BILL ANALYSIS Ó
SJR 29
Page 1
(Without Reference to File)
SENATE THIRD READING
SJR
29 (Hernandez)
As Introduced August 29, 2016
Majority vote
SENATE VOTE: 39-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |14-0 |Wood, Bonilla, Burke, | |
| | |Campos, Chiu, Gomez, | |
| | |Lackey, Nazarian, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron, Gordon | |
| | | | |
| | | | |
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SJR 29
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SUMMARY: Urges the Congress of the United States to investigate
the impact that Mylan's monopoly has had on the price hikes for
EpiPen, and urges the Congress and President to take action to
limit the unrestrained ability of drug manufacturers to increase
prices based only on what the market can bear rather than on
providing a fair return on investment. Specifically, this
resolution:
1)Finds that millions benefit from life-saving drugs and
devices, including Americans with allergies that can be
treated by epinephrine, and last year doctors wrote 3.6
million prescriptions for EpiPen, which stops allergic
reactions by quickly and safely injecting epinephrine.
2)Finds that in 2007 Mylan NV purchased the rights to EpiPen and
immediately began raising its price, and that in 2008 and
2009, Mylan raised the price by 5% and at the end of 2009 by
another 19%, and from the fourth quarter of 2013 to the second
quarter of 2016, Mylan raised EpiPen prices 15% every other
quarter.
3)Finds that a pack of two EpiPen devices now has a list price
of over $600, an increase of 548% since Mylan began selling
the drug according to Truven Health Analytics.
4)Finds that the formula of EpiPen did not change, and it is no
more effective in protecting against allergic reactions in
2016 than it was in 2007 and that during the same time, Mylan
began an aggressive marketing and lobbying effort to increase
demand for EpiPen, which included the passage of federal and
state legislation.
5)Finds that the rising cost of EpiPen has implications for
taxpayers because over half of California's children are
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insured through Medi-Cal, therefore taxpayers are paying a
large share of the cost of this medication.
6)Finds that Mylan has an effective monopoly that it is using to
maximize profit because there is no equivalent generic
competitor and that patients who have to pay retail prices are
being forced to buy EpiPen abroad, where it is cheaper, and
are resorting to other devices that deliver epinephrine,
including do-it-yourself syringes.
7)Finds that after recent widespread criticism, Mylan said it
would expand access and increase benefits to programs that it
uses to help consumers pay less, but those changes do not
alter the prices that insurers and employers pay and those
institutions will still face the brunt of the impact from the
price hikes.
8)Finds that offering co-payment assistance and free product to
consumers is part of the standard playbook for manufacturers
of expensive drugs and that efforts by drug makers to shield
consumers from the out-of-pocket costs associated with the
rapidly increasing cost of their medications ignores the fact
that insurance companies bear the brunt of these unreasonable
price increases, which results in higher premiums for all
consumers.
9)Resolves that the Legislature declares unnecessary and
unexplained increases in pharmaceutical pricing is a harm to
our health care system that will no longer be tolerated
because the system cannot sustain it and that the Legislature
urges the United States Food and Drug Administration (FDA) to
reconsider its denial of approval for generic alternatives to
EpiPen.
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FISCAL EFFECT: None.
COMMENTS: According to the author, during the same time that
Mylan was steadily increasing the price of EpiPens to reach over
500% of its list price in 2007, the company began a marketing
and lobbying effort to increase demand for this product, which
included the passage of federal and state legislation. The
author states that in 2010, the FDA changed its recommendations
so that two EpiPens be sold in a package instead of one and that
they be prescribed for at-risk patients, not just those with
allergies. The author notes that in 2013, Congress passed the
School Access to Emergency Epinephrine Act to provide an
incentive to states to boost the supply of epinephrine at
schools. Following this, a number of states, including
California, passed laws requiring public schools to have
epinephrine. The author contends that Mylan has an effective
monopoly that it is using to maximize profit because there is no
equivalent generic competitor. Furthermore, in California, over
half of our children are insured through Medi-Cal, therefore the
public ends up paying a large share of the cost of the drug.
The author also notes that after recent widespread criticism,
Mylan announced that it would expand access and increase
benefits to programs that it uses to help consumers pay less,
but those changes do not alter the prices that insurers,
employers, emergency responders, and schools pay. Those
institutions will still face the brunt of the impact from the
price hikes and offering co-payment assistance and free product
to consumers is part of the standard playbook for drug
companies. The author states that efforts by drug makers to
shield consumers from the out-of-pocket costs associated with
the rapidly increasing cost of their medication ignores the fact
that insurance companies bear the brunt of these unreasonable
price increases and results in higher premiums for all
consumers. The drug maker Mylan is taking advantage of its
monopoly and exploiting a life-saving medication that countless
families across California and the nation rely on and something
must be done now to correct the market for this particular drug.
The author concludes that the federal Administration and
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Congress have the power to limit the unrestrained ability of
Mylan to gouge our health care system, and they should use it.
1)Anaphylaxis. According to the National Institutes of Health,
anaphylaxis is a severe, whole-body allergic reaction to a
chemical that has become an allergen. After being exposed to
a substance, such as bee sting venom, the person's immune
system becomes sensitized to it. When the person is exposed
to that allergen again, an allergic reaction may occur.
Anaphylaxis happens quickly after the exposure, is severe, and
involves the whole body. Tissues in different parts of the
body release histamine and other substances. This causes the
airways to tighten and leads to other symptoms. Some drugs
(such as morphine, x-ray dye, and aspirin) may cause an
anaphylactic-like reaction when people are first exposed to
them. These reactions are not the same as the immune system
response that occurs with true anaphylaxis. However, the
symptoms, risk for complications, and treatment are the same
for both types of reactions. Risks include a history of any
type of allergic reaction.
