The House Committee on Oversight and Government Reform has scheduled a hearing for Wednesday on the significant increase in the price for EpiPens, the life-saving dispenser and medicine for people with severe allergies. Mylan CEO Heather Bresch is among those scheduled to testify, and it could get ugly.
The list price for a two-pack of EpiPens is $608, twice as high as it was just two years ago and five to six times higher than it was in 2007 when Mylan acquired the product, although neither the technology nor the medicine has changed significantly.
“There is justified outrage from families and schools across the country that struggle to afford the high cost of EpiPens,” said Committee Chairman Jason Chaffetz (R-UT) and ranking member Elijah Cummings (D-MD) in a joint statement. “We look forward to receiving answers next week from Mylan about its dramatic price hike for this life-saving medication.”
Bresch is going to have to do better than she did during an extended interview on CNBC just after the story broke where she said the price hikes were attributable to a broken health care delivery system. “No one is more frustrated than me,” she said.
That’s going to be a tough sell on Capitol Hill, especially after Wednesday’s Wall Street Journal story revealing that Mylan’s top five executives, including Bresch, were paid nearly $300 million over the last five years.
Those compensation levels were the second highest among all U.S. drug and biotech firms even though Mylan is not among the biggest players in the drug industry. “It is No. 11 by revenue and No. 16 by market capitalization,” reports the Journal.
The paper also points out that Mylan’s three top executives—Bresch, Chairman Robert Coury and President Rajiv Malik—“ranked among the 20 highest-paid in the drug industry over the last five years, a distinction unmatched by any other company.”
The EpiPen accounted for nearly one-fourth of the company’s income last year and 12 percent of its revenue. “Some analysts have suggested that Mylan raised prices on the EpiPen in part due to incentives approved by the company’s board, including a 2014 long-term incentive plan that rewards executives if they hit ambitious growth targets averaging 16 percent annually,” the Journal reported.
Bresch can argue that the drug delivery system is broken, and she may be right, but that failure has allowed top Mylan execs to be become incredibly wealthy, beyond many of their industry equals, while adding to the financial burden of average Americans who must always have EpiPens available.
A free market purist can argue that it is reasonable to charge for a product or service whatever the market will bear, but wise businessmen and women understand the moral hazard that accompanies taking advantage of a captive market. A consumer backlash, such as what is now being directed at Mylan, is likely to follow.