This isn’t the first time Mylan chief executive Heather Bresch has been under fire.
Bresch, who started out in a low-level position in quality control at one of the company’s factories, is the first female head of a large pharmaceutical company. She made a name for herself by turning the EpiPen — once an obscure injection device for allergy sufferers that she calls her “baby” — into a blockbuster billion-dollar drug. But the 47-year-old has found herself in the hot seat in recent weeks as consumers and lawmakers have expressed outrage over the rising cost of the drug and have called for investigations into the company’s pricing practices.
While the mounting attacks may be enough to unnerve even the hardened chief executive, Bresch has a longer history than most of dealing with such issues and coming out (mostly) unscathed.
In fact, Fortune, in a tough profile, once described her career as being full of “ethically messy mishaps and public relations gaffes.” At least two involve her own father, Sen. Joe Manchin III, D-W.Va.
The most scandalous incident occurred in 2008 shortly after she was named the company’s chief executive and involved the master’s degree in business administration from West Virginia University that was listed on her resume. It turns out she never got it. An investigation by the school, prompted by a newspaper report, found that some administrators had added courses and grades to her transcript to make it look as if she had completed the required coursework.
The incident made headlines across the state because her father was governor at the time and the school’s president, Mike Garrison, was a longtime family friend and former business associate.
The controversy blew over quickly for Bresch, and she remained chief executive, but Garrison and a slew of other administrators resigned from their positions following expressions of no confidence from students, faculty and alumni.
In 2015, Bresch caused another firestorm when she merged Mylan with a company in the Netherlands. The transaction is known as a “tax inversion” and involves joining with a foreign entity to move a legal corporate headquarters abroad. Doing so provides a major advantage: trading U.S. corporate taxes, which at 39 percent are among the highest in the world, for a tax bill from a different country that is presumably less.
Such moves are so unpopular with the American public that only a handful of U.S. companies have attempted them. Members of Congress — including her father — denounced such tactics as undermining the U.S. economy.
Then there’s the matter of Bresch’s salary and other perks, which are unusually high, even in this era of crazy compensation for company executives.
“EpiPen prices aren’t the only thing to jump at Mylan,” NBC News reported. According to Securities and Exchange Commission filings, Bresch’s total compensation went from $2,453,456 to $18,931,068 from 2007 to 2015. That’s a striking 671 percent increase. That period coincides with the time when Mylan acquired the rights to EpiPens and steadily hiked the average wholesale price from about $55 to $320.
A standard 2-pack now costs between $600 to $700. The price has prompted outrage among many consumers who have taken to social media to complain that they can no longer afford the potentially lifesaving medicine.
“A trip to the ER is now cheaper. HOW CAN THIS BE??” one woman tweeted on Wednesday. Actress Mia Farrow weighed in: “Grandchild w severe allergies needs life saving #Epipen. Cost has soared. Luckily we can pay the $600. Impossible for many scared parents.”
The contrast between Bresch’s lavish lifestyle — her signature designer five-inch stilettos for example — and those of ordinary families struggling to afford the drugs her company sells is a theme that has come up again and again.
While many companies have curbed the use of company aircraft for personal business or required executives to provide reimbursement, Mylan has continued to allow Bresch to use one. The Pittsburgh Post-Gazette reported earlier this year that her corporate jet use hit $310,312, including both personal and business trips.
Another Mylan executive, Robert J. Coury, was called out by The Wall Street Journal in 2012 for having a side business that is a record label that promotes his son’s music career and for taking the jet frequently to cities that coincided with his son’s concerts.
Martin Shkreli is in prison, but Daraprim still costs $750 per pill. Heather Bresch was hauled before Congress, but EpiPens still cost three to six times more than they did in 2007.
.. This phenomenon, what economists call “sticky pricing,” is common in pharmaceuticals. It has raised the price of drugs for serious conditions including multiple sclerosis and diabetes, even when there are multiple competing drugs.
The problem is that companies have decided it is not in their interest to compete.
.. There’s cover in numbers.
When you’re driving on the highway where a speed limits is 55 and most everyone’s going 70, you’re likely to increase your speed, too. Why should you feel bad? Why would the cop pick you? Someone else in a flashy car is probably doing 90. (For drug makers, Mr. Shkreli would be the hot-dogger who gives others cover.)
.. The parties are not really colluding. They’re not calling one another up to agree to drive too fast; no manufacturer (one hopes) is sitting at a country club agreeing to keep his prices high. This makes drug makers difficult to prosecute under racketeering or restraint of trade laws.
.. But while drug prices in America are going up, many of the same drugs are cheaper — and often coming down in price — in other developed countries, where governments step in to regulate prices.
.. Now you know why Novartis might have paid $1.2 million to Michael Cohen, the president’s personal lawyer and “fixer,” after hearing the candidate’s threats.
.. Britain’s National Health Service sets a price it is willing to pay pharmacists for medicines they dispense. The pharmacists, who are in business for themselves, can then source the medicine from any wholesaler. The cheaper they can procure the medicine, the more they profit.
Earlier this week FDA published a list of drugs that don’t face competition from generic alternatives even though their intellectual property protections have expired. FDA said it will expedite the approval process for such applications “until there are three approved generics for a given drug product.”
.. the cost of developing a generic product can run into the millions of dollars, and many can’t fetch the profit to recoup the expense.
.. Consumers pay 94% of the branded price on average when one generic firm enters the market, but that drops to 52% with two competitors and to 44% with three, according to an FDA analysis... Lipitor, which cost $3.29 a unit before its patent expired. The generic version last year cost $0.11... One barrier to innovation is that some manufacturers are abusing FDA safety and risk mitigation regulations to protect monopoly positions.. Regarding EpiPen, FDA regulations helped keep a generic alternative off the market by requiring an identical device to deliver a shot of adrenaline… most generics are not approved on the first round, and revisions create substantial work for companies and FDA staff. The agency also has a backlog of applications and has struggled to hire enough staff to keep up with applications.