Epipen® Pricing – The Costs of Anaphylaxis in Australia

Background

As part of a regular dog walk, Gregor Lewinsky often stops in front of a large gumtree on the roadside
to look up at one of his favourite sights. Coming in and out of a large hole are one of nature’s hardest
workers; never on strike; never complaining; always reliably producing a highly valued natural resource
– honey. As a treasured local sight in his local community, attached to the trunk is a local council sign
explaining how precious this beehive is and how important the role is that honeybees play in our lives.
As he looks up and watch the honeybees following their flight paths, he feels down to his waist to a
reassuring black pouch attached to his belt.

Gregor is part of a small proportion of the population for whom bees, wasps and ants that sting, or
bite, can be killers. Around three Australians die each year from anaphylaxis, a severe allergic reaction
to insect venom that causes an overall rash, swelling of tongue or throat, trouble breathing, abdominal
pain, diarrhoea, vomiting and a drop in blood pressure (shock), with honeybees being the most
common insect cause.1 Anaphylaxis from allergies to specific foods is significantly more prevalent,
with peanut allergies single-handedly impacting around 10% of Australian children under 12 months.2

The emergency first aid treatment for anaphylaxis has remained unchanged for many years and is
based on an immediate intramuscular injection of adrenaline (now increasingly termed epinephrine)
into the outer thigh muscle, typically using an auto-injector device. Auto-injectors have been available
for some years as an emergency device for rapidly injecting an antidote, often through outer clothing,
whether for armed forces personnel facing chemical warfare agents or for consumers with a wide
range of allergies to many toxins or venoms, such as a honeybee sting. The initial emergency injection
is often repeated, until sustainable respiratory and cardiovascular function is restored or stabilised.

For individuals and/or parents who have experienced a severe allergic reaction, the risks of anaphylaxis
are real and severe, requiring emergency self-treatment. These devices are therefore a daily necessity
and need to be readily available, usually being carried in handbags, belt pouches, backpacks, car glove
boxes etc.

Schools are an important auto-injector customer, given the increase of allergies in many countries
today. As well as each child carrying their own auto-injectors, a common sight in most Australian
school reception offices is a row of Epipen® (and increasingly Anapen®) injectors prominently
displayed, along with each at-risk child’s photograph for emergency identification. In larger schools,
the task of managing this and ensuring units are within their shelf-life has become a significant safety
issue.

1 Australasian Society of Clinical Immunology and Allergy. Allergic reactions to bites and stings. Accessed 27.9.21
2 Osborne et al. Prevalence of challenge-proven IgE-mediated food allergy using population-based sampling and predetermined challenge criteria in
infants. J Allergy Clin Immunolol 2011; 127: 668-676

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023
Market Situation to Date

The global market for epinephrine-equipped auto-injectors is over 2 billion USD and will continue to
increase3 given that many food allergies and sensitivities appear to be on the rise for a multitude of
reasons, many of these being poorly understood. The supply of auto-injectable epinephrine has been
dominated by the Epipen® brand, in place for over 35 years, now owned by a Pfizer-owned company,
Viatris (formerly owned by Mylan).

Epipen®’s pricing history has been a source of tension in the US, with consistent price increases from
an initial unit price of around $50 to $300+ today. In 2016, with a 90% market share, the then-owner,
Mylan, had increased pricing 15 times since acquisition, with these price increases becoming the focus
of a US House Oversight and Government Reform Committee4. In an attempt to deflect attention from
these price increases, Viatris introduced several versions of a “savings card” for both Epipen® and
Viatris’ generic auto-injector users (Epipen® Savings Card, Viatris Advocate, Epinephrine Injection
Savings Card, USP Auto-Injector Savings Card). These user savings cards ostensibly offer savings to
users, but in effect, are limited to users with existing commercial health insurance only. Uninsured US
residents using auto-injectors are ineligible.

In Australia, the supply of auto-injectable epinephrine has also been a monopoly for over 30 years,
dominated by Epipen® with two presentations manufactured by Alphapharm under licence: an adult
(300mcg dose) and paediatric (150mcg) presentation.

