ronny Gal, an analyst with Bernstein, said when all is said and done he estimates a total price reduction for EpiPen of 32 percent. The price rose 27 percent in the second quarter of 2016 versus the same quarter a year ago.
"Thus we are basically rolling back the increase of the past year," he said. "In all, we estimate that today's news results in a 20-25 percent hit on EpiPen revenues." He expects that to translate into a 3-4 percent hit to Mylan's earnings per share over the next few years.
He estimates the company will earn $4.77 a share in 2016 and $5.58 in 2017.
Mylan is the latest company to be caught up in the growing outrage at apparently egregious drug price increases. Valeant Pharmaceuticals International and Turing Pharmaceuticals have both been publicly excoriated for similar price increases.
Presidential candidate Hillary Clinton, who has spoken out against escalating drug prices, "welcomes the fact that Mylan is now apparently open to taking steps to lower some of the cost sharing burdens imposed on families," Tyrone Gayle, a campaign spokesman, said in a statement.
However, he added, "discounts for selected customers without lowering the overall price of EpiPens are insufficient, because the excessive price will likely be passed on through higher insurance premiums."
Clinton's view was echoed by Democratic lawmakers, including Rep. Elijah Cummings, who said Mylan's move is nothing but a public relations stunt that does nothing to help the majority of patients who need the drug.
"Offering a meager discount only after widespread bipartisan criticism is exactly the same tactic used by drug companies across the industry to distract from their exorbitant price increases," he said in a statement. "Nobody is buying this PR move any more."
Mylan Chief Executive Heather Bresch, defending the price in an interview on Thursday on CNBC, said her company had spent hundreds of millions of dollars improving EpiPen, including making its needle invisible, since acquiring the device from German generic drugmaker Merck KGaA.
"When we picked up this product, they [Merck] weren't spending a dollar on it," said Bresch,
Bresch said Mylan recoups less than half of EpiPen's list price because pharmacy benefit managers, which often require discounted prices or rebates from drugmakers, are involved, along with insurers and others.
U.S. Sen. Amy Klobuchar speaks about price hikes for EpiPens, the emergency drug injectors for severe allergic reactions, at Children's Hospital, Aug. 24, 2016, in Minneapolis. Klobuchar's 21-year-old daughter carries an EpiPen because of severe nut allergies, is one of several members of Congress demanding more information on why EpiPen prices have soared
Democratic U.S. Senator Amy Klobuchar said Mylan's action was a "welcome relief" to many who are struggling to afford the medication, but said it does not address the root of the problem of rising drug costs.
Earlier this year, Clinton chastised drug companies for exorbitant pricing and unveiled a plan that she said would cut costs, making the issue not only a hot election discussion topic but potentially an issue that could have policy implications if she is elected. On Wednesday, Clinton pressed Mylan to voluntarily cut the EpiPen price, sending the company's share price lower and pushing down biotech stocks.
Mylan shares fell more than 10 percent this week before rising 3.2 percent on Thursday after announcement of the discount program.
EpiPens are pre-loaded injections of epinephrine (adrenaline) used in case of a dangerous allergic reaction known as anaphylaxis that could cause death if untreated.
Anaphylaxis can occur in as little as a couple of minutes of exposure to the allergen, which can come in the form of food such as peanuts or insects such as bees. Certain medications or latex can also cause a severe reaction.
Symptoms include itching, swelling of the lips, tongue and roof of the mouth, tight chestedness and difficulty breathing.
People who are susceptible to such reactions are frequently advised to carry an EpiPen, which can deliver an immediate emergency jolt of adrenaline to reverse the symptoms.
A group of lawmakers said on Wednesday they had written the U.S. Food and Drug Administration asking about its approval process for alternatives to the EpiPen.
Bresch, daughter of Democratic U.S. Senator Joe Manchin of West Virginia, said she contacted members of Congress over the past two days and asked to meet with them to discuss what she called an "unsustainable" drug pricing system.
She said one of the calls was to Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa), who recently wrote a letter to Mylan asking for an explanation of big EpiPen price increases.