August 24, 2016
The EpiPen was her 'baby.' Now this pharma CEO is in the hot seat over price hikes
By Damian Garde
Drug company CEO Heather Bresch affectionately describes the humble EpiPen as her "baby," a once-middling product that she turned into a blockbuster.
With aggressive advertising — and even more aggressive price hikes — Bresch has fostered the EpiPen into a bestseller that brings in more than $1 billion a year in revenue for Mylan Pharmaceuticals.
Even (Martin) Shkreli, widely perceived as a paragon of greed after hiking a drug price by 5,000 percent, decried Mylan as a group of "vultures."
The EpiPen, an auto-injector used to reverse life-threatening allergic reactions, is inextricably tied to Bresch, whose ascension at the company tracks with the product's rapid growth.
She has also become one of the drug industry's highest-paid CEOs, pocketing more than $18 million in cash and stock last year.
Among the Senate's membership is her father, Joe Manchin, a populist West Virginia Democrat whose influence is woven throughout her rise in the drug industry.
Bresch first adopted EpiPen in 2007, when Mylan purchased the generic drugs division of Germany's Merck KGaA for $6.7 billion.
Bresch was promoted to chief operating officer at Mylan shortly after the deal with Merck KGaA. The official corporate announcement touted her MBA from West Virginia University. Months later, an exhaustive investigation by the Pittsburgh Post-Gazette revealed that she hadn't finished the MBA program — and a later independent report found that university officials had falsified her transcripts to conceal that fact, adding in grades "pulled from thin air."
WVU's provost and business school dean later resigned, and the university revoked Bresch's degree.
In 2015, Mylan announced that it would move some of its operations overseas in search of a more favorable tax rate. The tactic, known as an inversion, exploits what President Obama has called "one of the most insidious tax loopholes out there." For Mylan, inversion meant shifting its business address to the Netherlands through a complicated transaction with Abbott Laboratories.
Senator Bernie Sanders had tweeted that "there's no reason an EpiPen, which costs Mylan just a few dollars to make, should cost families more than $600."
If Mylan loses too much value, it could struggle to defend itself from a future hostile takeover. But Bresch herself is well-insured: According to a recent analysis from Bloomberg, if she's deposed in a merger, she's in line for a $61.5 million golden parachute.
Aaron Carroll also discusses EpiPen as a case study in health care system dysfunction:
Comment by Don McCanne
Much is being written about Mylan's price gouging of its life-saving injectable epinephrine - EpiPen - charging over $600 for a product that costs less than a dollar to make, so rather than discussing the background, comments will be limited to the ethical underpinnings of this decision to gouge us.
Actually, nothing further need be said about the ethics of Mylan and its CEO Heather Bresch since they scream out at you in a cursory reading of the STAT article excerpts above. In an oft-repeated scenario, they created nothing but paid billions for a company that made their targeted product - billions of dollars that must be recovered through sales - then generated skyrocketing returns through escalating price gouging, and even avoided taxes through inversion. As CEO Bresch says, that's her "baby."
We sure get a lot of talk from Congress and the administration about outrageous drug prices, yet all we get from them is more talk. It almost makes you want to start a revolution (Bernie style) and nationalize the pharmaceutical industry (and some of the other industries while we're at it). Well, maybe not a complete government takeover, but mandate that they be converted to non-profit public service corporations. We can start negotiations over nationalization and then come to the compromise of converting to non-profit private sector corporations, wherein the gains serve the public interest rather than being drained off to the one-percenters.