Importantly, the active drug epinephrine, has a limited shelf life with consumers typically receiving
autoinjectors with between 12-18 months shelf life. In Australia, access to Epipen® has been
problematic in 2021-2022, not only with inconsistent supply, but in many cases, logistics delays, which
have resulted in customers receiving stock with as little as 4-6 months shelf life left. In these cases,
users have experienced increased costs in replacing their Epipen® up to three times more often per
annum.

Auto-injectable epinephrine is available as a Schedule 3 drug, with a pharmacist’s advice (without need
for a doctor’s prescription). The Australian Government heavily subsidises Viatris’ price of $158.78 per
unit by supplying Epipen® for as low as $6.30 each for concession holders.5 Non-Pharmaceutical
Benefits Scheme (PBS) authority pricing via discount pharmacies may be as low as around $80.00.6

Pricing in the USA is more than double – Viatris market their range in 2 pack formats (not available in
Australia) and charge over $600 for an Epipen® 2-Pack.7

Although the unit price is lower than the one in USA, annual costs for Australians are high. Consumer
pressure on Mylan and subsequently now Viatris, has been growing with advocacy groups calling for
price reductions on shorter shelf-life supplies to reflect more frequent replacement needs.
"It's expensive and parents have to remember to replace the devices within a
short space of time." (Allergy and Prophylaxis Australia, Chief Executive Maria Said.
Nine News March 5th 2021)

3 https://www.futuremarketinsights.com/reports/epinephrine-auto-injectors-market
4 US Congress House Oversight and Government Reform Committee on Pricing, 2016.
5 Pharmaceutical Benefits Scheme, Accessed May 2023.
6 Chemist Warehouse. Accessed May 2023
7 Drugs.com. Epipen® 2-Pak Price Guide. Accessed May 2023

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023
The Launch of Anapen

A new competitor, Anapen®, was approved by the

Australian Therapeutic Goods Administration (TGA)
in September 2021. Manufactured by Arrotex and
distributed by Allergy Concepts in Australia, three
presentations of the Anapen® epinephrine auto-
injector have been launched.

Anapen® is positioned as a “weight-based dosing”

product range, which creates a new market by
segmenting users into three weight categories:
Junior 150mcg for 7.5kgs to 20kgs; 300mcg for up
to 50kgs; and 500mcg for 60kgs and over (Table 1).

In some emergency anaphylaxis situations, more than one epinephrine injection is required, which is
often related to patient size and weight. In recognition of this, an important aspect of Arrotex’s entry
into the market is the identification of an unmet emergency indication for larger adults over 60kgs
using epinephrine auto-injection.

As the approved Anapen® 500mcg Product

Information states:

“The usual adult dose is 300 micrograms for

individuals under 60 kg bodyweight. The
recommended dose is 300 to 500 micrograms for
individuals over 60 kg bodyweight, depending on
clinical judgement. Larger adults may require more
than one injection to reverse the effect of an allergic reaction.”8

Arrotex clearly promote this differentiation against existing treatments in describing their 500mcg
presentation as offering “more choice” for adults exceeding 60kgs. Consumer advocacy groups also
responded favourably, praising this new presentation as an important step forward.

Table 1: Comparative Presentations – Viatris versus Arrotex

Manufacturer Junior (<30kg) Adult (>30kg) Adult (>60kg)

Viatris (Epipen®) Epipen®® Jr Epipen®®
12-18 month shelf life 12-18 month shelf life
Viatris (Generic) Adrenaline Jr 150 Adrenaline 300
US only 12-18 month shelf life 12-18 month shelf life
Arrotex Anapen® Junior 150 Anapen® 300 Anapen® 500
21 month shelf life 24 month shelf life 24 month shelf life

8 ®
Australian Product Information, ANAPEN®® (ADRENALINE (EPINEPHRINE)) Australian Therapeutic Good Administration. Version 1.5 March 2021

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023
Supply Shortages and Expiry Date

The manufacturing of auto-injectors containing epinephrine or adrenaline carries a challenge in

managing a relatively shorter shelf life of 18 months. Both Viatris and Arrotex have faced logistics
problems in supplying global markets during and post-pandemic periods. Given the importance of
avoiding the risk of using expired auto-injectors, Arrotex offer a free reminder email for customers to
pre-warn pending expiry of purchased Anapen® units. This is also combined with an emailed 6
monthly user training reminder. Viatris offer a similar concept through their www.epipenclub.com.

