Mylan’s CEO Tells Congress the EpiPen Price Hike Was ‘Fair’

September 21, 2016, 10:25 PM UTC
Mylan Inc. Chief Executive Officer Heather Bresch Interview
Heather Bresch, chief executive officer of Mylan Inc., speaks during an interview in New York, U.S., on Thursday, May 1, 2014. Bresch discussed the U.S. corporate tax code and the impact of consolidation in the pharmaceutical industry on generic drugmakers like Mylan. Photographer: Chris Goodney/Bloomberg via Getty Images
Photo by Chris Goodney/Bloomberg/Bloomberg—Getty Images

Mylan CEO Heather Bresch trekked to the House of Representatives on Wednesday to testify about her company’s controversial price hike for the EpiPen. But Bresch’s testimony wasn’t so much a mea culpa as it was an exegesis of the biopharmaceutical industry’s complicated economics—and a defense of pricing practices Bresch still believes were fair.

Mylan (MYL) upped its patient discounts for the life-saving, allergy-fighting device following a deluge of public and political fury and a historic plunge in its market value. The firm has also promised to introduce a lower-cost “authorized generic” alternative to the market, which is the same drug and device minus the branded EpiPen name.

The House Committee on Oversight and Government Reform’s hearing featured a string of critics who rebuked Bresch for raising the price of a product with life-or-death implications, especially one that needs to be replaced almost every year and in a therapeutic space where Mylan has more than 90% market share. Lawmakers also took aim at the EpiPen’s significance to Mylan’s business and the extravagant growth of Bresch and other top company executives’ compensation. The product “generates 10% of their revenue,” noted committee chair Rep. Jason Chaffetz, and Mylan had “five executives in five years who earned nearly $300 million in compensation.”

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Bresch admitted that the EpiPen, which her company acquired in 2007, had become its first $1 billion device. She also claimed her $18 million pay last year was “in the middle” of compensation packages in the biopharma industry. A Wall Street Journal analysis from last week found that Mylan actually ranks second among U.S. drug makers when it comes to executive compensation.

However, Bresch attempted to defend the price increase itself. “We believe it was a fair price, and we now just lowered it by half,” she said, referring to the authorized generic.

The top line cost of an EpiPen two-pack ballooned from about $100 to $608 over the past decade. But Bresch repeatedly emphasized that Mylan realizes just about $274 out of that wholesale acquisition cost, and only has a net profit of about $50 per EpiPen after taking discounts, rebates, patient assistance programs and outreach, and other expenses into account. Furthermore, Bresch said increasing EpiPen access through school programs provided a social good that warranted a fair return.


The blame, Bresch argued (and not for the first time), largely lay with the shifting health insurance landscape. Patients are “paying higher out of pocket costs,” she said. “The system wasn’t intended to have people pay the full wholesale acquisition cost, and that’s what’s happening at an alarming rate.” And simply lowering that wholesale acquisition cost wouldn’t assure that the savings would be passed on to consumers by insurers, drug benefit managers, and other players in the convoluted American health care industry.

Bresch asserted that Mylan made its pricing changes after learning of the challenges that some consumers, especially those with high insurance deductibles, were having acquiring the product. The hearing had still not adjourned as of 6 p.m. Eastern time, and was scheduled to reconvene at 6:30.

Outside the House, several states have launched investigations into the company’s contracting practices with school districts and public health programs for potential fraud.

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