2)Epinephrine auto-injectors (EAI). An EAI is a medical device
used to deliver a measured dose of epinephrine using
auto-injector technology, most frequently for the treatment of
acute allergic reactions to avoid or treat the onset of
anaphylaxis. According to the Food Allergy Research and
Education Web site, epinephrine is a highly effective
medication that can reverse severe symptoms of anaphylaxis but
must be administered promptly to be most effective. EpiPen
and EpiPen Jr. (the version for smaller children) are commonly
used EAIs. According to Mylan, which makes the two products,
EpiPen contains 0.3mg of epinephrine and is intended for those
who weigh 66 pounds or more, while EpiPen Jr. contains 0.15mg
and is intended for patients weighing between 33 to 66 pounds.
Mylan's product information states that it is not known if
EpiPen and EpiPen Jr. are safe and effective in children who
weigh less than 33 pounds. The devices are intended to be
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injected into the middle of the outer thigh, and patients are
directed not to inject the device into a vein, buttock,
fingers, toes, hands, or feet.
3)EpiPens and generic alternatives. Epinephrine on its own is
extremely cheap, just a few cents per dose. The
auto-injecting device is the product that is protected under
patent in this case. Mylan "owns" the EpiPen auto-injector
device design, so competitors must find work-arounds in their
devices to deliver the epinephrine into the patient's body.
This task has proven to be difficult for EpiPen competitors.
In 2015, Sanofi US issued a voluntary nationwide recall of its
Auvi-Q due to potential inaccurate dosage delivery. In 2016,
the FDA rejected Teva Pharmaceutical's generic epinephrine
injector because it had reliability issues and therefore
wasn't medically equivalent. Another company, Twinject, also
discontinued their injectors in 2012. A generic product
called Adrenaclick is on the market, but is not very popular
and is not always covered by insurers.
4)The Rising Costs of Drugs. According to the Centers for
Medicare and Medicaid Services (CMS), prescription drug
spending increased 12.2% to $297.7 billion in 2014, faster
than the 2.4% growth in 2013. A study published in Health
Affairs in December 2015 found that drug spending is growing
faster than other health care spending in the United States
(U.S.) - increasing 12.2% between 2013 and 2014. A Kaiser
Family Foundation (KFF) analysis of data from the CMS and
Truven Health Analytics shows that while drugs account for 10%
of U.S. health spending, it represents 19% of the cost of
employer insurance benefits. Some speculate that this
disparity exists because the $3 trillion in U.S. health
spending is a broad catchall which includes hospital care,
physician services, drugs, research, administrative costs,
public health activities, and long-term care. Additionally,
some of the people served by Medicare and Medicaid (whose
spending is counted in the national totals) require many
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services not typically used by those covered by employer
health plans. According to an analysis by the chief executive
officer (CEO) of the KFF, even that 19% figure is understated
because while it includes prescriptions that patients fill at
pharmacies, it does not include many of the expensive drugs
administered in physicians' offices or hospitals. In
Medicare, for example, retail prescription drugs represent 13%
of overall spending while drugs administered mainly by
physicians add an additional 6%.
According to the June 2016 California HealthCare Foundation's
(CHCF) Issue Brief, in 2015, the total U.S. expenditure on
prescription medicines was $425 billion, a 12.2% increase over
2014 total expenditure or an 8.5% increase when adjusted for
net expenditures. CHCF states that U.S. pharmaceutical prices
are among the highest worldwide, and escalating costs have
been a concern for many years, presenting challenges for
federal, state, and private purchasers.
5)Drug pricing. Federal regulations prohibit the U.S.
government from setting the price of pharmaceuticals, and
patents on drugs, in effect, prohibiting competition, at least
initially. Countries without these restrictions generally buy
drugs for a fraction of the U.S. price. Pharmaceutical
companies argue that high drug prices are justified because of
the enormous cost and risk associated with bringing a drug to
market and that payment for current drugs fund future
innovation. Developing a new drug costs an average of $1.2
billion and takes 10 to 15 years. When a new drug provides a
cure for a disease, as opposed to only treating symptoms, drug
companies claim that a high upfront cost is mitigated by not
having to treat symptoms indefinitely. However, critics point
to numerous examples of drug companies charging high prices
for drugs with only marginal improvements over cheaper
alternatives, or astounding increases in pricing for drugs
that have been on the market for years.
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6)Recent press. Over the last several days there have been
numerous articles reporting on the rapidly rising costs of
EpiPen. According to the Los Angeles Times the price has
risen more than 500% from $94 when EpiPen was acquired by
Mylan in 2007 to its current price of $608. On Thursday,
August 25, 2016, Mylan began offering more financial aid to
patients getting EpiPens, such as coupons to cover up to $300
off patient copayments, and on Monday, August 29, 2016, the
company announced it will begin selling a generic version for
$300 in the next several weeks.
On the same day, the heads of the House Committee on Oversight
and Government Reform wrote to Mylan Chief Executive Heather
Bresch, requesting information regarding how much Mylan
receives from federal healthcare programs, information about
its profits, as well as lobbying disclosure forms. Last week
leaders of the Senate Judiciary Committee and the Senate
Special Committee on Aging sent similar letters.
Analysis Prepared by:
Lara Flynn / HEALTH / (916) 319-2097 FN:
0005023