5 things we learned from EpiPen price hike hearing
Posted on September 23, 2016
Congress heaped scorn upon the CEO of the drug company that makes the EpiPen treatment during a committee meeting Wednesday.
Here’s what we learned from Mylan (MYL) CEO Heather Bresch’s testimony and questioning before the House Oversight panel.
1. Solutions are in short supply.
Well, this shouldn’t surprise you. But hearings like this bring it into full view. The hearing was heavy on rhetoric, light on answers.
After Mylan raised the base price of an EpiPen two-pack from $100 in 2009 to more than $600 in 2016, consumers lambasted the company as the latest example of a greedy pharmaceutical giant taking advantage of helpless Americans.
Congress joined the parade. Rep. Stephen Lynch, D-Mass., called it “disgraceful” and “disgusting,” while Rep. Elijah Cummings, D-Maryland, blasted Mylan for seeking “to get filthy rich at the expense of our constituents.”
Lectures were plentiful. Agreement on what to do about it? Not so much.
Lynch said the situation illustrates that Medicare needs the power to negotiate drug prices, which some experts have said could help, but there was no substantive discussion of the matter. Others have suggested that the U.S. needs to implement price controls on life-saving drugs. That idea, too, was nowhere to be found.
2. Mylan isn’t sorry.
Bresch didn’t back down. She blamed the “complexity” of the health-care system for making it appear like Mylan reaps huge profits on EpiPen.
“I truly believe the story got ahead of the facts,” she said, adding that Mylan makes a profit of $100 per two-pack.
Still, experts say that’s a significant profit margin, especially considering that the treatment has barely changed for decades.
3. Heather Bresch thinks her compensation is average for her industry.
The Mylan CEO received about $18.9 million in total compensation in 2015, which she was forced to admit during the hearing.
“Sounds like you’re doing pretty well on this,” Rep. John Mica, R-Florida, said. “How does your compensation compare to peers in the industry?”
“It’s in the middle,” Bresch replied.
That’s generally accurate for 2015, according to a recent USA TODAY review of S&P Global Market Intelligence data.
But for the last five years, Mylan had the second-highest executive compensation in the entire drug industry, according to the Wall Street Journal.
4. A strategy is emerging for price-hiking drug companies.
Roll with the punches. That’s the approach drug companies seem to be taking.
Rep. Elijah Cummings, D-Maryland, compared it to Muhammad Ali’s “rope-a-dope” strategy.
After taking a few punches, the companies “keep on raising their prices,” Cummings said.
Why? Because, Cummings said, nothing changes. He pointed to similar examples at “pharma bro” Martin Shkreli’s former company, Turing Pharmaceuticals , and controversial firm Valeant Pharmaceuticals (VRX).
Shkreli stunned politicos by saying after he refused to testify to the same committee earlier this year that the panel was made up of “imbeciles.”
5. An EpiPen with longer shelf life may be coming.
Bresch said Mylan “within days” will submit a request to the Food and Drug Administration for review of an EpiPen with longer shelf life. The current version expires in 18 months, she said. The goal for the new version is 24 months.