Heather Bresch, the CEO of Mylan – which makes the EpiPen – testified in front of the House Oversight and Government Reform Committee about the drug’s price Wednesday.
The price of the device, used in emergencies to treat severe allergic reactions, has increased more than 500% since Mylan acquired it in 2007. A two-pack of the EpiPen now has a list price of $608.
In her prepared testimony released ahead of the hearing, Bresch gave background on Mylan as a company and addressed some of the controversy around the rising price.
“Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full [list] price or more,” Bresch said in her testimony. “We never intended this.”
The members of Congress had a lot of questions for Bresch, who testified alongside Doug Throckmorton, a deputy director of the Food and Drug Administration. In her defense, she said the company is implementing a number of programs to help patients pay for EpiPens.
But Congress didn’t buy it. Here are a few highlights before we get into the play-by-play:
- Bresch refused to admit at any point that her company raised the price of the EpiPen to make more money. She also didn’t come prepared with information Congress had requested about revenue and the company’s patient assistance programs. Bresch couldn’t answer those questions off the top of her head either. Mylan’s EpiPen4Schools program took a serious beating. Rep. Tammy Duckworth called it a “monopoly” and seemed appalled that schools that entered the program had to sign a noncompete agreement. She was also mad that those schools didn’t know that the president of the National Association of State Boards of Education who was lobbying them to join it was actually Bresch’s mother. Bresch kept saying that her company saved the US $180 billion in medical expenses, but could never explain how. Throckmorton got slammed because Congress felt the FDA approval process was too onerous, and he couldn’t disclose much about any applications for competitors to the EpiPen because of the FDA’s rules. Bresch said she didn’t plan on raising the price of an EpiPen in 2017, but wouldn’t give it a firm no. Later in the evening, Bresch faced questions about Mylan’s tax inversions, private jets, and drew ire from Rep. Earl “Buddy” Carter over the company’s authorize generic version of the EpiPen.
‘A simple but corrupt business model’
Rep. Jason Chaffetz, chairman of the committee, kicked off the hearing, saying, “We’ve got a lot of questions.”
Right off the bat, he brought up his interest in learning more about how much money Mylan makes off each EpiPen and how much Mylan executives are compensated. He had questions about the lack of existing competition that might have helped to lower the cost of the device.
“Parents don’t have a choice,” Chaffetz said.
- House Oversight Committee via YouTube
Cummings followed Chaffetz, saying he was “not impressed” by Bresch’s prepared testimony and bringing out an EpiPen. He accused the company of using a “simple but corrupt business model” to enrich themselves in the same manner as Martin Shkreli of Turing Pharmaceuticals and executives at Valeant Pharmaceuticals.
He scoffed at Mylan’s promise to increase patient assistance programs.
“We’ve heard that one before,” he said. “They never ever lower their prices. I’m concerned this is a rope-a-dope strategy.”
Cummings said he’s not sure he wants an apology from Mylan as much as he wants solutions.
“It’s time for Congress to act,” Cummings said.
He referenced Shkreli’s testimony earlier this year.
“After the hearing, you know what he called us? Imbeciles. You know why he said that? Because he knew he would go back and do the same thing,” he said. “So he took his punches – he rope-a-doped us. Even worse, he took the Fifth.
“This is our moment. If we’re going to do something in a bipartisan way, this is it.”
‘Ms. Bresch, you’re now recognized’
Bresch and Throckmorton gave their prepared statements, which you can read here. Bresch defended herself and her company. Throckmorton talked about the FDA’s efforts to ramp up approval of generics.
But that’s not what anyone came here to see. It’s all about the Q&A free-for-all.
- AP/Pablo Martinez
Chaffetz asked a simple question to start: You raised the price – what did you think was going to happen?
Bresch did a lot of gymnastics to explain how Mylan actually doesn’t make that much money on the drug, but Chaffetz wasn’t having it.
“This doesn’t make any sense,” he said. “This is why we don’t believe you.” He turned to Throckmorton.
“I want to know how many epinephrine products are in the queue right now?”
Throckmorton couldn’t answer. Chaffetz grew visibly frustrated, and asked him to answer the question ASAP.
“It’s simply an illegal answer. I’m not allowed to disclose confidential commercial information in this setting,” Throckmorton said.
Chaffetz said he would confer with his colleagues on that one. Rep. John Mica followed up later, and Throckmorton still couldn’t give an answer.
