Textbooks and Epinephrine

As university student, it is a familiar ritual marking the beginning of a new semester and usually is the discussion that comprises the first lecture of any course: the review of the syllabus.  In addition to listing classroom expectations, grading rubric for the course, and any other related varia, the syllabus often possesses a section listing the required course materials, which comprises textbooks, software, or any other items that the professor deems of particular importance to the course. 

Often a small and relatively compact section of the syllabus, the required materials section has gained a reputation for packing a significant punch in terms of “sticker shock” to the student; textbook costs comprise a significant and growing portion of the education related expenses of students from semester to semester.  In a recent online publication of projected university education expenses, Simon Fraser University estimates the total cost to the typical undergraduate student to be $9,368 per term; this number includes tuition, fees, residence housing, and any other mandatory expense including “books and supplies” costs which are estimated to be $1,020.[1]

As shown by the figure above, the costs relating to “books and supplies,” (the vast majority of which being attributable to the prices of textbooks) composes 11% of the total costs to a typical student for a semester of a university education.  This percentage share of costs ascribed to textbooks increases from 11% to 15% when expenses such as medical, dental insurance, and food plans are removed (students may often opt-out of these plans) and the cost of housing decreases (by moving off campus).[2]

The situation at Simon Fraser University is similar to that on almost any university campus across Canada.  Textbooks comprise a significant amount of the education related expenses, and total cost of textbooks averages on a nationwide basis to be between $500 and $1000 per student per semester.[3]  The costs related to the purchase of new course materials have been one of the fastest growing education expenses over the past few decades rising 1,041% compared to the consumer price index of inflation which has risen 308% over the same period from 1971 to 2015.[4]  To cope with the rising tide of costs, students have been finding new and creative ways to live with higher textbook prices.

In light of the excess growth in the cost of textbooks over general inflation, one would search for a reason that would serve as the impetus in an attempt to explain this phenomenon.  It is interesting to observe that the recent rapid increases in the prices of pharmaceutical drugs in the United States and the swift growth in the prices of textbooks are related.

In 2007, Mylan pharmaceuticals bought the rights to the epinephrine auto injector EpiPen from Merck.  At the time of the transaction, EpiPen possessed 90% of the market share within the autoinjectible epinephrine space and had a cost per shot (dose) of 57USD.[5] [6] By 2016 the price per dose of epinephrine injected via EpiPen had increased to over 300USD and looked as if the prices would continue to climb with little end in sight.[7]  There was talk about Mylan introducing a generic version of EpiPen for public use; however, the cavalcade of price increases for the flagship drug resembled the scandal surrounding Martin Shkreli of Turing Pharmaceuticals, which increased the price of Danaprim (another life-saving drug) from 15USD to 750USD, in both the motive and the fact that the CEOs of Mylan and Turing found themselves testifying before the United States Congress to explain their respective companies actions.

In the United States, pharmaceutical costs are often covered by insurance (be it private provider, US medicare, or other system).  Pharmaceutical companies spend billions of dollars on advertising and promoting their name brand drugs in the marketplace both to patients but also to the doctors themselves who prescribe the medication.  Because most of the costs are incurred by insurance and doctors have little reason to search for cheaper alternatives, pharmaceutical companies are able to increase the prices of their products to take advantage of marketplaces in which insurance companies and patients are often rendered price takers by patents and lack of strong competition.

A similar observation can be made in the realm of textbooks and course materials.  Textbook companies, spend millions per year marketing their products to universities and professors alike while making small and superficial changes between editions.  By creating “new” versions of textbooks on a semiregular basis and accompanying every new edition with a price hike, textbook companies have been able to extract profit from existing franchises.  Students have reacted to this financial pressure by purchasing used textbooks whenever available, finding free versions of textbooks (through legal and illegal means), or simply going without using textbooks for certain courses (often against the wishes of the professor).  This ability to adapt to circumstances in which purchasing new textbooks verge on being fiscally preclusive has caused average spending on academic and course materials in the United States to fall 60USD between 2007 and 2013.[8]

In the end, the rapid increases in the prices of many pharmaceuticals and the growth in the prices of textbooks in higher levels of education can be rectified with many of the same solutions.  Both marketplaces need increased competition and to provide a wider range of products available to serve the needs of students and patients.  Secondly, professors and doctors need to think of the financial well-being of their students and patients when requesting their purchase of a certain item which may be integral to their students’ university studies or their patients’ health.  After all this is just another way in which education and health are inextricably linked for “education is not the preparation for life; education is life itself.”[9]

By,

John Butler

Works Cited

[1] https://www.sfu.ca/students/financialaid/costs/canadian-2016-17.html

[2] This model assumes that housing costs decrease from $2,868 to $2,000 per semester and that food costs decrease from $1,860 to $1,000 per semester.  Both of the new estimates are conservative in nature and based on projected grocery and housing costs for a typical student living in Burnaby, British Columbia.

[3] http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/how-to-cut-the-cost-of-textbooks/article600370/

[4] http://www.nbcnews.com/feature/freshman-year/college-textbook-prices-have-risen-812-percent-1978-n399926 (uses data from textbook prices and CPI in the United States)

[5] http://www.bloomberg.com/politics/articles/2016-09-09/mylan-response-on-epipen-prices-doesn-t-satisfy-senate-chairman

[6] http://www.chicagotribune.com/business/ct-mylan-epipen-monopoly-20160825-story.html

[7] http://fortune.com/2016/09/27/mylan-epipen-heather-bresch/

[8] http://www.wsj.com/articles/a-tough-lesson-for-college-textbook-publishers-1409182139

[9] Quote by John Dewey

Picture titled "125/365" taken by David Mulder on May 5, 2014, obtained through Creative Commons (https://flic.kr/p/ne5jkw)