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Mylan Fiasco May Be “The Shot Heard Round the World”

The Mylan EpiPen debacle may have inadvertently weakened the grip Big Pharma on U.S. lawmakers.  Last week, a bill proposed by Senator Bernie Sanders was narrowly rejected by a vote of 52-46.  Unexpectedly, 12 Republicans and 1 Independent voted with Senator Sanders in favor of allowing pharmacists and distributors to import cheaper prescription drugs from Canada and other foreign countries (something typically favored by Democrats.)  The winds of change are starting to blow in the bipartisan direction when it comes to the pharmaceutical industry.    

U.S. Healthcare needs a revolution ; ‘the shot heard round the world’ often refers to the opening shots of the American Revolution in 1775.  The Big Pharma lobby is holding the American people hostage with their exorbitant ransom demands.  Last summer, Mylan Pharmaceuticals, led by CEO Heather Bresch, overplayed their hand.  Mylan came under fire for a 400% price increase in the EpiPen two-pack.  This device is considered life-saving for children and adults with anaphylactic reactions to various food, insect, or environmental insults.  Ms. Bresch insisted the significant price increase ($600-$700 for a medication which costs pennies) was justified due to the more ergonomic appearance of the delivery device and improved safety profile.  Her miscalculation seems to have indirectly incited the war on Big Pharma by angering the public, the media, and the government simultaneously. 

Ms. Bresch landed herself in front of the House Oversight and Government Reform Committee on September 21st, in attempts to defend her bold decision, where she insisted the company only profited $100 on each two-pack.  Somehow despite a paltry profit margin, her salary ballooned from 2.5 million to almost 19 million between 2007 and 2015.  Later that same month, the Centers for Medicare and Medicaid Services (CMS) discovered the EpiPen had been misclassified as a generic drug, making it ineligible for the low rebates Mylan was paying back to Medicaid.  Essentially, Mylan overbilled Medicaid for its life-saving drug resulting in being saddled with a large settlement.

Ironically, CEO Heather Bresch is the daughter of U.S. Senator Joe Manchin (D-W.V.). Bresch has had ethical difficulties throughout her illustrious career starting when her father was a governor.  Every decision she makes seems to border on unscrupulous.  Laws in at least 11 states require schools to stock epinephrine, and keeping a stockpile is incentivized by federal law.  So Mylan started the EpiPen4Schools program, in 2012, which provided free EpiPen two-packs to more than 65,000 schools, in an effort to ‘help’ children access life-saving medication.  The EpiPen4Schools discounted price was $112.10; however, in order to qualify for that price, schools had to agree they would not purchase products from any EpiPen competitors during the next twelve months.  A Mylan spokesperson said this requirement is no longer part of its program as of July1, 2016.

In the first days of this new administration, I find myself reflecting on the positives and negatives of the most recent Presidential campaign; it appears one noble outcome may be the ushering in of true bipartisanship to Washington.  Big Pharma has relied upon their strategic lobbying efforts and targeted donations to key political insiders to ensure someone in power was always looking after their interests.  It appears the direct tactical approach by Trump could redefine those battle lines.  His comments calling out the pharmaceutical industry on their predatory tactics, sent drug sector stocks into a tailspin.

The morning of the pharmaceutical bill vote, President-elect Donald Trump accused Big Pharma of “getting away with murder.”  He pointed out “there’s very little bidding on drugs,” blaming the harmful influence of the pharmaceutical lobby.  Currently, federal law prohibits our government from negotiating Medicare drug prices with the pharmaceutical companies.  Trump has called for dissolving this policy in the past, another policy that tends to be favored by Democratic lawmakers.  Federal laws regulate much of healthcare delivery; why not Big Pharma? The tide may be turning; four more votes are all that are needed next time.  Rep. Peter Welch (D-Vt.) has introduced a bill that would allow Medicare negotiation on drug prices.  Prohibiting Medicare from the first right of refusal in regard to price negotiation and medication formulary exclusion absolutely must end.

The Pharmaceutical Research and Manufacturers of America (PhRMA), oppose Medicare negotiation and importation of foreign medications because they “will not ensure prescription drugs entering the U.S. from abroad are safe and effective.”  Who are they kidding?  Have you purchased medications outside the country before?  It is a veritable smorgasbord of brand name medications, all with labels printed in English.  It’s almost as if the medications walked across the border on their own accord.  Big Pharma keeps peddling fear and trepidation; however, the tight grip they have had over Washington is at last loosening. 

