Behind the grandstanding, Congress may have taken a key step to clarifying drug prices

This weekly column offers opinions on the latest pharmaceutical industry news.

Heather Bresch was beaten up by Congress last week — and rightfully so.

The Mylan Pharmaceuticals chief executive testified before a House committee investigating EpiPen price hikes, and her performance was largely dreadful. Although soft-spoken and respectful, she often dodged questions, and too many of the answers she did give were vague or hard to follow.

Nonetheless, the hearing may yet prove beneficial.

Families across the country are furious that Mylan has boosted the price more than 500 percent over the past decade so that an EpiPen two-pack now costs $608. But Bresch refused to apologize. Instead, she repeatedly blamed industry middlemen for much of the problem.

Bresch also tried to portray herself as misunderstood, but no one bought that line. “You could make this thing go away by being honest and candid, but I don’t think you are,” Representative Jason Chaffetz (R-Utah), who chairs the House Oversight and Government Reform committee, chided her as the hearing ended.

Sadly, the lawmakers contributed to this dismal showing. None of the committee members seemed prepared to press Bresch on the fine points of her pricing strategies. And that was a missed opportunity.

“She made some claims, but didn’t really explain them,” said Pratap Khedkar, a managing principal at ZS Associates, a consulting firm to drug makers. “But no one followed up, because everybody wants a show with grandstanding and finger pointing. So we didn’t come away with much insight.”

So how could all that posturing actually be helpful?

I say this because the committee reiterated its demand that Mylan fork over documents that could potentially shed some light on the Byzantine pharmaceutical pricing system, not just for EpiPen, but for all types of drugs. The documents could include contracts with pharmacy benefits managers and distributors, among others.

If Mylan fully complies, this could get interesting. Pharmacy benefits managers fill a crucial role by negotiating with drug makers on behalf of health plans, unions, and employers to get the best prices. And they maintain lists, called formularies, which determine insurance coverage for medicines.

But there is a complicated game that takes place behind the scenes between drug makers and benefits managers over rebates. And this is where things get tricky.

To get the best placement on formularies, drug makers offer rebates to benefits managers. And when there’s competition among drug makers, they often offer bigger rebates, even though that eats into their profits.

Yet Mylan has had little competition for EpiPen. A rival product was recalled a year ago and a generic was rejected several months ago by regulators. Mylan has a 94 percent market share. Yet Bresch maintains that Mylan offers rebates so high, they crimp revenue — while simultaneously acknowledging that EpiPen is wildly profitable. That’s curious. Mylan’s contracts could provide some answers.

Another thing I’d like to see documented: The extent to which benefits managers pass on those rebates to their clients — and, in turn, how much is passed along to consumers in the form of lower prices at the pharmacy counter.

What we do know is that insurers are pushing a greater share of drug costs onto patients. This helps explain why many parents are squawking over EpiPen pricing — some are paying all or most of the $608 cost.

It’s hard to believe that Bresch was unaware of these trends, especially when patient advocacy groups with close ties to Mylan reportedly warned her earlier this year that parents were getting upset.

The Mylan documents may not have all the answers to these conundrums, but the lack of clarity surrounding EpiPen pricing is a good reason to take a look.

Of course, Mylan may play hardball and claim that it can’t release documents because they’re  confidential. Or maybe Mylan will redact all the juicy parts. A Mylan spokeswoman would only say that the company will “continue to cooperate with the committee.”

Let’s hope that cooperation translates into substantive disclosure.

Otherwise, the American public is likely to be stuck in a cycle of sensational hearings about drug pricing that produce lots of heat, but little light.