Later in the evening, the FDA tweeted out a response to this issue:
FDA’s practice is not to disclose the number of pending applications since together w/ public info it could disclose applicant identity.
— U.S. FDA (@US_FDA) September 21, 2016
Then Chaffetz turned to Bresch and asked about a USA Today article that reported that Bresch’s mother used her influence as president of the National Association of State Boards of Education to help Mylan launch its EpiPen4schools program.
Bresch said the story was wrong and implied the company was being punished for giving schools free EpiPens.
“I certainly thought it was a cheap shot to bring my mother into this,” she said.
‘How much profit did you make in 2015 on the sale of EpiPens?’
That was Cummings’ question. He was trying to calculate how much Mylan spends on marketing compared with how much it makes, and he was walking through the public information available.
He found that information – and Bresch’s answers – without it. “You’re telling me you don’t know how much you spent on patient assistance programs and school-related programs in 2015?”
Bresch said they spent maybe $105 per pack because the company had to do so much work raising awareness about anaphylaxis.
Cummings then asked Bresch how much she spent on research and development in 2015. He asked twice; the second time he asked v-e-r-y s-l-o-w-l-y. Again, Bresch wasn’t prepared with answers.
“You knew what this hearing was about. I’m asking questions that if you’re the CEO I think that you would know,” he said.
He added later: “Would you agree that you made hundreds of millions of dollars on EpiPen in 2015 alone?”
Bresch said that the EpiPen wasn’t all of Mylan’s $11 billion revenue.
Cummings cut her off and repeated the question. Bresch said yes. Then Cummings asked her to produce documents showing how much Mylan made on the EpiPen. She had been asked to bring them to the hearing, and she did not.
Bresch mentioned that Mylan was working on developing an EpiPen with a longer shelf life. Currently, the EpiPen expires after about 12 months, and Bresch said that the hope is to increase that to 24 months.
‘Will you reverse the increase in price of EpiPens?’
Rep. Eleanor Norton was the one to ask the question everyone wants the answer to: Will the price of the EpiPen actually come down?
Bresch said that introducing an authorized generic was the most efficient way to make that happen, saying that if the branded-product price went down, it wouldn’t necessarily make its way to patients.
Norton then followed up on Bresch’s compensation. “What have you done to earn this 671% [compensation] increase?”
Bresch first replied that she earned it because her company has saved the US billions.
“Our products alone have saved the country $180 billion,” she said a few times.
But that wasn’t good enough for Norton. She followed up, asking what she has done for this product, the EpiPen. Bresch pointed to the EpiPens Mylan has provided to schools and public places.
How much Mylan makes on an EpiPen
Rep. Stephen Lynch pressed the question of how much Mylan makes off an EpiPen.
Using poster boards, Bresch tried to illustrate the point that Mylan currently makes about $275 off of each two-pack of EpiPens, with a profit of about $50.
In 2014, when the list price was about $400, Bresch said the company got $235 from each two-pack, and about $40 in profit off each. Bresch said that the $300 authorized generic would make less than the $50 profit that the company is making today.
Bresch later told Rep. Scott DesJarlais that she did not plan on increasing the price of the EpiPen in 2017.
DesJarlais then asked, “Do you think you were charging too much at $600?”
“We believe it was a fair price, and we’ve just now lowered that by half,” Bresch said.
But, DesJarlais asked, if she thought it was fair, why lower at all?
That has to do with more people paying closer to the list price, Bresch said – something that she said wasn’t intended.
A recent Kaiser Family Foundation survey found that deductibles, the amount of money a person with insurance is on the hook for, had gone up 20% in the past five years.
‘You asked for it’
Duckworth went off on Mylan’s EpiPen4Schools program. To get the drug, schools have to promise not to buy it from anyone else.
“That, to me, is an unfair monopoly,” she said.
Bresch said the schools don’t have to buy them if they don’t want to.
“That’s right, they don’t have to buy them, but your own mother is out there … passing out your guides for Mylan,” Duckworth said.
She added that some of the schools being lobbied by Bresch’s mother, who was president of the National Association of State Boards of Education, had no clue about her connection to the CEO.
Bresch said this simply wasn’t true.
Rep. Mick Mulvaney also talked about government intervention in the project. He said his colleagues mostly asked questions about an industry it doesn’t understand.