Those who supported Senator Sanders’ bill should be commended for voting with their conscience instead of their pocketbooks.  The 13 courageous GOP and Independent Senators who voted with Sen. Bernie Sanders are: John Boozman (AR), Susan Collins (ME), Ted Cruz (TX), Jeff Flake (AZ), Charles Grassley (IA), Dean Heller (NV), John Kennedy (LA), Curtis King (ME), Mike Lee (UT), John McCain (AZ), Lisa Murkowski (AK), Rand Paul (KY), and John Thune (SD.) It is worthwhile to note, 13 Democratic Senators voted against this bill, however many, including my own Senator from Washington State, Patty Murray, had ties to the pharmaceutical industry.  She received 300K in funding from Big Pharma during her most recent re-election bid. 

The overconfidence of Mylan Pharmaceuticals in support of government and the public for restricting access to life-saving medications for children was “the shot heard round the world.”    In one sweeping move, their CEO violated the trust of the consumer, by bankrupting them, Wall Street, as evidenced by declining share price, the pharmaceutical industry, by exposing their profit-driven manifesto, and most importantly, the federal government and its lawmakers. 

Recently, CVS announced it would begin stocking a competitor of EpiPen, Adrenaclick, for $110, a textbook example of free market forces at work.  An epinephrine delivery device has become available for $10 to patients at the largest pharmacy retailer in the nation within 6 months of Mylans’ price misstep.  Most individuals with private insurance now qualify for a manufacturer’s coupon knocking $100 off the price which will be applied right at the register.  The public maelstrom started by the CEO of Mylan not only took a toll on their share price, which tumbled from $54 to $36, but lost the monopoly on schools, pharmacies, and patients at the same time. 

When President Ronald Reagan gave his infamous speech “Tear down this wall”, he noticed words of wisdom spray painted upon its structure; ‘This wall will fall. For it cannot withstand faith; it cannot withstand truth. The wall cannot withstand freedom’.  Walls of Big Pharma have begun to crumble and it is time to hold their feet to the fire.  Four more votes stand between consumers and the freedom to purchase medications in foreign countries for pennies on the dollar.  Mylan deserves credit for showing us the ‘true colors’ of the pharmaceutical industry and my sincere hope is they can no longer stand in the way of the acquisition of knowledge, truth, and freedom of individuals to manage health for themselves.    

Niran al-Agba is a pediatrician in Washington State. She is THCB’s private practice editor.

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welltraveledmeltootsBarry CarolNiran Al-AgbaAllan Recent comment authors
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welltraveled
Member

Great article. I share your dream but not your optimism– this issue has been proposed at least 5 times that I’m aware of, often with the same names associated (Sanders, McCain, etc), and it never goes anywhere. There’s no (pro-consumer) reason for us to not import drugs at least from Europe, often they’re the exact same drugs in different packaging. My favorite example is actually the copper IUD (Tcu380a)– it costs a few pennies to make, sells for about 25 cents in the 3rd world, $20-50 in the first world, except for the US, of course, where it’s about $900… Read more »

Peter
Member
Peter

Those prices are lower because of price controls. You want to take advantage of other countries sane policies because the U.S. does not have the balls to control drug prices?

Barry Carol
Member
Barry Carol

For a very good and comprehensive review of the whole Mylan Epi-Pen drug pricing controversy, check out this analysis by drug distribution expert, Adam Fein.

http://www.drugchannels.net/2017/01/the-weird-and-wild-gross-to-net.html#more

meltoots
Member
meltoots

Only in US, after this Mylan exposure, do we go backwards. The other “lower priced” alternative announced, Auvi-Q, is $4500 per dual pack injector. But don’t worry that is the insurance price, and you can apply online for a cheaper version, whatever. I have pretty much lost faith in our politicians to actually put a lid on this. There is big money here and money talks. Even if it is bankrupting citizens. As for the Mylan family disaster, lets not forget the mother, Gayle Bresch, at the same time the daughter becomes CEO and the dad is a D-senator from… Read more »

Niran Al-Agba
Member

Sometimes you can’t make this stuff up!

