Mylan to Reduce Cost of EpiPen as Pressure Mounts; Not All Patients to Benefit

Mylan NV (Amsterdam) on Thursday took some steps to alleviate patients’ cost burden for its $600 EpiPen emergency allergy shots following pressure from politicians including presidential candidate Hillary Clinton, who called past price increases “outrageous” on Wednesday.

After being blasted from nearly every quarter, political, patient advocacy, and naturally, the media, Mylan moved to expand assistance programs that help patients with high out-of-pocket expenses–but didn’t go as far as cutting the treatment’s list price. Mylan has been under incessant fire for increasing the price to more than $600 for a two-pack, from $57 for a single pen in 2007.

Mylan expands assistance programs to lower cost of EpiPen--but didn’t cut the list price Click To Tweet

CEO Heather Bresch, the daughter of Democratic Senator Joe Manchin of West Virginia, was quick to react to the mounting political scrutiny, days after lawmakers started to express outrage about EpiPen’s 400% price hike and called for investigations. The criticisms, surpassed by Democratic nominee Clinton’s statement on Wednesday, had sent the shares down 11% in just three days, according to Bloomberg News.

Mylan will expand existing programs to help people with high out-of-pocket expenses, according to a statement Thursday. By using a savings card, patients will get as much as $300 toward their EpiPen 2-Pak, which should effectively reduce costs by 50% for those who were previously paying the full list price.

The drugmaker is also doubling eligibility for its patient assistance program so a family of four that makes up to $97,200 would not have to pay for the EpiPen.

“We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter,” Mylan’s Bresch said in a statement. “Price is only one part of the problem that we are addressing with today’s actions. All involved must also take steps to help meaningfully address the U.S. healthcare crisis.”

The EpiPen price increases drew particular attention in Washington because Bresch had successfully pushed legislation to encourage use of the EpiPen in schools nationwide. Mylan spent about $4 million in 2012 and 2013 on lobbying for access to EpiPens generally and for legislation, including the 2013 School Access to Emergency Epinephrine Act, according to lobbying disclosure forms filed with the Office of the Clerk for the House of Representatives.

Mylan was the latest drugmaker to provoke congressional ire for steep price hikes. Martin Shkreli and executives from the company he used to lead, Turing Pharmaceuticals AG (Zug CHE), and executives from Valeant Pharmaceuticals International Inc. (Laval Quebec) were called before congressional committees this year to explain why they bought the rights to older drugs that lacked competition and raised the prices.

Members of Congress who began demanding an explanation for the EpiPen price increases in the past days included Senate Judiciary Chairman Chuck Grassley of Iowa. Sen. Amy Klobuchar, a Minnesota Democrat, on Monday asked the Federal Trade Commission to look into whether Mylan had done anything to deny competitors access to the market in order to keep raising prices, pointing to a competitor product, Adrenaclick, that she said is less expensive but has only minimal sales.

On Wednesday, the Senate Special Committee on Aging asked Bresch to turn over information used by Mylan’s board of directors related to the price increases. The panel wrote a letter to Bresch asking her to “provide a briefing to Committee staff on the pricing of EpiPen at a mutually convenient time no later than two weeks from today.” The letter was signed by the committee’s chairman, Republican Sen. Susan Collins of Maine, and its top Democrat, Sen. Claire McCaskill of Missouri.

Steve’s Take: The biotech sector is reeling the past few days from the uproar about Mylan’s EpiPen pricing moves, something that Hillary Clinton termed “outrageous.”

Apparently following Valeant Pharmaceutical’s catastrophic pricing strategy, leading to a steady, sickening freefall from investors’ grace–its stock has plunged 88% since reaching a high of $252.53 on July 31, 2015–Mylan is clearly attempting to pull off a quick reversal-of-fortune campaign both with a new, but porous, pricing plan and some high-minded, but transparent, PR stints by its CEO, and former top lobbyist, Heather Bresch.

Although the company said that the savings card would halve the cost of the drug to commercially insured patients who pay full price, outside experts said the overall impact will likely be small and that it did not amount to a solution to the broader problem.

Such savings cards are a classic public relations move by the pharmaceutical industry, said Harvard Medical School professor Aaron Kesselheim, and it will only be used by a fraction of the people who need the drug. For example, such savings cards are illegal in government health programs such as Medicaid.

