Consumers need to be saved from outrageous costs of health care products
In both 2014 and last year, Mylan Pharmaceuticals made more than $1 billion on its EpiPen. Of the more than 1,400 products the drug giant markets, the Epipen has been its shining star during recent years.
Until just about a week ago. Now, after more than a week of negative publicity regarding Mylan’s unconscionable pricing of EpiPens, the product has turned into a gigantic public relations nightmare.
On Aug. 18, just before the pricing scandal broke, Mylan N.V. stock topped out for the day at $49.42 per share. By the end of the day, it had plummeted to $42.75. Mylan had lost more than one-eighth of its total value – more than $3.3 billion.
Yet Mylan, headed by Heather Bresch, doesn’t seem to get it.
The company made a ridiculous attempt to justify its EpiPen pricing with an inadequate attempt to placate both public opinion and that of angry members of Congress demanding answers. Bresch, incidentally, is the daughter of U.S. Sen. Joe Manchin, D-W.Va.
EpiPens, used as life-savers by those with severely dangerous allergies, sold for $93.88 for a two-pack in 2007, the year Mylan acquired rights to the product.
Now, the list price is $608 for a two-pack. No wonder Mylan has been reaping gigantic profits.
Company officials’ defense was that Mylan gets only $274 of the total price. The rest goes to various entities ranging from distributors to retailers.
But even so, Mylan’s price increase was outrageous. One common explanation for high drug prices is the cost of research and development. That was not a factor for Mylan, which bought the rights after another firm had paid for research and development.
Efforts to improve the company’s image have been wholly inadequate. Vouchers to cut the price by $300 were touted. Mylan now says it will offer a generic version at around $300.
As if the end result, pricing more than 320 percent of what it was less than a decade ago, is supposed to sound reasonable.
Angry members of Congress can do little more to Mylan than to humiliate company officials publicly. Lawmakers have no power to dictate prices and should not. Government price controls simply do not work.
What Congress can and should do is clear, as 20 senators hinted in a letter to Bresch. They want answers from her, they wrote. And they want to know why the Food and Drug Administration appears to have dragged its feet in approving other companies’ products that can compete with EpiPens.
Mylan already is paying dearly for its greed as investors drive down the company’s value. Consumers need to be rescued from that avarice with competition making prices for making health care products, not just those for allergy sufferers, more reasonable.