This weekly column offers opinions on the latest pharmaceutical industry news.
Editor’s note: This column was published just prior to the news that Mylan plans to sell a generic version of EpiPen.
Last week was a train wreck, wasn’t it?
The rage over continual price hikes for EpiPen finally exploded. Petitions accusing you of price gouging whizzed around the Internet. A cadre of Washington lawmakers repeatedly vilified you. And Wall Street is edgy that your company, Mylan Pharmaceuticals, is the new poster child for corporate greed.
Well, congratulations. You are the new Martin Shkreli.
Okay, you tried to deflate the anger with a two-pronged message: You talked up promises to make EpiPen more affordable with more generous copay cards and an expanded patient-assistance program. At the same time, you tried to paint the health insurance system as the real bad guy for making drugs unaffordable.
“No one is more frustrated than me,” you told CNBC. “The system is broken.”
But you’re playing a disingenuous game, and it’s just as transparent as the real reason for your sky-high pricing, which boosted the cost of EpiPen by nearly 550 percent — to $600 for a two-pack — over the past decade.
Defusing outrage is never easy, but you failed to do the one thing that could have made a difference — lower the price.
I don’t pretend to know the magic number that would have gotten parents and Congress off your back, but some kind of reduction — along with those other moves — would have been a smart gesture.
Let’s be honest, many discount cards simply never reach consumers or pharmacies, anyway. And not everyone has time or the wherewithal to fill out patient-assistance forms, either.
Moreover, we both know your gambit is nothing more than a way to shift costs around. Yes, some patients will be eligible to get EpiPen at a lower price with an upgraded discount card or expanded patient assistance. But other folks will continue to pay the current price.
What’s more, the moves come too late for parents who already stocked up for the new school year. You were reportedly told months ago that EpiPen pricing was an issue, but you chose to ignore the warning lights. That sort of indifference, especially when your compensation was $18 million last year, suggests you suffer from TES — tin ear syndrome.
Look, I know you have a responsibility to shareholders to maximize profits. I know you have financial targets to hit. Before the copay and assistance programs were expanded, EpiPen was expected to generate nearly $1.5 billion in sales this year, or about 13 percent of Mylan’s revenue, according to Sanford Bernstein analyst Ronny Gal.
That’s real money, and no chief executive wants to disappoint Wall Street. As you told CNBC, “I’m running a business.”
Indeed, you are. And repeatedly raising the price for EpiPen, especially after erstwhile competitors stumbled and you had the market almost entirely to yourself, was certainly one way to bump up revenue. But you either dismissed or badly calculated the hardship this would cause some families. This was a failing.
You may be surprised to hear that I do agree with you on some points. The system for prescription drug pricing is Byzantine and more transparency is needed, especially from pharmacy benefits managers and other payers who have great sway over what consumers pay for their medicines.
In this instance, however, Bernstein’s Gal believes that payers got mad as you kept boosting the cost for EpiPen. So they turned around and “raised the pain level on patients” by increasing their copays. If that’s true, you set this in motion, Heather, and can’t simply blame payers as if your repeated price hikes had nothing to do with it.
You told CNBC that “we have fought night and day to bring products into the marketplace at affordable prices.” Well, no, you didn’t.
As a result, the battle over EpiPen pricing is now the latest proxy for the wider national discussion over corporate profits and affordable health care.
It’s not too late, though, for you to undo some of the damage. Wells Fargo analyst David Maris suggested you should lower the price to where it was two or three years ago and offer to reimburse families who purchased EpiPen during that time for their out-of-pocket costs. That’s a good idea.
Yes, such moves will cost you. But goodwill also has value. And the cost of belatedly displaying empathy may be much less than any laws that emerge as a result of the increasing skirmishes over drug costs.
You may think you can ride out the storm, Heather, but what if you’re wrong?