Training and New Users

The launch of Anapen® has not been

completely trouble-free. As well as a
new, higher strength, the activation of
Anapen® is significantly different to
Epipen®

Given this, Australian prescribers and

issuing pharmacies are strongly advised
against supplying Epipen® and Anapen®
products to the same patients.

The different strengths, packaging and

administration techniques require
patients to be educated before
dispensing.

As an example, Epipen® is activated by first removing a blue safety release, then pressing the needle-
equipped end down hard against the thigh, to activate the self-injection. Anapen® has a number of
differences in operating compared to Epipen® — users have to remove a cap at the needle end first,
then a grey safety cap; and then press a red button at the non-needle end to inject.

Both Epipen® and Anapen® products are supported by inactive, non-needle

training versions used in new patient education and available for purchase
widely.

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023
As ongoing supply inconsistency continues to impact shelf life in Australia, the longer shelf life of 24
months offered by Arrotex (Table 1) may be a significant differentiating product benefit that may
translate into overall reduced ownership costs over time. In addition, Anapen’s customers received
short dated expiry stock are now being offered free replacement units.

Government Reimbursement and Pricing of Epinephrine Auto-Injectors

In Australia, epinephrine auto-injector presentations are priced based on patient health card status
(income tested), annual expenditure on medications, registration as an authorised user with the
Pharmaceutical Benefits Scheme (PBS).9 (Table 2)

Table 2: Epinephrine Auto-Injector Reimbursement Pricing

Presentations Health care card General patients Private (non-PBS

holders with PBS authority subsidised) patients
150/300/500mcg $6.30 $29.90 $80.00 to $158.78
epinephrine strengths depending on distributors

Viatris’ Product – Market Strategy Options

In anticipation of the launch of Anapen®, Viatris registered a generic epinephrine version of both
paediatric (150mcg) and adult (300mcg) strengths with the TGA in 2021. This is not yet commercially
marketed by Arrotex at the time of this case publication.

As a new competitor in a monopoly product, Anapen® may trigger a revision of future PBS price
reimbursements, as well as encouraging the entry of other generic auto-injectors like Adrenaclick® and
others, yet to be seen in Australia.

It may also trigger a competitive launch strategy of Viatris’ generic epinephrine to apply in managing
its product pricing overall and limit the incursion of Anapen®. This has already occurred in the US
market with Viatris simultaneously managing two product ranges – offering a 50% discount to users via
their generic single and two-pack 150mcg and 300mcg options, whilst still maintaining their substantial
branded premium pricing on Epipen®.

9 The Pharmaceutical Benefits Scheme (PBS). Department of Health, Australian Government. Accessed 27.9.21

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023
Case Discussion Questions:

Please focus on one country region (US or Australia) to address the following questions:

1. How can we briefly introduce the company / product?

2. What are the primary issues flagged in the case?
3. How can we relate those issues to concepts / theories learned in class?
4. Can we draw a conclusion (or two)?

For the Australian market, note:

International students fall outside the Pharmaceutical Benefits Scheme (PBS) benefits. You could also
look into which other Australian customers may fall outside the PBS benefits and consider their price
sensitivity and different possible pricing strategies that may be relevant to them (and compare this to
PBS customers using epinephrine).

This is a useful link to information about PBS:

https://www.google.com/search?q=PBS+WHO+ACCESSES+THIS+IN+AUSTRALIA%3F&oq=PBS+WHO+A
CCESSES+THIS+IN+AUSTRALIA%3F&aqs=chrome..69i57j0i546i649j0i546.10293j1j15&sourceid=chrome
&ie=UTF-8

For the US market:

You could consider issues like price sensitivity and different pricing strategies.

Prepared by Mike Brooke, Dept of Mgmnt & Marketing, Faculty of Business & Economics, University of Melbourne. Updated 2023