Mylan CEO Heather Bresch is sworn in on Capitol Hill in Washington, Wednesday, Sept. 21, 2016, prior to testifying before the House Oversight Committee hearing on EpiPen price increases. AP
Heather Bresch, the CEO of Mylan — which makes the EpiPen — is testifying in front of the House Oversight and Government Reform Committee about the drug's price after an hour-long delay.
The price of the device, used in emergencies to treat severe allergic reactions[1], has increased more than 500% since Mylan acquired it in 2007. A two-pack of the EpiPen now has a list price of $608.
In her prepared testimony released ahead of the hearing, Bresch gave a background on Mylan as a company, and addressed some of the controversy around the rising price.
"Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full [list] price or more," Bresch said in her testimony. "We never intended this."
You can watch the whole thing live here.[2]
The congressmen are going to have a lot of questions for Bresch, who will be testifying alongside FDA deputy director Dr. Doug Throckmorton. In her defense, she says the company is implementing a number of programs to help patients pay for EpiPens.
"A simple but corrupt business model"
Rep. Jason Chaffetz, chairman of the committee kicked off the hearing, saying "we've got a lot of questions." Right off the bat, he brought up his interest in learning more about how much money Mylan makes off each EpiPen, how much Mylan executives are compensated, and questions about the lack of competition that exists that could have helped bring down the cost of the device.
"Parents don't have a choice," Chaffetz said.
Rep. Elijah Cummings with an EpiPen. House Oversight Committee via YouTube
Rep. Elijah Cummings followed Chaffetz, saying he was "not impressed" by Bresch's prepared testimony, bringing out an EpiPen. He accused the company of using a "simple but corrupt business model" to enrich themselves in the same manner as Martin Shkreli of Turing and executives at Valeant Pharmaceuticals.
He scoffed at Mylan's promise to increase patient assistance programs. "We've heard that one before," he said. "They never, ever lower their prices. I'm concerned this is a rope-a-dope strategy."
Cummings said he's not sure he wants an apology from Mylan as much as he wants solutions.
"It's time for Congress to act," said Cummings. He went back to Martin Shkreli's testimony earlier this year and said, "After the hearing you know what he called us, imbeciles. You know why he said that? Because he knew he would go back and do the same thing. So he took his punches, he rope-a-doped us. Even worse, he took the fifth. This is our moment, if we're going to do something in a bipartisan way. This is it."
"Ms. Bresch you're now recognized"
Bresch and Throckmorton gave their prepared statements, which you can read here. Bresch defended herself and her company. Throckmorton talked about the FDA's efforts to ramp up approval of generics.[3]
But that's not what anyone came here to see. It's all about the Q&A free-for-all.
Chaffetz asked a really simple question to start — you raised the price, what did you think was going to happen?
Bresch did a lot of gymnastics to explain how Mylan actually doesn't make that much money on the drug, but Chaffetz wasn't having it.
"This doesn't make any sense," he said. "This is why we don't believe you." He turned to Throckmorton.
"I want to know how many epinephrine products are in the queue right now?" Throckmorton couldn't answer. Chaffetz grew visibly frustrated and asked him to get him the question answered ASAP.
House Oversight Committee Chairman Rep. Jason Chaffetz, R-Utah holds up an EpiPen during his opening remarks during the committee's hearing on Capitol Hill in Washington, Wednesday, Sept. 21, 2016. AP/Pablo Martinez
"It's simply an illegal answer. I'm not allowed to disclose confidential commercial information in this setting," Throckmorton said. Chaffetz said he would confer with his colleagues on that one. Rep. John Mica followed up later on, and Throckmorton still couldn't give an answer.
Then Chaffetz turned to Bresch and asked about a USA Today article that reported that Bresch's mother used her influence as president of the National Association of State Boards of Education to help Mylan launch its EpiPen4schools program.
Bresch said the story was wrong and implied the company was being punished for giving schools free pens.
"I certainly thought it was a cheap shot to bring my mother into this," she said.