Barry Carol
Member
Barry Carol

Mylan claimed that the net price it actually received for Epi-Pen was less than $300 presumably due to rebates negotiated by the big Pharmacy Benefit Managers (PBM’s). The problem with this system is that the increasing number of patients with high deductible drug plans were exposed to having the pay the full list price of over $600 for a two-pack. That’s what created the outrage, in my opinion. Mylan has since introduced a generic version of the Epi-Pen that retails for $300 for a two-pack. In addition, Adrenaclick is now back on the market for a much lower price than… Read more »

Allan
Member
Allan

What I don’t understand is that Adrenaclick, which I believe has been approved for quite awhile, wasn’t on the drug formulary plans especially since it is less expensive. I believe the answer lies in our third payment system that is highly regulated by government. This has created a lack of transparency for the patient that seems to benefit the pharmaceutical industry up and down the line while it benefits our legislators who are funded by big Pharma. The answer to such a problem is to rid ourselves of third party payer due to employer tax deductions and rid ourselves from… Read more »

Niran Al-Agba
Member

As usual, insightful comments Barry. Having the FDA approach it this way is an intriguing idea. As to medications in foreign countries… I have never purchased in China or India, but Mexico is awesome! Whenever I have needed something while ill down there, Wal-Mart and even the small mom and pop pharmacies are fantastic. You can either get the brand name medication (cheap) or generic offerings (even cheaper) and even some pretty great stuff they do not have here such as a combo cream with antibiotic, antifungal, and steroid all rolled into one. Packaged, ingredients listed in English, and all… Read more »

Barry Carol
Member
Barry Carol

Niran, I’m glad to hear that there are good drug options in Mexico, at least if one is physically in Mexico and can walk into a licensed pharmacy with a prescription and get needed drugs at a good price. I still wouldn’t be confident about ordering drugs from Mexico online while sitting in my home. Who knows where they’re coming from and whether or not they’re counterfeit. A few years ago, I remember reading that, because of vigorous competition, generic drugs are actually about 10% cheaper on average in the U.S. as compared to other countries. It’s the brand name… Read more »

Niran Al-Agba
Member

I do like going back and forth with you Barry. As far as physically being there. Most countries have a solid distributor who is trustable. For example, sometimes patients, without our knowledge, fill our prescriptions outside the country. They have favorites who are reliable and medication works well. It is not what I recommend, but honestly, would rather have people ON their necessary meds than not. You actually do not need a prescription if you are physically in Mexico or most of the countries I listed. You just walk in and ask for the medication. It is not true generics… Read more »

Allan
Member
Allan

We have had counterfeit drugs made right here in America. Many of our most common generics aren’t made in the US and our inspection policies abroad don’t match what we see here yet we are permitted to import those drugs. Nothing is perfect so one can expect occasional problems, but it should be the choice of the individual as to how much risk he wishes to take. Years ago when one compared drug prices with Canada the brand names were less expensive in Canada, but the generics and over the counter drugs were much more. The free HIV drugs given… Read more »

Allan
Member
Allan

“ in favor of allowing pharmacists and distributors to import cheaper prescription drugs from Canada and other foreign countries” I have never seen a free market argument that would dispute the right to import less expensive pharmaceuticals from abroad. “ Somehow despite a paltry profit margin, her salary ballooned from 2.5 million to almost 19 million ” Profits are what is left after everything is paid for. Her $19Million would have been profit if she took no salary. “ The EpiPen4Schools discounted price was $112.10; ” The marginal costs of those pens was probably a few dollars. Trump was absolutely… Read more »

Peter
Member
Peter

“I have never seen a free market argument that would dispute the right to import less expensive pharmaceuticals from abroad.”

Let’s see, close U.S. borders to imported goods to save American jobs, which would increase prices, but open borders to lower drug costs – which would reduce U.S. profits to hire and innovate.

Allan
Member
Allan

I don’t think you have shown “a free market argument that would dispute the right to import less expensive pharmaceuticals from abroad.” Instead you changed the subject and some of the context. That seems to be the way you manage most of your discussions.

It appears that instead of discussing freemarkets you chose to discuss what you think Trump is doing. If that is the case and there is an argument you wish to make, go ahead, but be truthful and don’t play with the facts.

Niran Al-Agba
Member

Thanks Allan. Their EpiPen4Schools program was a kind of monopoly whereas they would sell a discounted pen and then mandate their product was the only one that could be stocked in the school for 12 months effectively eliminating free market competition. Brilliant huh? Except it interfered with access to life-saving medication for school children.

