Remember PharmaBro? Martin Shkreli, co-founder of Turing Pharmaceuticals and a hedge-fund broker, incurred the wrath of the media and political establishment when he arbitrarily hiked the price for a popular AIDS and malaria medication by 5000%. Congressional hearings pilloried Shkreli in absentia while Shkreli remained obstinately unrepentant. PharmaBro became the symbol of the evils of capitalism, and his arrest on unrelated fraud charges certainly helped cement that reputation.
If Shkreli was PharmaBro, then Heather Bresch qualifies as PharmaSis. The CEO of Mylan and daughter of Democratic Senator Joe Manchin has presided over a 400% price increase for the Epi-Pen, an epinephrine delivery device to prevent anaphylactic shock in those with severe allergies. Costing just $100 dollars in 2008 for a two-pack, the price has now skyrocketed to over $600, and lawmakers want to know why:
Congressional lawmakers are locking horns with generic drug giant Mylan MYL -5.41% over the company’s price hike for the EpiPen, a flagship device used to counteract deadly allergies whose price has exploded more than 400% since 2008. And at least one senator is calling for a Federal Trade Commission probe into the firm’s practices.
The EpiPen has a virtual lock on the U.S. market with about a 90% share in the space and few legitimate competitors to speak of. Its position in the food allergy business has given Mylan, a global pharmaceutical with about a $25 billion market cap, wide leeway to raise prices however it wants to—especially since customers have severely limited alternate options and must refill their two-pack injector supplies every year.
Assuming they have to use the injectors to stave off death, they might have to refill them more often than that. Mylan blames ObamaCare:
The company emphasized that many patients qualify for its patient access program, which significantly reduces the EpiPen’s price through coupons, and laid the blame for consumers’ inability to afford the device to the increasing popularity of high-deductible health plans.
“With the current changes in the healthcare insurance landscape, an increasing number of people and families have enrolled in high deductible health plans, and deductible amounts continue to rise,” wrote the company. “This current and ongoing shift has presented new challenges for consumers, and now they are bearing more of the cost. This new change to the industry is not an easy challenge to address, but we recognize the need and are committed to working with customers and payors to find solutions to meet the needs of the patients and families we serve.”
While it’s never a bad time to criticize ObamaCare, this explanation makes little sense. The shift to high deductibles certainly makes consumers responsible for more of the retail costs of such drugs, but that’s a reason why people might be paying most or all of the $100 — not a reason for the price to go from $100 to $600. The actual cost of the epinephrine is around $2 a dose, or $4 a pack, a cost which hasn’t increased much in the last eight years.
The Washington Post’s Ariana Eunjung Cha picks up an NBC News report that the costs may have gone up on EpiPen production, but that it’s likely just overhead — from the massive increase in salary Bresch gets paid:
“EpiPen prices aren’t the only thing to jump at Mylan,” NBC News reported. According to Securities and Exchange Commission filings, Bresch’s total compensation went from $2,453,456 to $18,931,068 from 2007 to 2015. That’s a striking 671 percent increase. That period coincides with the period when Mylan acquired the rights to EpiPens and steadily hiked the average wholesale price from about $55 to $320.
This isn’t Bresch’s first time at the scandal rodeo, either, as Cha notes:
The most scandalous occurred in 2008 shortly after she was named the company’s CEO and involved the MBA from West Virginia University that was listed on her resume. It turns out she never got it. An investigation by the school, prompted by a newspaper report, found that some administrators had added courses and grades to her transcript to make it look like she had completed the required coursework.
The incident made headlines all over the state because her father was governor at the time and the school’s president Mike Garrison was a longtime family friend and former business associate.
The controversy blew over quickly for Bresch and she remained CEO but Mike Garrison and a slew of other administrators had to resign from their positions following expressions of no confidence from students, faculty and alumni.
Bresch’s other brush with infamy came last year, when she took Mylan through a tax inversion to avoid paying the high US corporate tax rate. Her father has demanded Congressional action to penalize and disincentivize this practice, along with other Democrats, although the obvious step of reforming the corporate tax to make it competitive hasn’t occurred to most of them. Nevertheless, the move would normally put the same kind of target on Bresch that PharmaBro received.
So will Bresch become PharmaSis, with gallons of ink and untold gigabytes of pixels used to make her the poster person for What’s Wrong With America? I’d doubt it. Scandals involving Democrats and their relatives usually get treated by the media as an outlier rather than morality lessons. The media is on the story for now, but don’t expect to see Bresch targeted for ridicule and shaming in the way they did Shkreli, although to be fair, he seemed delighted to get the attention at the time.
is currently under indictment for securities fraud. He was heavily criticized for his “5,000 percent” price hike of the malaria and HIV medicine, Daraprim. He defended Mylan to CBS News on Tuesday.
“Mylan is the good guy. They had one product, and they finally started making a little bit of money and everyone is going crazy over it,” said Shkreli. “Like I said, it’s $300 a pack. $300. My iPhone is $700. … It’s $300 and 90 percent of Americans are insured.”
Maybe PharmaBro just wants some company.