The Mylan Follies Starring Chief Executive Posts Closing Notice
After 12 years at the helm that included a 400% price increase in life-saving Epi-Pens plus a severe shortage, Chief Executive Officer Heather Bresch is retiring from Mylan. The company is now merging with Pfizer’s off-patent drug business to form a new company yet to be named. Read the article below about the good and the bad performance by Mylan under Bresch’s leadership. We can only hope for improvement in the future.
The Mylan Follies Starring Chief Executive Posts Closing Notice
The personal views of an activist for anaphylaxis prevention
Op-Ed opinion article written by Jon Terry
August 12, 2019
This article is a summary of recent business activities involving Mylan Pharmaceuticals and Chief Executive Officer Heather Bresch. All the text material was obtained from news sources readily available on the World Wide Web. The opinions expressed by Jon Terry are solely his own and are not necessarily endorsed by the Allergy Advocacy Association.
After a long run, the final curtain has fallen for Mylan Pharmaceuticals Chief Executive Officer Heather Bresch. And she might be thinking “… not a minute too soon, thank heaven.” Rave reviews for her performance may be few and far between.
Pfizer, the world's largest drug maker, plans to divest its off-patent drug business and combine it with generic-drug maker Mylan if the merger receives the needed approvals from the federal government in Washington, DC.
The combined company, which will sell Mylan's Epi-Pen© and Pfizer's Viagra©, will receive a new name and be domiciled in the U.S. The deal will be structured in what's known as a reverse Morris trust, with Pfizer's Upjohn business divested and then combined with Mylan.
CEO Heather Bresch, 50, will then retire from Mylan. Last year she received $13.3 million in Mylan compensation and could receive $37.5 million after she leaves the company. Bresch was paid a modest $2 million in 2007, when Mylan first acquired the patent for Epi-Pen©.
Epinephrine is THE life-saving medication for individuals at risk for anaphylaxis. Food Allergies Research Education (FARE) has estimated that 32 million Americans have food allergies, including 5.6 million children under age 18. That's one in 13 children, or roughly two in every classroom. About 40 percent of children with food allergies are allergic to more than one food.
The record of Mylan and CEO Bresch does show some notable achievements. She and Mylan have played an important role improving public access to live-saving epinephrine for individuals with life-threatening allergies. Examples include:
- The Mylan EpiPen4Schools Program began in 2012. Over 5,000 schools in New York State have participated in the EpiPen4Schools Program and received over 50,000 free two packs of auto-injectors.
- In 2014 New York enacted the Nurse Authorized Stock Epinephrine Act (NASE). The law allows schools to stock and maintain undesignated epinephrine auto-injectors to use in an emergency.
- Mylan introduces a less expensive generic version of the Epi-Pen December 2016.
- In 2017 New York enacted the Emergency Allergy Treatment Act (EATA). This law expands access to allow public entities to stock and maintain undesignated epinephrine auto-injectors to use in an emergency.
For helping make all these items become a reality, Mylan certainly deserves a lot of credit. And Ms. Bresch played a “diva” sized role in producing a “boffo” corporate success story.
Other actions by Mylan and Bresch, however, tell an entirely different saga.
- Mylan CEO's Pay Rose Over 600 Percent as Epi-Pen Price Rose 400%.
Proxy filings show that from 2007 to 2015, Heather Bresch's total compensation went from $2,453,456 to $18,931,068, a 671 percent increase. During the same period, the company raised Epi-Pen prices, with the average wholesale price going from $56.64 to $317.82, a 461 percent increase, according to data provided by CONNECTURE Healthcare IT.
Mylan inherited the EpiPen technology with acquisition of Merck’s generic business in 2007. (They did not invest in expensive research and development) In 2008 and 2009, Mylan raised the price by 5 percent. At the end of 2009 it tried out a 19 percent hike. The years 2010-2013 saw a succession of 10 percent price hikes.
And from the fourth quarter of 2013 to the second quarter of 2016, Mylan steadily raised EpiPen prices 15 percent every other quarter. Mylan has increased the price of Epi-Pens by 25% year-over-year, while the drug industry standard of price increases hovered around 10%.
Mylan benefited from several factors including weak competitors, subsidies to pharmacy benefit managers, patent protections and high insurance deductibles for patients. Having a virtual monopoly has facilitated rapid price hikes. Mylan reached $1 billion in sales for the second time last year.
By 2016, it controlled 90 percent of the market for epinephrine auto-injector (EAI) devices. Although Mylan had increased Epi-Pen’s price some 400% by then, Ms. Bresch stated publicly that the company’s profit was only about $100 for a pack of two EAIs.
