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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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  1. 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?

  2. 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 in the private sector and $300-$500 to the VA. Biggest International price difference I know of.

  3. 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 Trump is not ideologically motivated and has been a Democrat as well as a Republican. He just doesn’t walk lockstep to your leftist cause where any deviation is considered to be a major offense.

  4. 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 to the Africans get sold in the European market very inexpensively. We should not be preventing the importation of pharmaceuticals from anywhere in the world. Making that illegal seems to be a deal made between government and big Pharma. It appears government is helping corporations rip us off.

    When Medicare patients buy their personal drugs they do so from the companies they pay their premium to. It seems to me that these companies should be negotiating good prices for Medicare patients. Somewhere government must have some rules or regulations that inhibit these companies from getting the best price possible.

    Barry I must admit your positions have radically changed.

  5. 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.

  6. 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 are cheaper here. They are absolutely cheaper in foreign countries in my experience. There are probably exceptions, but Ciprodex Ear Drops are $90 for 10ml bottle in US with Medicare coverage and $7 for 10ml bottle of the same in Mexico. That is more than 10x the mark up! Most medications are about $1-5 for generics on average.
    I 100% agree with you about Medicare being willing to walk away. Canada absolutely does this if the price is not right. We need this same ability. Part of cost cutting will include rationing and that is inevitable. I take issue with rationing necessary physician visits and have less objection to eliminating non life-saving drugs from the formulary.
    For instance, Tamiflu is a great one to talk about. People are out in the country paying $100-200 out of pocket for a medication that shortens flu symptoms by 24 hours. It does NOT cut mortality, it does NOT alter morbidity. Seriously? Why are we using it? These are the details that need to be teased out in the pharmaceutical market. This is how we cut costs for the greatest number while harming the fewest individuals.

  7. 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.

  8. 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 and specialty drugs that are significantly more expensive in the U.S. Other countries free ride on U.S. R&D and even R&D done in other countries often target products specifically for the unfettered U.S. pharmaceutical market.

    Suppose a patient needs one of the three newer drugs often given as an alternative to Coumadin to control atrial fibrillation. Those are Eliquis, Xarelto and Pradaxa. Suppose they sell for half the price or less in Canada as compared to the U.S. Canada, with 10%-11% of the U.S. population, can’t just order enormous quantities of these drugs at Canadian controlled prices and export them back to the U.S. The drug manufacturers won’t let them get away with it. They will just sell them basically what’s needed for the Canadian market based on historical consumption patterns in that country.

    As for Medicare negotiating drug prices, negotiating power doesn’t come from the number of covered lives involved. It comes from a willingness to walk away and not cover a drug at all. When politics enters the equation, especially for drugs with no adequate and available substitutes, I don’t think Medicare would walk away. For drugs that do have adequate substitutes within the therapeutic class, I think the PBM’s are already doing as good a negotiating job as Medicare would do because the three largest PBM’s already negotiate on behalf of more covered lives than have Medicare Part D. The only problem with the PBM negotiated volume based rebate system is that patients with high deductible drug plans remain exposed to paying the full list price. That problem could be fixed by passing the rebate on to the patient in those cases.

  9. “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?

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

  11. 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 WV…the mom magically becomes the president of the National Assoc of School Boards and lobbies for the Epi Pen to be placed in all schools. 11 states make laws, and even a federal EpiPen law gets put on the books later that year. The level of conflict of interest and corruption is mind boggling. http://www.usatoday.com/story/news/politics/2016/09/20/family-matters-epipens-had-help-getting-schools-manchin-bresch/90435218/

    Its shocking to me how Washington DC types are COMPLETELY unethical and oblivious to this type of fraud on the citizens of the US.

  12. “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.

  13. 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 the normal stuff. As to other locales, medications are straightforward in Canada, New Zealand, Italy, and most other European Countries, and even Syria (pre-2008.) Very safe, effective, and well packaged the same as they are here including that little plastic thing with the perforations you have to struggle and rip off before opening the bottle. I understand not everyone is as adventurous with medication (maybe they shouldn’t be with anti-seizure medicine for example), but if it comes down to cheaper import or NO medication at all, shouldn’t a person have personal choice?

  14. 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 a lot of government regulation. The patient doesn’t have near the lobbying ability of the industry. Ridding ourselves of third party payer does not rid us of insurance or other benefits.

  15. 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.

  16. 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 Epi-Pen as noted.

    I think when there is an egregious increase in the price of generic drugs especially, the FDA could do more to push application from new competitors to the head of the line for approval as rapidly as possible. To the extent that the FDA can streamline its drug approval process for both completely new drugs and new competitors who want to sell an existing generic drug, it should do so.

    As for importing drugs from other countries, I would be nervous if I found that the drugs came from China or India or Mexico. How can I be sure than they’re not counterfeit? What happens if they turn out to be fake or otherwise unsafe? Who is responsible? Moreover, the drug industry doesn’t sell drugs to other countries well beyond what’s needed for each country. Try going to India or Egypt to buy Sovaldi or Harvoni for Hepatitis C, for example. You won’t get very far.

  17. 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.

  18. 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?

  19. 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.

  20. “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.

  21. “ 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 correct that Big Pharma was “getting away with murder” He understands business and the marketplace in this area and many other areas. The worst thing that can happen is when business gets in bed with corporations. Was that what happened at Mylan?

    Excellent post.

  22. “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.

  23. 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.

  24. 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 nation’s pharmaceutical needs.

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