“I’ll tell you what we do know, though, is that you’ve been in our hallways to ask us to make people buy your stuff,” he said, saying that 11 states have laws requiring EpiPens be available in schools. “You’ve lobbied us to make the taxpayer buy your stuff. … I was here when we did it.”
He continued: “You came and you asked the government to get in your business, so here we are today. And I was as uncomfortable with some of these questions as you were … but I have to defend both my Republican and Democrat colleagues for these questions because you’ve asked for it, so I guess this is my message.
“If you want to come to Washington, if you want to come to the state capitol and lobby us to make us buy your stuff, this is what you get. You get a level of scrutiny and a level of treatment that would ordinarily curl my hair, but you asked for it!”
And with that, Chaffetz called a recess.
‘I can’t afford to pay this much for EpiPens and I can’t afford not to’
After an hour and a half break, Congress came back in looking for answers about why it takes so long for generic drugs to get approved, and had some more questions about the EpiPen’s price and how much money Mylan makes from it.
Rep. Peter Welch recounted one letter he received from a single mother with a four-year-old, who was facing problems paying for the drug. It left her in a tricky position: “I can’t afford to pay this much for EpiPens and I can’t afford not to,” she wrote to Welch.
Welch, whose state Vermont is home to a Mylan facility, was curious about why, if the number of EpiPens sold has gone up, why the per-unit cost hasn’t gone down as it typically. Bresch said that the cost of goods has actually gone up.
‘Don’t try to convince me that you’re doing us a favor’
Rep. Earl “Buddy” Carter, a pharmacist, got into the issue of pharmacy benefits managers, or companies that negotiate the price of drugs that serve as a middleman. It’s a group of companies that he’s interested in investigating as part of the reason that patients are feeling the rising cost of prescription drugs.
He asked Bresch’s opinion on looking into this issue, to which she replied: “I certainly would agree that transparency is needed. … The system hasn’t kept pace with the evolution of the healthcare system.”
In addressing the issue of PBMs, though, Bresch brought up the company’s authorized generic, which didn’t go over well.
“You know I know better than that,” Carter said. “Don’t try to convince me that you’re doing us a favor.” Carter said that if Mylan had cut the list price of their drug in the first place, they wouldn’t have received rebates from the PBMs. Carter asked Bresch to follow up with more details about Mylan’s contracts with PBMs.
Private jets and tax inversions
Changing gears, Rep. Bonnie Watson Coleman asked how Bresch showed up to the hearing. Bresch said she had flown in from Pittsburgh, where Mylan’s US corporate offices are based on a private jet.
Coleman then got into the issue of Mylan’s tax rates. Last year, Mylan incorporated its headquarters in the Netherlands. Mylan now has a tax rate of 15-17%, down from the mid-to-low twenties it was a year earlier.
That move, Coleman pointed out, makes it so Mylan’s paying less on its taxes than the everyday American. Coleman also asked if anything happens out of the Netherlands. Bresch said “physically,” the company is run out of the company’s Pennsylvania offices, which is where she and other executives are based.
“This is a sham and a shell, and it’s really sad to hear this,” Coleman said.
Classifying the EpiPen as a non-innovator drug
Chaffetz, coming back for another round of questions, wanted to know more about what’s going on with the EpiPen’s classification under Medicaid. It’s currently classified as a “Non-Innovator Multiple Source Drug,” different from a branded drug. Although Bresch hadn’t been directly involved in recent conversations with CMS, she did try to answer the question of why it’s classified like that. Bresch said the EpiPen was in that status before Mylan acquired the drug, and that at several other times, the company confirmed that that was the right status.
‘The numbers don’t add up’
Toward the end of the hearing, Cummings sounded exasperated by the responses Bresch had given.
“If I could sum up this hearing, it would be that the numbers don’t add up,” Cummings said. “It is extremely difficult to believe that you’re making only $50 when you’ve just increased the price by more than $100.”
Cummings sounded a bit jaded after dealing with companies like Turing Pharmaceuticals and Valeant Pharmaceuticals in past hearings, saying that this sounded a lot like the talking points he’s heard before. So, he emphasized the need to see some documents and records.
Chaffetz agreed that something spelled fishy. “It just feels like you’re not being honest with us,” he said, pointing to some of the numbers and charts Bresch had used during the hearing, which he said seemed dumbed down.
Bresch and Throckmorton will now have 10 days to provide the committee with more documents to answer some of the questions that they couldn’t fully answer on the spot.