Drugmakers create own 'hurricanes' to gouge consumers: Ex-FDA official

There's a case for applying laws against profiteering to the drug industry, when outrageous price hikes occur in little-changed, life-saving legacy treatments, said a former deputy commissioner for the Food and Drug Administration.

The latest fuel for this debate was sparked by the outrage over Mylan increasing the cost of EpiPens by about 400 percent in recent years.

Using an analogy, Dr. Joshua Sharfstein told CNBC's "Squawk Box" it's illegal to jack up gasoline prices in hurricanes. He said drug companies are "creating their own hurricanes" and gouging consumers with the relief.

Sharfstein said he's not talking about new drugs with lots of research and development costs behind them. He said the problem is with drugs that have been on the market for years with no innovation and little or no competition, which companies exploit to make money.

He cited writings by the attorney general of Maryland who said it would not be hard to apply "profiteering laws" to products where there's nothing different but the huge price spike.

Mylan's EpiPen has been singled out as the latest example.

"We're talking about drugs that have been on the market for many years at very low costs and then they're going up 100- to 200-fold," Sharfstein said.

The drugmaker, meanwhile, is taking further steps aimed at making the cost to consumers cheaper. The company said Monday it will launch a generic EpiPen Auto Injector at a discount of more than 50 percent. The list price will be $300 for a two pack. Mylan expects to launch the generic in several weeks.

The FDA could take various steps to ease the problem, such as prioritizing a "second competitor" drug over the "19th competitor" of another drug, Sharfstein said.

Mylan has seen one EpiPen competitor, Sanofi's Auvi-Q, exit the market last year due to a recall, and Teva's generic version fail to receive regulatory approval.

But the agency's reluctance to approve an EpiPen generic has not been wrong, he said. "The FDA has made a very important point with injectors. If a pharmacist is going to substitute an injector [with a generic] it has to work the same way." He added: "There very little room for error with an injector."

Last week, Mylan said it's reducing the cost of branded EpiPens to eligible consumers through the use of a savings card that will cover up to $300 for the EpiPen 2-Pak.

Mylan CEO Heather Bresch struggled in a CNBC interview Thursday to justify the repeated big price hikes of the company's lifesaving EpiPen devices as criticism continued that Mylan is gouging consumers with a retail cost of more than $600.

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