Recently, the medical device manufacturer Mylan came under fire in the media for increasing the price of its EpiPen product sixfold in the last ten years. Epinephrine autoinjectors are lifesaving devices for people with severe allergies. Autoinjectors, like the EpiPen, are invaluable and necessary emergency instruments for daily living, helping sufferers to combat rapid-onset reaction conditions such as anaphylaxis.
Due to product rejections and recalls of its competitors, Mylan’s EpiPen has come to dominate the market for autoinjectors, with an 85 percent market share in the United States as of 2015. For many users of autoinjectors, the name EpiPen is nearly synonymous with the product, the same way that Xerox is for copiers.
In 2007, the price of an EpiPen package containing two autoinjectors was about $100. By 2016, that price had been raised by Mylan to roughly $600, with 25 percent of the increase coming in the last several months alone, due to a decision in May to increase wholesale costs by Mylan’s CEO, Heather Bresch.
Although consumers don’t typically pay for the cost of the product directly, health insurance providers do, and their expenses are usually passed on to consumers.
Along with the EpiPen price increase, Bresch’s salary also rose dramatically over the last 9 years, going from $2,453,456 in 2007 to $18,931,068 in 2015, an increase of 671 percent. As CEO, Bresch has been controversial, moving the company’s business registration to the Netherlands to enable it to pay far lower taxes, despite its selling the majority of its products in the U.S. and having most of its laboratories there.
In fact, the U.S. government is one of the company’s largest customers. But due to the company’s tax structure, the firm is expected to pay a tax rate in only the low teens starting in 2019. Bresch defended the move as necessary to remain competitive in its industry.
Bresch also courted controversy in 2007 when her alma mater West Virginia University (WVU), from which she claimed to have an MBA degree, said it had not awarded the certificate. Subsequently, the university gave an EMBA degree to Bresch, despite her having earned only 26 out of 48 of the necessary credits.
At the time, Bresch’s father was the governor of West Virginia (he’s now a Senator from the state). Michael Garrison, the president of WVU, was reported to have been a former business associate of Bresch and a close family friend. In April 2008, the university rescinded the EMBA degree, and Garrison and other officials at WVU resigned from the school over the affair.
After Mylan announced the latest price increase for EpiPen, outraged consumers began to complain, particularly parents of children who needed the devices. One parent in Connecticut was a friend of an actress named Mellini Kantayya, whose husband also needed the Epipen. Kantayya created a petition online entitled “Stop the EpiPen Price Gouging” that she began promoting on Facebook.
Kantayya shared the petition with her 836 friends, many of whom were also parents of children needing the EpiPen, and things began to snowball. In 45 days, Kantayya’s petition spread virally and gathered enough signatures to send more than 120,000 letters to Congress.
Political candidates such as Bernie Sanders and Hillary Clinton called on Mylan to rescind the company’s price increases. Sanders tweeted about the issue, and his tweet was retweeted more than 8,785 times and reached almost 2.8 million people.
“I think Mylan just pushed it too far,” declared parent activist and writer Robyn O’Brien of Boulder, Colorado, who has a large following on social media. “It hit a price point for this year for back to school where parents absolutely revolted.”
O’Brien has a website called AllergyKids.com, and a woman named Georgina Cornago Cipriano, whose son died at age 14 from an allergic reaction, wrote a post about Mylan for parents on the site. The post was shared more than 475 times, reaching more than 100,000 people.
Another parent is Jennifer Vallez of Ellington, Connecticut, whose daughter Lola has a tree nut and pet allergy. Vallez’s insurance has a $2,000 deductible, so her pharmacist said the cost of refilling an EpiPen prescription would come to $600.
“It’s just morally so wrong,” stated Ms. Vallez, who is a high school acquaintance of Ms. Kantayya and was the second signer of the petition. “I have a lot of friends with children with allergies, so we all are pretty adamant about this kind of stuff and support each other.”
The furor over the price increase has been orchestrated almost exclusively by parents of EpiPen users. Patient advocacy groups such as the Asthma and Allergy Foundation of America, the Allergy & Asthma Network and Food Allergy Research & Education, all of which receive funding from Mylan, have been silent on the issue.
In late August, the media began covering the issue, and stories appeared in USA Today, The New York Times and on the “Today” show on NBC. Republican Senator Charles Grassley of Iowa demanded a response from Mylan, calling for both a probe by the Federal Trade Commission and a Judiciary Committee inquiry into the matter.
For her part, Mylan CEO Bresch has fought back in the press, stating on CNBC’s “Squawk Box” that “I’m running a business…. We are going to continue to run a business, and we are going to continue to meet the supply and demand that’s out there.”
Bresch might want to re-think her media strategy, though, as a recent story about her in The New York Times showed her at her desk with a book entitled “Compensation Review with the CEO” in plain view.
On August 25, Mylan announced that it would offer patient assistance programs and coupons to help some users of the EpiPen who were facing prohibitive costs. For many parents, this is only a half-step, as most would still be charged excessively for the device.
Whether this case marks a turning point in the battle between patients and drug makers over pharmaceutical costs remains to be seen. But clearly, some power of social media to effect change at “Big Pharma” companies has been shown.
Regards,
Ethan Warrick
Editor
Wealth Authority
