Public Employee Press


EPIPEN SCANDAL SHOWS PHARMACEUTICALS' SQUEEZE ON DRUG PLANS
Big Pharma: world's greatest price gouger

BY GREGORY N. HEIRES

THE CONTROVERSIAL EpiPen price hike is yet another example of how high-profit pharmaceutical companies squeeze consumers and employer and union prescription drug plans.

Drug maker Mylan came under fire this summer after NBC reported that the company jacked up the price of the drug in May. A pack of two EpiPens now costs about $600, compared with $100 in 2008.

Millions of people carry the portable auto-injector devices, which are used to treat life-threatening allergic reactions. Because of the price hike, many families are now turning to cheaper manual syringes for treatment.

New York City employees and non-Medicare retirees obtain EpiPens through the city's PICA program for cancer and injectable drugs, so the DC 37 Health & Security Plan isn't directly affected financially by the price hike.

But, if city funding for EpiPens were to dry up, the DC 37 Health & Security Plan would have to pick up the coverage.

The EpiPen scandal is a concern of municipal union drug plans and the city because they all share the same pot of money used to provide drug coverage.

"In a sense, we are all in this together," DC 37 Executive Director Henry Garrido said. "Our members and retirees, the city and the union's prescription drug plan are being walloped by the relentless price increases imposed by pharmaceutical companies. This has left us with a never-ending search for ways to preserve and protect our very popular and important drug benefit."

"The EpiPen controversy gives us a window into the way the drug industry works and helps explain how these greedy pharmaceutical companies essentially can charge whatever they want for their products," said Willie Chang, administrator of the DC 37 Health & Security Plan, which has been forced to draw millions of dollars from its reserve to fund the prescription drug benefit.

"This situation isn't sustainable," Chang said. "Without government regulation, we can only expect that this sorry state will continue."

As Chang notes, Mylan reflects the business practices of the pharmaceutical industry. The companies thrive in their own business world, where they are free of the government regulation and price controls common in other developed countries.

American pharmaceuticals aggressively market their products through advertising and lobbying. They avoid taxes by depositing profits in overseas tax havens and setting up shop outside the United States.

Big Pharma's executives enjoy big compensation packages that encourage them to boost their own earnings by focusing more on the bottom line than on the needs of consumers.

Mylan's operations are run out of its offices in suburban Pittsburgh. But in 2015, the company registered as Mylan N.V. in the Netherlands in order to pay less taxes.

The steady price hikes of EpiPen coincided with the corporate board's adoption of an incentive program for its 100 managers in early 2014 that encourages short-term profits over long-term value. The salary of Mylan CEO Heather Bresch, who is the daughter of U.S. Sen. Joe Manchin of West Virginia, skyrocketed from $9 million in 2013 to $18.9 million in 2015.

When Mylan purchased EpiPen from Merck KGaA in 2007, EpiPen's wholesale price was $94 and the device brought in $200 million revenue. Today, the two-pack EpiPen accounts for more than $1 billion of Mylan's revenue.

Mylan has turned the EpiPen into a billion dollar bonanza through clever marketing and lobbying. The company has boosted its spending on EpiPen television ads from $4.8 million in 2011 to $35.2 million in 2014, according to the research group Nielsen.

Mylan has targeted schools and emergency medical services for its EpiPen sales. It distributed free EpiPens to more than 59,000 schools to generate demand for its near-monopoly product. In 2013, it successfully lobbied for a federal law that encourages schools to keep emergency supplies of epinephrine injectors, according to the Los Angeles Times.

It has an agreement with Walt Disney to supply its cruise ships and theme parks with EpiPens.

The automatic injector devices are used to inject epinephrine in the thigh. The drug has been around for a century, and it is very cheap, less than $1 per milliliter, according to The New York Times. Virtually all of Mylan's profit from the EpiPen comes from the device - on which it holds a patent - not the medication.

The EpiPen imbroglio has led to calls for a Congressional investigation and put the drug industry under greater scrutiny.

At least ten states are now training EMS workers to use syringes rather than the automatic injector device to administer the medicine. Americans for Tax Fairness has included Mylan in its campaign against price gouging and tax dodging in the pharmaceutical industry. In April, the Obama administration blocked Pfizer's attempt to avoid paying $35 billion by shifting its corporate address to Ireland.