Acknowledging that patients “deserve increased price transparency and affordable care,” Mylan N.V. (MYL) CEO Heather Bresch wrote in a company press release Monday that the company is “taking immediate action to help ensure that everyone who needs an EpiPen gets one.” The drugmaker has come under fire following reports highlighting steep price rises in the life-saving drug, which treats anaphylactic shock caused by allergic reactions.
Mylan announced that it would cover up to $300 of out of pocket cost at the pharmacy, which it said would amount to a 50% reduction in patient cost from the list price. It will also double the eligibility for patient assistance, “effectively eliminating out-of-pocket expense for uninsured and under-insured patients.”
Mylan bought the rights for the EpiPen injector in 2007, when the wholesale price for a single EpiPen (they are sold in packs of two) averaged $56.64, according to Connecture, a health insurance technology and data analytics company. Gradual price hikes accelerated until, beginning in the fourth quarter of 2014, the price rose 15% every other quarter. A single injector now costs an average of $365.17 according to Connecture, meaning that a refill of the prescription costs more than $700 wholesale. That is a 545% price rise since the end of 2007. The injectors expire every year.
Food allergies affect between 4% and 6% of children in the U.S., according to the CDC. Mylan has a near monopoly on emergency self-treatments for anaphylaxis. The company settled a lawsuit in 2012 to allow a generic alternative to enter the market in 2015, but Teva Pharmaceutical Industries Ltd.’s (TEVA) product was rejected by the FDA. Sanofi S.A.’s (SNY) non-generic Auvi-Q was pulled from the market last year. Most of the EpiPen’s price increase has come since 2012. (See also, Drug Prices: Name Brands Doubled in Last 5 Years.)
Even as the price of an EpiPen has shot up, the total compensation of its current CEO has risen faster. Bresch earned $2.5 million in 2007. She was appointed President in 2009, and earned $4.9 million that year. In 2011 she joined the company’s board and her appointment as CEO was announced; she earned $9.7 million that year. She took over as CEO in 2012, earning $10.0 million; two years later she earned more than twice that figure, $25.8 million.
Mylan bought Abbott Laboratories (ABT) in 2014, allowing it to move its headquarters to the Netherlands, where the corporate tax rate is lower.
The company has conducted a concerted lobbying campaign around the EpiPen, spending $11.5 million since 2007, according to OpenSecrets.org. The FDA recommended that a prescription pack contain two injectors instead of one in 2010 and widened guidelines for who should be prescribed an EpiPen. Some states now require that public schools stock the drug, with the Federal government passing a law to provide those states with grants in 2013. (See also, Why Drug Prices Keep Rising and How to Fight Back.)
Bresch is the daughter of U.S. senator Joe Manchin from West Virginia.
Jim Yocum, executive vice president at Connecture, told Investopedia via email that “Mylan has done a masterful job of creating demand for the EpiPens as a necessary stocked items in schools, restaurants, summer camps, etc.; anywhere the risk of anaphylactic shock might exist.” He also points to the way the company designed its patents: “by focusing on the specific dosage control mechanisms and actions that ensure firing a consistent dose into the patient,” Mylan has made it difficult for generic manufacturers to enter the market.
Mylan has become the target of political ire in recent days, with Hillary Clinton tweeting Wednesday that there is “no justification” for the company’s price hikes. The company’s stock fell 6.2% at its intraday low. (See also, Two Senators Investigate Pricing of Mylan’s EpiPen.)
EpiPens can be the difference between life and death. There’s no justification for these price hikes. https://t.co/O6RbVR6Qim -H
— Hillary Clinton (@HillaryClinton) August 24, 2016
Senate judiciary chairman Chuck Grassley of Iowa, a Republican, has written a letter to Mylan expressing concern that “the substantial price increase could limit access to a much-needed medication.” He requested an explanation by September 6. Senator Amy Klobuchar of Minnesota, a Democrat, asked the Federal Trade Commission to investigate possible antitrust violations by the company, saying the law prohibits “the use of unreasonable restraints of trade to facilitate or protect a price increase.”
In an interview Thursday, Bresch told CNBC, “No one’s more frustrated than me,” adding that “everybody should be frustrated” with the current state of the healthcare system. She blamed middlemen for the necessity to charge high prices and expressed hope “that this is an inflection point for this country.” She also said that she had reached out to Senators Grassley and Klobuchar to arrange a meeting but had received no response.