Peter
Member
Peter

“it appears one noble outcome may be the ushering in of true bipartisanship to Washington.”

Surely you jest. If this were to be true then Repugs would invite Democrats to help write the ACA replacement – better, cheaper, “Insurance for everybody”

“President-elect Donald Trump accused Big Pharma of “getting away with murder.””

You need to learn there’s no brain behind his shoot from the hip tweets. His mouth opens and words come out – nothing more. Tomorrow different words will come out.

Niran Al-Agba
Member

Peter, I have decided you are a “glass is half empty” and I am a “glass is half full” type. Thank you for your comments. IMO, Pharmaceutical companies should not be allowed to go about doing business unchecked. And yes, I am looking forward to the Era of True Bipartisanship. I am sure it will be smooth sailing from now on with nothing less than perfection in Washington politics. Don’t you have the same sunshine and roses optimism that I do?

Peter
Member
Peter

“Pharmaceutical companies should not be allowed to go about doing business unchecked.”

So we will import cheaper drugs from other countries that REGULATE their drug pricing, but we won’t allow Medicare to negotiate drug prices?

Tom Price thinks generics offer all the competition that is necessary and voted no on Medicare Rx negotiation. I wonder if his investments in drug stocks will sway his attitude toward importation.

Niran Al-Agba
Member

Uh my post endorsed Medicare negotiation. Did you miss that section? We all agree negotiation, negotiation and negotiation is the solution.

Peter
Member
Peter

“We all agree negotiation, negotiation and negotiation is the solution.”

Now convince Tom Price and other Repugs. But then what do you do for those not in Medicare?

Niran Al-Agba
Member

I’m working on convincing people of a good many things. Republicans crossed over to vote with Bernie. Hoping this trend will continue . As far as those not on Medicare, negotiation or purchase out of Country.

Allan
Member
Allan

I won’t say the Democrats, rather Obama refused to negotiate with the Republicans when he was in office and the Democrats followed along. That was a mistake.

Right now it is the Democrats that are refusing to deal with the Trump administration. Some of the leaders of the woman’s march were disgusting to such an extent I wouldn’t let my grandchildren listen to them. Some even express desires of violence such as bombing the White House. Many on the left have gone over the edge.

Peter
Member
Peter

“I won’t say the Democrats, rather Obama refused to negotiate with the Republicans when he was in office and the Democrats followed along.”

Wrong again.

http://www.theatlantic.com/politics/archive/2015/07/the-real-story-of-obamacares-birth/397742/

Allan
Member
Allan

Peter, I don’t expect you to admit anything. You just toe the leftie line and add your own Peterisms to the mix. The hostility of Obama towards the Republicans was evident just like it is today with leftie leaders wanting to blow up the White House. I predict the Republicans and Trump will open the doors to some Democratic support of the next healthcare plan whether I agree with it or not. Therefore some Democrats will vote with the Republicans something not seen when Obama was pushing the ACA bribing companies as well as states. We have to recognize that… Read more »

Greg Fulton
Member
Greg Fulton

Great post

William Palmer MD
Member
William Palmer MD

I can think of only two ways to get prices down: 1.shopping/competition/market and 2. large purchasing–monopsony–something big doing the purchasing of drugs…like states, the Fed.

So far, we have neither of these two forces acting in the U.S…..it pays politicians to have perpetual avoidance of either remedy.

Niran Al-Agba
Member

Dr. Palmer, I agree and would prefer starting with option one. I think there is a lower chance for conflicts of interest netting large groups millions.

pjnelson
Member
pjnelson

It is likely that the long-term, over-all business model for the pharmaceutical industry may be defined simply, as in: Forty percent of annual cash income is allocated to profit and promotion. All sorts of tactics occur to sustain this simple statement. My view is that the pharmaceutical industry is in a state of institutional co-dependency with its barely sustainable business model. The ability of Congress to influence this business model has been substantially hampered by own internal affairs. A well-funded and improved FDA will be necessary to augment the FDA’s future ability to modulate the cost and quality of our… Read more »

Niran Al-Agba
Member

Dr. Nelson – My faith in the FDA is not as certain as yours. We will see.

pjnelson
Member
pjnelson

Hope springs eternal!