"How much profit did you make in 2015 on the sale of EpiPens?"
That was Congressman Cummings' question. He was trying to calculate how much Mylan spends on marketing compared to how much it makes and was walking through the public information available.
He found that information, and Bresch's answers, without. "You're telling me you don't know how much you spent on patient assistance programs and school related programs in 2015?"
Bresch said they spent maybe $105 per pack, especially because the company had to do so much work raising awareness about anaphylaxis.
He then asked Bresch how much she spent on R&D in 2015. He asked twice, the second time he asked v-e-r-y s-l-o-w-ly. Again, Bresch wasn't prepared with answers.
"You knew what this hearing was about. I'm asking questions that if you're the CEO I think that you would know," he said.
Later he added: "Would you agree that you made hundreds of millions of dollars on EpiPen in 2015 alone?"
Bresch said that EpiPen wasn't all of Mylan's $11 billion revenue.
Cummings cut her off and repeated the question. Bresch said yes. Then Cummings asked her to produce documents showing how much Mylan made on EpiPen. She had been asked to bring them to the hearing, and she did not.
Bresch did mention that Mylan was working on developing an EpiPen with a longer shelf life. Currently, the EpiPen expires after about 12 months, and Bresch said that the hope is to increase that to 24 months.
'Will you reverse the increase in price of EpiPens"
Rep. Eleanor Norton was the one to ask the question that everyone wants the answer to: will the price of the EpiPen actually come down? Bresch said that by introducing an authorized generic[4] was the most efficient way to make that happen, saying that if the branded product price went down, it wouldn't necessarily make its way to patients.
Norton then followed up on Bresch's compensation. "What have you done to earn this 671% price increase?"
To which Bresch first replied that her company has saved the US $180 billion. "Our products alone have saved the country $180 billion, she repeated a few times. But that wasn't good enough for Norton. She followed up, asking what she has done for this product, the EpiPen. Bresch then pointed to the EpiPens Mylan has provided to schools and public places.
How much Mylan makes on an EpiPen
Rep. Stephen Lynch pressed the question of how much Mylan makes off an EpiPen. Using posterboards, Bresch tried to illustrate the point that Mylan currently makes about $275 off each two-pack of EpiPen, with a profit of about $50. In 2014, when the list price was about $400, Bresch said the company got $235 out of it, and about $40 in profit off each two-pack. Bresch said that the $300 authorized generic would make less than the $50 per-pen profit that the company is making today.
Bresch later told Rep. Scott DesJarlais that she did not plan on increasing the price of the EpiPen in 2017.
DesJarlais then asked, "Do you think you were charging too much at $600?"
"We believe it was a fair price, and we've just now lowered that by half," Bresch said. But, DesJarlais asked, if she thought it was fair why lower at all? That has to do with more people paying closer to the list price, Bresch said, something that she said wasn't intended. A recent Kaiser Family Foundation survey found that deductibles, the amount of money a person with insurance is on the hook for, had gone up 63% in the past five years, 10 times the rate of inflation.[5]
EpiPen4Schools
Representative Tammy Ducksworth went off on Mylan's EpiPen4Schools program. To get the drug schools have to promise not to buy it from anyone else.
"That to me is an unfair monopoly," she said.
Bresch said that the schools don't have to buy them if they don't want to.
"That's right they don't have to buy them but your own mother is out there... passing out your guides for Mylan," Ducksworth said.
She added that some of the schools being lobbied by Bresch's mother, who was president of the National Association of State Boards of Education, had no clue about her family connection to the CEO.
Bresch said this simply wasn't true.
We'll be updating this post as the hearing continues.
References
- ^ severe allergic reactions (www.mayoclinic.org)
- ^ live here. (www.youtube.com)
- ^ you can read here. (oversight.house.gov)
- ^ authorized generic (www.businessinsider.com)
- ^ deductibles, the amount of money a person with insurance is on the hook for, had gone up 63% (www.businessinsider.com)
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