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Mylan's EpiPen will get competition from return of Kaleo's Auvi-Q in 2017

EpiPen rival will return to market next year

Mylan's pricey EpiPen is about to get some more competition soon.

Kaleo Pharma on Wednesday announced it will reintroduce its auto-injector device Auvi-Q in the first half of 2017, a move that comes two months after huge price hikes for the similar anti-allergy EpiPen sparked public outrage.

"We're very excited about this. We've put together a thoughtful plan on how to bring the product back," said Kaleo President and CEO Spencer Williamson.

His company last fall had seen its then-manufacturing and marketing partner Sanofi voluntarily recall Auvi-Q from the market after problems were identified with dosage deliveries of the drug epinephrine.

"We believe that patients should have options when it comes to epinephrine auto-injectors," said Williamson.

Auvi-Q(tm) (epinephrine injection, USP).
PRNewsFoto | Sanofi | AP

But it's not clear that Auvi-Q will be less expensive in terms of retail price than EpiPen, which now sells for more than $600 for a twin-pack, and which controls around 95 percent of the U.S. market for epinephrine auto-injectors.

For much of the time after it first went on sale in 2013, Auvi-Q sold at a premium to EpiPen. At the time of its recall, Auvi-Q sold for slightly more than $500.

Kaleo, which is privately held, would not disclose its planned retail price for Auvi-Q, which features a recorded message instructing people how to use the device when they need it.

"We understand that price is central to this conversation, and it's really important," said Williamson. "More important in our view is the price to the patient ... we're working on that to ensure that we have low out-of-pocket costs for the patient."

Patients often don't have to pay the full retail price for drug products, being responsible only for a share of the cost through copayments or deductibles, or because they receive a coupon.

But health insurers are responsible for covering the remaining share. Those costs are in turn passed on to people with insurance in the form of monthly premiums.

"When a physician writes a prescription for Auvi-Q, we believe that the patient should be able to obtain the product without insurance barriers or high costs to the pharmacy," Williamson said.

"What I can assure you is it will be less out-of-pocket costs for patients even if they have high-deductible plans," he said, without disclosing details of how that would happen.

Williamson said Auvi-Q has approval from the U.S. Food and Drug Administration, and that the company has "proven manufacturing and quality processes." He said the devices will be made by an "intelligent, high-tech, 100-percent robotic production line."

Kaleo and Sanofi ended their agreement on Auvi-Q in early 2016. In April, Kaleo announced that it planned to return the product to the market, but at that time did not say when that would happen.

EpiPen vs. Auvi-Q wholesale acquisition cost

Like EpiPen, the Auvi-Q is used to counteract the potentially fatal allergic reaction known as anaphylaxis.

Kaleo was founded by two brothers, Eric and Evan Edwards, both of whom were diagnosed with serious allergies at the age of 3, and who invented the Auvi-Q.

"Growing up with life-threatening allergies and having to always have an epinephrine auto-injector ... it was tough," said Eric, who is a physician. "We thought there needed to be innovation in this space."

The danger from anaphylaxis, and a public relation campaign that pushed the message about that danger, are why EpiPen sales have skyrockted from $200 million, when Mylan bought the device from Merck, to $1 billion today.

During that time, Mylan jacked up the price of EpiPen by more than 500 percent.

Those price increases, and Auvi-Q's exit from the market last year, set the stage for an outpouring of public anger against Mylan in August. That month traditionally sees the biggest sales of epinephrine auto-injectors, and many consumers were confronted for the first time with having to pay $600 or more for EpiPens.

Consumers often buy multiple packs of EpiPens to have at home, school, work and their care.

In response to the controversy, Mylan CEO Heather Bresch was called before a congressional committee for to face blistering questions about the company's pricing strategy. Mylan, stung by criticism, increased its discount for many EpiPen buyers and also said it would introduce a generic version of the product that will sell for about $300.

Kaleo, like Mylan, has drawn attention from Congress because of its aggressive pricing of drugs. Since 2014, Kaleo has increased the price of its Evzio injectors, which contain the opioid-overdose treatment drug naloxone, more than sixfold, from $690 up to a stunning $4,500 for two single-dose injectors.

In a recent story about naloxone price hikes by Kaleo and other companies, Kaleo noted that "all patients and caregivers with commercial insurance and a prescription can obtain Evzio at no cost, even if their commercial insurance does not cover it."

In a press release Wednesday, Dr. James Baker Jr., CEO and chief medical officer of the group Food Allergy Research & Education, welcomed the news of another alternative to EpiPen.

"These lifesaving devices must be accessible and affordable, and Americans should have options when it comes to selecting the right auto-injector for their family."

Kaleo's announcement of Auvi-Q's return came on the same day that top-ranked analyst Irina Koffler of Mizuho Securities initiated Mylan shares with a buy rating, saying she saw the company "as oversold due to recent uncertainty about the EpiPen franchise and market concerns."

Mylan NV EpiPen 2-Pak medication
George Frey | Bloomberg | Getty Images