EpiPen: A Case Study in Health Insurance Failure
By John R. Graham
I recently wrote a post describing EpiPen as a “Case Study in Government Harm,” describing how the government had made it possible for the manufacturer to increase prices of the life-saving drug multiple times without fear of retaliation. It is also a case study in how health insurance distorts our choices and increases their cost. I learned this by following an Internet advertisement for EpiPen down its rabbit hole.
The ad induced me to download my “EpiPen Savings Card,” which would ensure I paid nothing for my EpiPens (up to six, according to the ad).
However, I had to answer a skill-testing question first: What was my insurance coverage? As you can see from the screenshot below, when I answered I had no insurance, the EpiPen savings card was figuratively ripped from my hand:
However, when I answered I had private insurance – Hooray! My EpiPen Savings Card was confirmed:
This is an extreme example of a coupon strategy used by some drug makers: Immunize the patient from the direct cost of the medicine so the health insurer has to pay a price much higher than the market can bear. Of course, the insurer might get a discount from the list price, but the uninsured patient will never benefit from that.
Further, the above-market price is paid by patients through high insurance premiums, so nobody is really saving money. In Canada, where EpiPen is sold over-the-counter in drugstores to cash-paying customers, it sells for about $80 (U.S.), instead of over $600 in the United States. Much of that price differential is due to our overreliance on health insurance to pay for medical goods.
This article was originally published on The Independent Institute‘s The Beacon Blog.