The Preppie and the Epi
Much of today’s news is about optics – what looks good and what looks bad, how it is spun and how the public sees it. The expanding revelations over the price run-up of EpiPens are candy land. Here is a mid-sized generic drug company, Mylan, suddenly finding itself in possession of a golden egg and hell bent to make more eggs while selling them at inflated prices into a monopoly market with a little push from the President. What could be prettier?
Mylan bought the rights to the emergency epinephrine-delivering syringe used to counteract anaphalactic shock a few years ago at about the same time that a couple of minor players got out of the market. Sort of strange, like, “Nah, those transistors will never amount to anything, lets stick with vacuum tubes.” Well, it’s a roughly $10-billion annual market now and Mylan owns all of it. (WSJ $2.56-billion quarterly revenue 8/25/16) So, the cost to the consumer for that $3.00 dose of epinephrine (adrenaline) to save a life has risen from $99 dollars for a two-pack “EpiPen” in 2008 to over $600 dollars today. Nice profit profile! Legal? Of course, this is America and the free (well, almost free) market system is alive and well.
But how does it look to those in the middle? For families with allergic kids who MUST have a fresh EpiPen (one year shelf life) available at all times in case somebody at school accidentally slips them a peanut or a pistachio resulting in a life-threatening allergic reaction, the more than 500% price increase in eight years is an outrage. The youngish president of the company, 47-year old Heather Bresch apparently is not allergic to profits. And she has some powerful friends. Her salary and benefits have risen from $2.5-million to over $19-million in eight years. Nice work if you can get it. In a New York Times story and many subsequent articles elsewhere, Ms. Bresch was quick to defend the price increases, blaming Obama Care and other exigencies, while tossing a bone to an anxious public by offering rebates, discounts, and pressuring insurance companies to swallow the increases.
So, that’s the gist of the story. Almost. CBS news was first with the bare bones facts more than ten days ago. They stayed on it and reported more information each day last week. However, what intrigued me on Tuesday of last week was the fact that NBC News finally picked up the story and ran a fairly complete account. Except for one thing: Heather Bresch, is the daughter of West Virginia Senator Joe Manchin. She was identified that way, “the daughter of a senator.” But, they forgot to say, “a democrat senator.” And, in this particular story, that fact makes a difference. The reporter had several opportunities to include in his script that Manchin is a Democrat, and as such, played a part in passing Obama Care, and other recent legislation that has a bearing on this story. Like what? Well, how about corporate taxes? Democrats generally love taxes, the higher the better, Republicans, not so much. The fact that Mylan moved its corporate headquarters to the Netherlands in 2014 in what is called an “inversion” is a slick way of not saying the company moved to avoid a boatload of U.S. taxes. It also helped that President Obama recommended last year that every school in America stock an emergency supply of EpiPens, just in case. Talk about shooting a little more adrenaline into Mylan’s bottom line.
Optics. Mylan raises the cost of EpiPens several hundred percent while increasing Heather Bresch’s salary by multi-millions and then scoots overseas to avoid taxes while President Obama winks and says, “You go, girl!”
It’s no wonder a lot of Americans are breaking out in hives these days. We’re all getting pricked and it’s not always by an EpiPen.