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EpiPens are a decades-old way of delivering epinephrine, a hormone that counters the potentially fatal effects of severe allergic reactions to things such as bee stings and peanuts. To children subject to such allergic reaction, having an EpiPen available can be a matter of life and death. There’s about a dollar’s worth of epinephrine in each EpiPen, to which Mylan acquired the rights in 2007 and proceeded to steadily impose double-digit price heights.
As Michael Weinstein, president of the AIDS Healthcare Foundation said: What good is a life-saving drug if you can’t get it?
In a Los Angeles Times article of August 26, 2016, Drug companies spend millions to keep charging high prices, David Lazarus wrote:
“Pharmaceutical heavyweight Mylan has become the latest poster child for drug-industry greed. The cost of a pack of two EpiPens now $608.61, an increase of 548% since Mylan began selling the drug in late 2007 with 17 price increases during that span, including two since a major competitor was recalled late last year. Notable is that both Democrats and Republicans have called for investigations.”
The two most recent price increases, last November and this May, came after Sanofi SA’s competing Auvi-Q was recalled. The absence of real competition is a factor in Mylan’s ability to keep raising the list price of EpiPens. Competitors so far have failed at challenging Mylan’s EpiPen.
Mylan’s executives are under scrutiny. Last year the company, incorporated in the Netherlands, moved its tax residence to the U.K. in a so called inversion deal. Heather Bresch, the company’s chief executive received an 8.3% pay raise that lifted her base salary to $1.3 million, for a total compensation of $18.9 million.
CEO of Mylan has Democratic connections
Reported by the Associated Press is that Heather Bresch happens to be the daughter of West Virginia’s Democratic Senator Joe Manchin, a supporter of Clinton’s presidency. When Manchin posted an announcement of a $16 million grant for his state, hundreds of people lashed out on the senator’s social media page, one even suggesting that Manchin’s daughter could cost him re-election in 2018.
CEO Heather Bresch, who raised the price of life-saving EpiPens to an exorbitant $608 for a two-pack, is blaming Congress for not overhauling an “outdated” medical system. It’s “the system”, not avarice that is to blame, as Heather Bresch told CNBC on Thursday, August 26, 2016:
“Congress and the leaders of this country need to quit putting their toe in this topic and really fix the system. We have an outdated system, inefficient system. This isn’t an EpiPen issue. This isn’t a Mylan issue. This is a health care issue … The irony is the system incentivizes higher prices. … There’s no question the system is broken.”
Mylan’s response to criticism
Mylan has pointed to a statement saying it was committed to ensuring patients having affordable access to the drug, noting that the company has given away more than 700,000 EpiPens to schools while paying all out-of-pocket costs of 80% of commercially insured patients. Following extensive criticism by politicians, physicians and lawmakers over the price of EpiPen, Mylan did to offer to provide more financial help patients, saying it would cover their insurance out-of-pocket costs up to $300, from $100 previously. It also said it would expand the number of low-income patients eligible to receive company subsidies. But the company didn’t roll back EpiPen’s high list price. Following is Mylan’s most recent response to the broad criticism of the price-increases on its lifesaving EpiPen, as reported in the WSJ on Monday, August. 31:
“Mylan NV plans to launch a half-priced generic version of the medicine which means Mylan would be competing against itself. This new generic product, to be launched in weeks, would sell for a price of $300 for two injection pens, compared with a list price of about $609 for its brand name EpiPen product.”