Stung by a public backlash, Mylan introduced a deeply discounted EpiPen generic and the Food and Drug Administration approved the first generic version of the device in 2018.
- Mylan agrees to pay $465 million in a settlement with federal regulators over its pricing practices.
The settlement in 2016 specifically refers to the question of how Epi-Pen© was classified with the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs the Medicaid insurance program for the poor. CMS said it advised Mylan on multiple occasions that the drug maker had incorrectly classified EpiPen as a generic treatment for the Medicaid Drug Rebate program, resulting in the company paying lower rebates to state health programs. Furthermore, the company has received "the worst possible governance score" consistently from the Institutional Shareholder Services Inc. (ISS).
“The terms of the settlement do not provide for any finding of wrongdoing on the part of Mylan Inc. or any of its affiliated entities or personnel,” the Canonsburg, Pa.-based company said.
- Epi-Pens© have been in short supply world-wide since November 2017.
Almost two years on from the first supply interruption, this crisis remains unresolved and the exact causes remain a mystery. Steps taken by U.S. regulators in recent weeks suggest that they expect the deficit of Epi-Pen brand injectors to linger, meaning more headaches likely await parents of students returning to school in September. In June, the Food and Drug Administration said expiration dates for some devices would be extended by four months.
Mylan’s subsidiary Meridian Medical Technologies has reportedly had a long manufacturing shut-down for maintenance and upgrades that made the problem worse and prevented supply reserves from building at the rate of projected demand. Mylan says it is speeding up shipments when it gets them from Meridian.
Additionally, Meridian voluntarily recalled Epi-Pens and Epi-Pen Jrs. (EAIs for children) in March 2017 for defective parts. Then in September 2017, the FDA sent Meridian a warning letter, saying it found the company had significant violations of current good manufacturing practices.
The Food and Drug Administration states that while there is a shortage, Epi-Pens© are still being released onto the market. However, the agency cannot require that a manufacturer make or distribute a product. The FDA’s shortage announcement will remain on the FDA website until supply is meeting demand.
Mylan has made it clear there is no timetable for the shortage to end. Shortages are expected to result in tighter supplies. This could continue through the summer as peak refill season comes as parents prepare for a new school year.
Although Mylan manufactures and sells the actual Epi-Pen device, Pfizer manufactures the drug the device administers. Although the financial deal between the two companies isn’t completely clear, Pfizer has shown increased revenues related to Epi-Pens for the last few years.
This year brand-name Epi-Pen prescriptions have swooned. After peaking at more than 580,000 in August 2016, there were just 27,000 in May 2019, according to data compiled by Bloomberg Intelligence.
- Mylan accused of collusion for price fixing with other pharma companies.
This spring forty-four states have joined together in a lawsuit against Mylan and other pharmaceutical companies, alleging that they colluded to push up prices of brand name and generic drugs. These states filed suits against Mylan, Teva Pharmaceuticals Industries and four smaller generic companies.
In addition to more than 100 other drugs, these companies are responsible for the manufacture and marketing of EAIs available in the US including Mylan’s brand name Epi-Pen, the EpiPen Jr. and their authorized generics. Teva’s newly introduced generic EAI device of the Epi-Pen, and the Adrenaclick generic manufactured by Pfizer’s Meridian unit are also affected.
In a letter to U.S. Attorney General William Barr and assistant attorney general for antitrust Makan Delrahim, Sen. Bernie Sanders and Rep. Elijah Cummings urged the Department of Justice (DOJ) to prioritize a generic drug price-fixing investigation and “pursue enforcement if warranted.”
If the states' allegations are true, “civil enforcement will not be sufficient to protect consumers or businesses that compete fairly, maintain the integrity of our economic system, or deter anticompetitive conduct in the future,” Sen. Sanders and Rep. Cummings wrote. If pending lawsuits succeed I think Mylan may follow the usual American corporate liability script: pay a huge fine but admit no wrong-doing.
While Heather Bresch is now exiting off-stage from Mylan, I doubt she will be summoned for any curtain calls. Many consumers may be reluctant to give her a standing ovation, too. The shareholders of Mylan stocks can’t be very eager for any encores, either. But if the collusion lawsuit filed by the states (including New York) proceeds through the judicial system, the Mylan Follies may get a revival. And the news media might be writing a very different sort of performance review for Heather Bresch.
“Praise to the undeserving is severe satire!”
— Benjamin Franklin
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