Allergic to Profit: Another Pharmaceutical Ethics Scandal

By: Jacob Dahlke

Did you hear the one about the pharmaceutical company that gouged its customers of money, and nobody noticed? Yeah, me neither. Pharmaceutical industry ethics became a regular news item last year thanks to Martin Shkreli, an investor who specialized in pharmaceutical companies. He became nationally known after a series of company purchases that resulted in formerly inexpensive drugs becoming very, very expensive.

In the wake of such negative national press, one might think to stay out of the public eye for a while, particularly if you are in and out court defending against federal charges. But not Shkreli. He has willingly waded into the next big pharmaceutical ethics story: the spike in the cost of EpiPen, an injectable medication to reverse often life-threatening allergic reactions. EpiPen’s manufacturer Mylan increased the cost of the injectors to over $600 per injector, which expire after a year if unused. For families with children who have life-threatening allergies, this can create a significant burden. Two additional facts to note: the pens cost $100 in 2004, and do not appear to have any significant changes to the product, and second these costs have not risen equitably in other countries such as Canada. That makes this a uniquely American problem.

It’s tempting to launch a fallacious attack on Shkreli: we ought to discount what he says now based solely on our vilification of his past actions. But if we put that aside to consider his contribution to this conversation, it is this: he claims that the blame is put falsely onto the pharmaceutical company, and should instead be put on health insurance companies who should pay for the drugs. He said that it’s “not quite true” that Mylan is “gouging people and taking tons of money”. The facts of this particular claim don’t seem to hold: EpiPen’s price rose 500% over the last six years (supporting Shkreli’s “gouge” claim), and profited in 2015 to the tune of almost $850 million. Since a U.S. ton of $1 bills is worth a little less than a million dollars, then they are literally taking in tons of money. But I digress. While his comments don’t exactly exonerate Mylan from their role, he references another player that may bear some of the burden of responsibility: health insurance companies, who can have just as much an interest in profits as the pharmaceutical companies. Within their role in the system, they have plenty of incentives (by way of profits) to avoid chronically ill patients (or ones with expensive therapies). By refusing to cover the costs of expensive therapies, their profit margins can benefit.

As it happens in the hospital room, though, if a patient needs a drug for recovery or survival they will likely get it. If insurance doesn’t cover it, the cost is borne by the hospital or institution. Those costs in turn can limit the organization from dedicating money to other ventures that could in the long term reduce health care costs. In the end, we all end up paying by having a less effective and efficient healthcare system than the amount of money that is in it. In 2014 the system accounted for over 17% of our economy, a growth seen by many as unsustainable.

Additionally, Shkreli misses the point by putting “insurance companies” into a single group; not all insurance companies are created equally, such as between for-profit and non-profit insurers. As such, some insurers may have very small profit margins, and therefore with fewer options to simply absorb the price of a high-cost drug. In terms of assessing risk of financial loss, a company has options, few of which would please its members. First, they could deny wholesale covering a specific drug, or increase the out-of-pocket expenses for patients who require expensive products, or they could simply raise premiums for everyone to offset the costs of those drugs. The issue reflects back, then, to the drug companies who are able to set the price, which dissolves Shkreli’s argument in the end. It’s a bit like yelling at the grocery store manager for charging me $5.00 for an apple, when the farmer decides to sell it to the store for $4.00; too high a price for an apple altogether.

There is something visceral about reading these kinds of stories. The reaction to taking advantage of the vulnerable people in our communities seems, well, wrong. But how is it any more wrong than, say, a homeless veteran who has limited access to mental health treatment? Are we as a society duped into tolerating the plight of the mentally ill because there’s no money to be made (yet) in the venture? Or how people with some severe types of hemophilia require treatments that cost tens of thousands of dollars per dose? Do we tolerate the expensive regimen because we don’t know about it, perhaps because its cost was high all along, and not raised exponentially after a business acquisition?

The line that we cross in such thinking is the inclusion of profit by a stakeholder. Once financial gain is introduced, then values begin to be assigned to people based on the cost of their care, and not their condition. High-cost patients are to be avoided by payers, and the drugs needed to treat them are maximized for the pharmaceutical company’s profit. Stuck in the middle is the patient, left with the prospect of being left out of the system specifically for which it is built. Some advocate a solution to this to be a more streamlined, single-payer system, but until there is a social will to objectively evaluate the problem, in it we remain.

So long as health care continues to be a profit-related industry, then these stories will continue. Our knee-jerk, social media-driven reaction to a single company, raising the cost of a single drug for a single disease or condition, will do little to adjust a system that profits on there being a constant supply of vulnerable patients, whose lives depend on products that are limited by cost and profit. So perhaps we need to hear more of these ethical issues, not fewer. It’s like putting a bandage on an allergic reaction. On the surface it looks treated, but a shock to our system is coming, and we are ill-prepared to manage it.

Health care justice is an underlying focus in the Master of Science in Health Care Ethics program at Creighton University to prepare students with the tools they need to analyze complicated issues like fair pricing and access to life-sustaining drugs on a national and international basis. 

Jacob Dahlke is a clinical ethicist for Nebraska Medicine in Omaha, Nebraska, and an instructor and associate for the Center for Health Policy and Ethics at Creighton University. The views shared here are his own and do not represent those of the organizations.