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Drugmakers exploit government-granted monopolies: Ex-Obama health advisor

The only way to stop drug companies — such as Mylan in the case of the EpiPen — from jacking up the costs of live-saving treatments is through price controls, Dr. Ezekiel Emanuel told CNBC on Tuesday.

"If we had a market that would be great. I think prices would come down," said Emanuel, one of the architects of Obamacare.

"But let's face it," he continued, "in the drug business there's a monopoly granted by the government ... through patents, through FDA marketing exclusivity and FDA regulation, which takes a long time to approve a line to produce drugs."

Emanuel told "Squawk Box" it's no surprise that big pharmaceuticals "exploit the monopolies to raise prices." He added: "The only way in a monopoly situation to keep the prices reasonable is government regulation, unfortunately."

The latest outcry over drug prices surrounds Mylan's decision to hike the cost of EpiPens about 400 percent in recent years.

"There was no improvements over the last six [or] seven years and prices have gone up 400 percent," Emanuel said. "There's no justification."

Mylan CEO Heather Bresch argued in a CNBC interview last week the problem of drug prices isn't with Mylan or even the pharmaceutical industry, but instead with a health-care system that often requires consumers to pay insurance premiums and out-of-pocket for prescription medications, sometimes at full retail.

Mylan has taken steps in recent days to offset the cost to consumers through a savings card that will cover up to about half of the EpiPen 2-Pak price tag of $600 for eligible purchasers. The drugmaker also said it would launch a generic version in the coming weeks at $300 per 2-Pak.

"Mylan EpiPens won't be the last case. You would have thought they would had learned after Turing," said Emanuel, referring to Turing Pharmaceuticals and the decision of its onetime CEO Martin Shkreli to raise the price of Daraprim, an antiparastic used by HIV patients, by more than 5,000 percent.

"But they don't seem to learn because the profit it too tempting," said Emanuel, chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania.

Emanuel, who's no stranger to politics and public policy as the brother of former White House chief of staff and now Chicago Mayor Rahm Emanuel, said the Food and Drug Administration needs an overhaul.

"We do need to get the FDA working faster to approve ... generic drugs. But we also need regulation because there's going to be period of time, even if the FDA is working well, where companies will have a monopoly," he said.

Mylan did have one EpiPen competitor, Sanofi's Auvi-Q, but it exited the market last year due to a recall. Teva's generic version of the EpiPen failed to receive regulatory approval.


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