What's going on?
We all know EpiPens as those things that you jab into your friend with a peanut allergy in case of emergency (it’s used for other allergies too). Well, the rapidly rising price of the EpiPen is now at the centre of a political controversy that’s wiping billions off the value of its parent company, Mylan.
What does this mean?
Hillary Clinton (you might be aware, she’s running for President…) called recent price hikes of the EpiPen “outrageous, and just the latest example of a company taking advantage of its consumers.” She’s just the latest politician to take issue with Mylan this week. It’s part of a political pushback against drug companies that have significantly hiked the prices of their products (some by more than 1,000%). In Mylan’s case, the cost of the EpiPen has jumped 4-600% (depending on who you ask) over the past seven years.
Why should I care?
The bigger picture: Drug companies are vulnerable to political risk.
The political crackdown on inflated drug prices began in earnest last year. It took a big toll on the stock prices of many drug companies, including those that didn’t necessarily employ “unfair” practices (perhaps investors feared that new laws would harm even the “fair” companies). Since then, the stock prices of most drug companies have rebounded at least somewhat, but this week’s news and the reaction of Mylan’s stock price (it’s down about 10% this week) is a reminder that political risk remains high for drug companies.
For you personally: Healthcare costs have been going up.
Personal healthcare costs are expected to go up 6.5% over the next year in the US (that’s actually lower than the double-digit increases seen in previous years). Employers and insurers aren’t shouldering all of the pain (so to speak…): some of those costs are being passed on to you in the form of higher insurance deductibles and “co-paying” options. People in countries with “free” healthcare aren’t immune either: higher healthcare costs paid by the government are ultimately funded by the taxpayer. Yeah, that’s you.