Kaiser Family Foundation reports an 18.2% increase in drug prices over two year
Unquestionably CEO Bresch and Mylan’s board are absolutely to blame, but there is truth in assessing blame of a broken, bureaucratic, morally bankrupt health-care system in our country, which has gotten far worse for many consumers under ObamaCare. According to the reliable Kaiser Family Foundation report, the drug industry — which includes health insurers, drug companies and pharmacy benefit managers, many of which are owned or work in conjunction with insurance companies — has managed over the last two years to drive drug prices up a punishing 18.2 percent. http://nypost.com/2016/08/27/epipen-debacle-is-symptom-of-sick-healthcare-under-obama/
Then too, Mylan and other drug companies point to insurance plans that force consumers to pay an ever-larger share of drug costs out of pocket, and note that few health insurers and drug-benefit managers pay a drug’s list price because of rebates and discounts. In a news release Bresch remarked that Mylan never intended patients to absorb the full cost of EpiPen. The major burden would fall on insurance companies, implying that Mylan is gaming the insurance industry.
Gaming the insurance system
There is no question that Mylan is “gaming” the insurance system, private and public versions. It is also ironic that Mlan and its CEO Heather Bresch would express “shock” that anyone would think they are gouging the public who actually need the Epipen. Their marketing strategy is devious. For starters, they are relying on the “Kleenex” syndrome, where you think of the term instead of the more inclusive term, ”tissue”. In medicine, if a doctor or a government mandate prescribes “Epipen”, that’s what you get unless you specifically ask for a generic version. The generic versions never got off the ground because the name recognition of “Epipen” was so well established. It’s rather notable that Mylan announced its own proposal to launch a generic version of its brand name EpiPen, which might be an attempt by Mylan to put a carrot out there so the whole price gouging controversy dies down. Mylan’s generic launch would certainly help to relieve the pressure it is experiencing, but it could also give Mylan a head start against competitors who plan to launch their own generic versions of Epi-Pens.
This may be an example of the spy-versus-spy culture, where companies use news releases, ostensibly from “independent research studies”, to promote a particular drug or treatment, or to discourage alternatives. The makers of Xantac and other proton-pump-inhibitors disparaged research which showed that ulcers were caused by chronic bacterial infections, until their patents ran out. Then the new technology was warmly embraced as pharmaceutical companies came out with new antibiotics to handle the real cause. Recently in the news were rumors that certain pacemaker devices could be hijacked by hackers with deadly results.
Mylan’s strategy included lobbying Congress to mandate EpiPens in schools and public institutions to handle very real and potentially deadly health threats. They ride in as the “white knights” to save the day. Think of Sir Lancelot in “Camelot” singing, “Ce’ moi.” Legislation was proposed by Senators Durbin and Kirk in November of 2011– School Access to Emergency Epinphrine Act — which required all public schools to have EpiPens available in case of an emergency. The bill was passed and signed by President Obama in 2013 to compel schools to stock EpiPens. This is a guaranteed annual sales volume of half a million units, assuming each school (98,000) maintains an inventory of 5 pens and doesn’t use any. According to the National Center for Education Statistics, there were 98,817 public schools during the 2009-2010.
Play for Play?
It is ironic that the cost of Mylan’s life-saving pen has been criticized by Hillary Clinton, somewhat belatedly, considering the fact that Mylan donated to the Clinton Foundation. Records available on the website of the Bill, Hillary and Chelsea Clinton Foundation reveal Mylan has donated up to $250,000. This recently released statement aptly displays Hillary’s lack of moral and ethical behavior when blasting her family foundation’s donor:
“Over the last several years, Mylan Pharmaceuticals has increased the price of EpiPens by more than 400%. They’re now charging up to $600 for a two-EpiPen set that must be replaced every 12-18 months. This both increases out-of-pocket costs for families and first responders, and contributes to higher premiums for all Americans and their employers. That’s outrageous — and it’s just the latest troubling example of a company taking advantage of its consumers … [I]t’s wrong when drug companies put profits ahead of patients, raising prices without justifying the value behind them.”
No one’s saying drug companies shouldn’t recover the costs of developing and marketing drugs, or that the industry shouldn’t enjoy reasonable profit for its efforts. But what Mylan and other maestros of greed show us is that this is an industry that fleeces the most vulnerable members of society, and rewards itself handsomely for its morally dubious behavior.