“These [savings cards] don’t actually do anything about the price itself, because the high price is still being paid by the insurer, which then ends up being reflected in increasing premiums,” Kesselheim said., according to the Washington Post. “This is not a public health solution.”

And the savings card cannot be used by people without insurance or by people who are in government-funded health programs. The cards are not allowed in federal healthcare programs because they are considered a kickback: Companies use the discounts to incentivize patients to buy a product while leaving the federal government on the hook for the remaining cost of the drug.

“People just don’t want to go through the hassle,” said Gerard Anderson, a professor at health policy and management at the Johns Hopkins Bloomberg School of Public Health. ”The problem is it doesn’t apply to nearly all of us. It only applies to a small subset of people that are willing to take out the coupon and use it. You should just make the drug, in the case of the EpiPen, a lot cheaper.”

In a research note, Umer Raffat, a senior analyst at Evercore, made a rough estimate of how the savings card program might affect the company’s revenue from the sales of the drug: a maximum of $100 million, or less than 10% of the company’s revenue from the drug. According to IMS Health, sales for the EpiPen 2-Pak were $1.2 billion last year.

As pointed out above, in some striking ways, what is playing out with EpiPen is simply a repeat of other drug price hikes that have earned attention and outrage. Before EpiPen, there was Daraprim, the drug where the price was hiked 5,000% by Turing Pharmaceuticals’ former CEO, Martin Shkreli, who was nicknamed “pharma bro” and widely maligned.Before that there was colchicine, a gout medication that underwent a 5,000% price increase.

“It will be something else later, until we really take a good hard look at the market and at the pharmaceutical market and try to fashion systemic responses,” Kesselheim said. “We’re just going to be continuing to chase our tails, around these individual instances… . We can continue to play Whac-A-Mole, or we can try and make real changes to enhance the market’s ability to address the issues.”

Mylan’s abrupt feint on Thursday was quickly criticized by politicians.

“Mylan should not offer after-the-fact discounts only for a select few–it should reverse its massive price increases across the board immediately,” Rep. Elijah E. Cummings (D-MD) said in a statement, adding that he had requested a hearing by the House Committee on Oversight and Government Reform on the issue in September.

Adding some little-known perspective to the curious, meteoric history of EpiPen, David Ferguson’s stinging, right-on piece for Raw Story points out that the device was initially conceived and developed for the U.S. Department of Defense by researcher Sheldon Kaplan.

The studies and testing were all underwritten by U.S. taxpayer revenues. The device was originally created as an antidote to nerve gas, but it was released to the public as a rapid remedy to anaphylactic shock. Tom Cahill at U.S. Uncut wrote,

“However, in 2007, Mylan Pharmaceuticals acquired the rights to the EpiPen and immediately started raising the price. After Heather Bresch, its former top lobbyist, successfully pushed for legislation in Congress that required all public schools to carry EpiPens for children with food allergies, its price hikes became more frequent and more severe, rising by at least 10% every other quarter from the fourth quarter of 2013 to the second quarter of 2016.”

Over the course of her tenure at the company, Bresch raised her own salary 617% and conducted an offshore reincorporation of Mylan, Inc. under the Netherlands’ looser corporate laws, but maintained the company’s headquarters and operations in the U.S. This practice is known as “inversion” and has become a popular way for U.S. companies to lower their effective tax rate while continuing to enjoy all the market rights and privileges of companies conducting all of their business domestically.

Bresch–who was one of Fortune magazine’s most powerful women of 2015–gave a shaky interview to CNBC on Thursday, attempting to pass off her $16 million salary hike and the 450% increase in EpiPen prices as routine business practices in the pharmaceutical industry.

Interviewer Brian Kelly pointed out that Bresch apparently used her power as a lobbyist-turned-CEO and her influence with heads of state to legislate a market for her company’s product, then inflated the price. But she countered, “I’m legislating in the access to EpiPens!”

Steve's Take: Mylan CEO Heather Bresch's EpiPen excuses sound hollow and worn-out Click To Tweet

Sorry, but that strikes me as just as hollow as the worn-out protestations of Turing’s Martin Shkreli and Valeant’s J. Michael Pearson. I expected more from Mrs. Bresch, perhaps because she’s smart and appears sincere; her words righteous.

But, then there’s her lobbying career… . It will be interesting to see whether Mylan and Mrs. Bresch prove more adept at avoiding the same disintegration befalling these other sad players. I’m hopeful, but not quite ready to place the bet.