EpiPen boss blames ‘the system’ for huge pharma price increase


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It’s true that business media speak a different language from earthlings, but we’re still confused — and a little impressed — with Mylan’s chief executive officer Heather Bresch’s response to her company’s shakedown of people who need to buy EpiPen’s to be used during allergic emergencies.

Bresch’s firm has raised the price of the pens, as detailed in this space yesterday, although the company tried to dampen the profiteering outrage by increasing “discounts” on the medication.

Give Bresch credit for facing the music during her appearance on CNBC this morning. And give her credit for putting a bunch of words together to make it sound like…. something.

“We’re running a business,” she said. It was a good start to an explanation.

“And we’re going to continue to meet the supply and demand of what’s out there. I can tell you, I don’t think anyone should stay status quo or business as usual. This is a dynamic, dynamic industry and our system needs to be dynamic to evolve and transform the health care system,” she said.

What?

She said she was ready to work with Congress and not to have a PR soundbyte, which, for the record, is pretty much what she delivered.

Bresch said as a mother “I can assure you the last thing we would ever want is no one to have an EpiPen.” She said the company took immediate action to lower the price for some people.

That assertion, of course, is wrong. The company took no action — immediate or otherwise — until social media started a campaign to call attention to the firm’s run-up in price for a product that costs about $1 to make.

It was, as the New York Times editorial today put it accurately, “a ripoff.”

High-level scrutiny from Ms. Klobuchar and others could conceivably shame Mylan into lowering prices. But if Congress were concerned about escalating drug prices, it would undertake a much broader look at the industry and possible legislative remedies. Mylan is hardly alone. Prescription drug prices jumped 38 percent in the last 10 years, compared to an 18 percent increase in general inflation, according to the Bureau of Labor Statistics.

One reason for those increases is that Congress doesn’t let Medicare negotiate prescription drug prices. Many medicines cost significantly less in other developed countries, like Canada and Britain, which do negotiate with drug makers. Pharmaceutical companies have also squelched competition by, in effect, paying one another to delay the introduction of generic drugs. The Supreme Court ruled in 2013 that regulators could challenge such agreements on antitrust grounds, but did not declare those deals illegal. Congress should pass legislation that would make pay-for-delay agreements illegal.

The system is gamed thanks to a cozy relationship between big pharma and big Congress.

“Is Congress too close to the biotech industry in this country?” the CNBC host asked the CEO.

That’s a pretty easy question to answer. It’s either “yes” or “no.” But for a second, you could almost hear the internal jukebox search for the non-answer answer. And it found it.

“I think we need leadership in this country to make this tough change. This isn’t easy; if it was easy, we wouldn’t be sitting here. It’s a complicated system and to get in and understand it takes time, which, as you know, many people don’t have the time to take the time,” she said. “Our leaders, our Congress, need to get around the table and fix this.”

Bresch, saying the situation is complicated, tried to provide the math that explains how the price of a package of EpiPens zooms to $600.

“The list price is $600,” she said. “What Mylan takes from that, our net sale, is $274. So $137 per pen. And against that — manufacturing the product, distributing the product, enhancing the product — is investing. When we took over the product, eight years ago, there was very, very little awareness. We have doubled the lives of patients carrying an EpiPen. We have passed legislation in 48 states to allow undesignated EpiPens to be in schools, and what that means is there have been unfortunate, tragic events like a seven year old in Virginia who died on the schoolyard because the school had EpiPens, but not in her name. So we fought, that takes time and resources to get out there and make sure people are aware of the issues and make sure people understand that EpiPens need to be everywhere.”

She’s referring to the cost of lobbying states like Minnesota, which has a law requiring a written health plan for students who’ve been prescribed an EpiPen. That’s a law that originated 12 years ago and was updated in 2013.

To the extent that explains a huge mark-up, Bresch’s argument is compelling, if not downright persuasive.

“But you can understand the outrage,” said the interviewer.

“No one is more frustrated than me,” Bresch responded.

“You’re the one raising the price, how can you be frustrated?” he said.

“My frustration is the list price is $608,” she said. “There is a system. I laid out that there are four or five hands that the product touches, and companies that it goes through before it ever gets to that patient at the counter. Everyone should be frustrated. I am hoping that this is an inflection point for this country. Our health care is in a crisis. It’s no different than the mortgage financial crisis back in 2007. This bubble is going to burst.”

Only in health care, she said, can you walk up to a counter and be paying up to $2,000 today for what you paid $25 for yesterday.

“It was never intended at the counter that the patient should be paying list price,” she said.

She said parents need to get “engaged” in their health care.

Which means what, exactly? He didn’t ask.

It’s a typical complaint — consumers of health care don’t understand the cost of health care. But it’s also an odd assertion, coming as it does in a TV interview taking place only because consumers “engaged” on the issue of the cost of their health care.

Why not just roll back the price? “If we’d done that, I couldn’t insure that everyone who needs an EpiPen gets an EpiPen,” she said.

“We’re cutting the price in half so we’re effectively letting the patient take control of that.”

Again: What?

The CNBC host continued to try to square an out-of-control price of Bresch’s product with Bresch’s rapidly increasing salary, now up to $19 million.

“I understand better than anyone that facts are inconvenient to headlines,” she responded.

By the time the 18-minute was over, we all needed a shot of something.