Mylan CEO Defends EpiPen Price Hike in House Grilling

     WASHINGTON (CN) — Members of a House committee on Wednesday lambasted the head of the company that makes the lifesaving emergency allergy treatment EpiPen over the steep price hikes on the drug.
     Mylan NV CEO Heather Bresch took the hot seat before the House Oversight and Government Reform Committee to answer for EpiPen’s steadily increasing price since Mylan acquired it in 2007.
     The cost has jumped from $100 for a pair of EpiPens to more than $600. The issue blew up in August after consumer outrage over the price reached a fever pitch, given that some families can no longer afford them.
     The pen delivers a shot of epinephrine to people suffering from severe and life-threatening allergic reactions.
     Bresch told angry lawmakers there is confusion over the price, which she attributed to an “opaque and frustrating” system of pharmaceuticals pricing.
     “The story got ahead of the facts,” she said. “I know there is considerable concern and skepticism about the pricing of EpiPen auto-injectors. I think many people incorrectly assume we make $600 off each EpiPen. This is simply not true.”
     The company only makes $50 per pen — or $100 on the two-pack, she declared.
     She explained the pricing confusion in her testimony: “In the complicated world of pharmaceutical pricing there is something known as the wholesale acquisition cost or WAC. The WAC for a two-unit pack of EpiPen auto-injectors is $608. After rebates and various fees, Mylan actually receives $274. Then you must subtract our cost of goods which is $69. This leaves a balance of $205. After subtracting all EpiPen auto-injector related costs our profit is $100, or approximately $50 per pen,” she said.
     According to data from citizen advocacy group Public Citizen, people in other Western countries pay far less for the devices. Prices range from $69 in the United Kingdom to $210 in Germany.
     Bresch’s pricing explanation failed to impress the committee, with some members calling the price hike “disgusting” and a “blatant disrespect” for American families who do not have discount options for the pens.
     Before her testimony, Rep. Elijah Cummings, D-Maryland, blasted her and accused the company of using a corrupt business model often used by drug companies.
     “Find an old, cheap drug that has virtually no competition, and raise the price over and over and over again — as high as you can,” he said.
     Cummings compared Mylan to other drug companies, including Turing Pharmaceuticals and Valeant Pharmaceuticals, whose chiefs — Martin Shkreli and J. Michael Pearson, respectively — both sat in the congressional hot seat after hiking drug prices.
     “They sat at this very witness table earlier this year with absolutely no remorse,” Cummings said.
     Cummings said Mylan made $184 from EpiPens in 2008 and that the company expects that number to soar to more than $1.1 billion this year. The company has made more than $4 billion on the drug in the decade since acquiring it, he said.
     Bresch — who currently enjoys a $19 million annual salary — focused her testimony on programs the company has implemented since the storm of controversy, stressing that Mylan’s priority is broad access to the drug.
     “We have now reached 80 percent more patients. And today, approximately 85 percent of EpiPen patients pay less than $100 for a two-unit package and a majority pay less than $50,” she said.
     Mylan recently announced a generic version of the EpiPen, which the company will offer for $300 for a two-pack.
     “This unprecedented move is the fastest and most direct way to reduce the price for all patients,” she told the committee.
     The company also launched a direct shipping program, allowing patients to purchase the devices directly from Mylan, and increased a savings card program benefit for the brand-name product by $200, she said.
     Bresch also stressed that the company has given 700,000 free EpiPens to 66,000 schools.
     Again, this failed to impress the committee.
     “This is the same PR playbook other companies use. When your price increases finally spark public outrage, just say you are expanding your patient assistance programs, and make as much money as you can along the way. That’s what Martin Shkreli did, that’s what Valeant did, and that’s what Mylan is doing,” Cummings said.
     Public Citizen sees Mylan’s move to offer a generic version as adding to the company’s de facto monopoly over the device.
     “There is reason to suspect that Mylan’s early introduction of a generic version of its own product is intended to grab market share and diminish the impact of market entry from actual competitors. In that way it may actually be anticompetitive,” the group said in a statement on Bresch’s testimony.
     Bresch acknowledged that Mylan’s share of the EpiPen market is 94 percent, but told the committee she believes the $600 price is fair. She again noted that Mylan has now lowered the cost by half with its generic EpiPen.
     “I was just struck by what humanitarians you people at Mylan really are,” Rep. Gerry Connolly, D-Virginia, said in response.
     Bresch testified one day after West Virginia Attorney General Patrick Morrisey announced a fraud probe of Mylan for how it rebates the state’s Medicaid program for the devices, and whether it violated the state’s antitrust laws for settling with a potential generic competitor.
     Bresch’s father Joe Manchin was West Virginia’s governor until 2010. He now serves as the state’s senior U.S. senator.
     Members of the Senate Finance Committee have also asked the inspector general of the U.S. Health and Human Services Department to examine EpiPen rebates to Medicaid.

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