The maker of the EpiPen is playing a dirty trick right from Martin Shkreli's book

Mylan, the company that sells the life-saving anti-allergy shot EpiPen, has said that it will provide discount coupons to patients to subsidise the $600 drug.

Mylan also said that it would double the number of people eligible for its patient assistance program, which helps uninsured and under insured people.

A package of two EpiPen cost $100 back in 2007 but is now about $600 — an increase of around 500%. That increase has angered Washington and sent the company’s stock plummeting. Rep. Elijah Cummings (D-Maryland) has requested a hearing on the matter in September.

But hey, there are new discounts, right? Ideally, with a discount people are going to get the help they need, as well as the various institutions like schools that stock EpiPen.

And maybe that’s true to a certain extent, but that’s not by any means the whole story here. In a press release after the announcement, Cummings called these discounts a “PR stunt” to “distract from their exorbitant price increases” — but they’re more insidious than that.

Coupons and patient assistance programs don’t just distract from high prices, they preserve them.

How we got with the program

Drug companies and their patient assistance programs really became a part of the American conversation about healthcare thanks to Martin Shkreli, the former CEO of Turing Pharmaceuticals who jacked up the price of life-saving drug Daraprim by around 5,000%.

Surely, you remember Martin.

In a Congressional hearing back in January, the current CEO of Turing said she was comfortable with the pricing because of Turing’s patient assistance programs. Shkreli tweeted about it as well. They argued that the low co-pays facilitated by the programs gave every patient access.

Of course, they also keep prices high for insurers, which often filters down to higher costs for patients.

Internal documents subpoenaed by the government show that the programs were part of the company’s strategy to keep the price of the drug high.

And it’s also important to point out that as prices rose, the co-pays patients did have to pay became more onerous. The company knew it too.

“We may need to make some updates based on co-pay amounts we’ve been seeing since the price change … there are patients waiting now for product who have a $6,000 co-pay,” Tina Ghorban, director of business analytics and consumer insights at Turing, wrote in an internal email in August.

In an interview with CNBC, the CEO of Mylan, Heather Bresch, said that as a mum, she knows coupons are great.

She also said that “no one is more frustrated” than her about the EpiPen price. She said the problem was that the drug touched so many hands before it actually got to the patient. In a press release, the company also blamed Obamacare.

“Healthcare in America is in a crisis,” she said on CNBC.

Yes, we can see that.

Here, hold my bag

As much as drug companies say the patient is being helped, someone in the world of healthcare is paying for these drugs. The bag-holders, in this scenario, tend to be the insurance companies. Their burden results in higher costs system-wide.

Another user of this tactic is Valeant Pharmaceuticals, which came under fire last year for raising the price of Isuprel and Nitropress, two cardiac drugs whose prices it raised by 525% and 212% respectively. Valeant also pointed to its patient assistance programs as a cost-saving mechanism after Hillary Clinton criticised the company in March.

At a February Congressional hearing, Mark Merritt, resident and CEO at the PCMA, which represents Pharmacy Benefit Managers (the gatekeepers between the drug companies and the insurers/payers), testified that Valeant’s patient assistance programs are designed to reduce “resistance to higher prices” from payers and patients.

Elizabeth warren hillary clintonJohn Sommers II/Getty ImagesElizabeth Warren appearing with Hillary Clinton in June.

And then in April, Senator Elizabeth Warren (D-Massachusetts) had this to say to Valeant executives.

“You double the price, even if you get a waiver to the customer, you make a lot of money,” Warren said. “What is the return on investment to Valeant on the money you’re currently putting into the patient-assistance programs?”

No one could answer.

This made Warren noticeably upset.

“Don’t tell me you’ve never done the analysis,” she said. “By doing this you … keep the patient on the more expensive drug and then you … recoup whatever from the insurance company. What I’m saying is that this must be a profitable … for you … You’re making more money … You haven’t done that analysis?”

It’s worth asking the CEO of Mylan the same question.

This is an editorial. The opinions and conclusions expressed above are those of the author.

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