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Cigna Drops Name Brand EpiPen While CVS Offers Generic For $100

Is Mylan getting a taste of its own medicine?

Health insurance giant Cigna announced this week it's dropping coverage for name brand $600 EpiPens, just as drugstore chain CVS nearly halved the price of a rival epinephrine autoinjector, Adrenaclick, to $109.

"It is positive news for our customers," said Cigna spokeswoman Karen Eldred in a statement. "The generic version, available now in pharmacies, has the same drug formulation and device functionality as the branded medication, but at a substantial cost savings."

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Meanwhile, CVS "recognized that there was an urgent need in the marketplace for a less expensive epinephrine auto-injector for patients with life-threatening allergies," said Helena Foulkes, President of CVS Pharmacy.

One consumer rights watchdog said the moves were "a start," that would give confidence to competitors and insurance companies to put more pricing pressure on EpiPen maker Mylan.

"CVS and Cigna are looking through the aggressive marketing tactics and asking why it's worth it to pay twice for the same product," said Peter Maybarduk, director of the Access to Medicines group for Public Citizen.

"We need a lot more action and we need legislative action against price spikes," he told NBC News, noting it was common industry practice for drug companies to raise prices 10 percent annually.


EpiPen Backlash

The EpiPen became the epicenter of a growing drug price hike controversy this summer after an NBC News story on parents scrambling to pay the soaring prices sparked a national uproar.

The company had jacked up prices by over 400 percent for the emergency allergic reaction intervention, leaving patients without coverage to pay $607 cash for a two-pack. The company was raising prices at a rate of over 25 percent per year.

NBC News exclusives on Mylan's executive compensation spiking 600 percent, its actual costs per pen (about $30), and an EpiPen dismantling followed.

After the outcry the company offered a $300 coupon for some affected customers, increased patient access programs, and offered a generic version of its own product at a 50 percent reduction in list price.

The story has now reached some of the highest levels of government. On Wednesday, President-elect Trump sent biotech stock prices tumbling by an average of 5 percent at his first press conference in six months with comments on the skyrocketing price of drugs.

"We have to...create new bidding procedures for the drug industry, because they're getting away with murder," he said.

Later that evening, the Republican-controlled Senate rebuffed a slate of 10 different Democratic amendments aimed at lowering healthcare costs and improving access to care. They included a budget resolution that aimed to lower pharmaceutical prices by allowing Canadian drug imports. In Canada, EpiPens sell for $290. Under the U.K.'s state-funded system, just $69.

Mylan Could Make Even Larger Profits

However, under the Cigna arrangement, Mylan could actually end up making more money than before.

That's because Cigna will instead be covering the generic EpiPen also made by Mylan. The only difference with the generic EpiPen is the packaging and its lower list price.

Mylan CEO Heather Bresch told CNBC that $274 of its $600 EpiPen price tag goes to middlemen. But generics are sold through a different kind of supply chain that cuts them out.

So with the $300 generic, Mylan gets to do a price chop while still keeping all its same profits. It could even make $26 more per box.

Announced over the summer as a way to tamp down the furor, the move was "weird," said Maybarduk. "It was essentially a maneuver to maintain premium market share and avoid straight talk on price."

Michael Rea, the founder and CEO of drug pricing comparison site Rx Saving Solutions, said the moves illustrate that, "if you can increase pricing visibility and provide consumers education about their choices — like an alternative to EpiPen at a fraction of the cost — the results are powerful."

Mylan didn't immediately respond to a request for comment.

On Tuesday, Mylan's Bresch told CNBC that a system where the manufacturer makes half of the product's list price "demonstrates an imbalance in the system." She said the controversy had made "Mylan a stronger company, me a stronger leader." And, going forward, she said she was now looking at price increase issues through a "patient lens."

"If EpiPen started this conversation, I will try at least to do everything in my power to see it through, and seeing it through means changing the way that pharmaceutical pricing, and ... that patient lens needs to change dramatically," said Bresch.

Georgetown University health research professor Jack Hoadley said that the confidential agreements between various drug industry players keep pricing a black box that prevents customers from seeing the whole story.

Thanks to increased media and congressional attention "there may be some interest in some innovation in pricing but who that benefits is hard to say without having more transparency," he said.

But any proposed changes to the system will run " up against that pharma has doubled their lobbying budget and is going to fight against anything that gets in their way."