Mylan CEO Grilled by Lawmakers Over EpiPen Pricing

Alicia Ault


September 22, 2016

WASHINGTON — Despite a withering 4-plus hours of questioning by members of a congressional committee yesterday, Mylan CEO Heather Bresch did not give a direct answer as to why the company had substantially and consistently raised the price of its EpiPen over the past 8 years.

The autoinjector, which contains a single dose of epinephrine to reverse anaphylaxis, is at the center of the latest storm over drug pricing. Since Mylan acquired the EpiPen from the German drug company Merck in 2007, it has increased the list price for the product from $94 for a single injector to $609 for a two-pack, according to an analysis by the Kaiser Family Foundation.

Kaiser reported that Medicare Part D spending on EpiPens had increased 1151% from 2007 to 2014, while the number of users had only risen 164%. Medicare beneficiaries also saw a big jump in their out-of-pocket spending, from $30 per pen in 2007 to $56 per pen in 2014.

Despite repeated requests during the House Oversight and Government Reform Committee hearing, Bresch offered no explanation for the price increase. But she did express regret about the controversy. "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 wholesale acquisition cost price or more," Bresch read from a prepared statement. "We never intended this."

Mylan CEO Heather Bresch Facing the Committee (Source: Pablo Martinez Monsivais/AP)

Republicans and Democrats alike vented at Bresch. Some members noted that their own families carried EpiPens. But none suggested price caps, price negotiations, or any other potential solution to what they labeled as excess. Instead, most vowed continued support of the free market.

$50 Per Pen Profit

Bresch told the committee that Mylan was not unduly profiting from EpiPen sales. After subtracting rebates to insurers, government agencies, and pharmacy benefit managers, as well as the cost of producing and marketing the EpiPen, the company only makes $50 per pen in profit, she said.

Members questioned her math. "Your numbers just don't add up," said ranking minority member Rep. Elijah Cummings (D-Maryland). "It's some fishy business," said Committee Chairman Jason Chaffetz (R-Utah), who said it seemed like Bresch was not being "honest and candid."

He and Cummings said they expected fuller answers to their inquiries within 10 days — essentially, by early October.

Other members said Mylan seemed to be the latest example of drug company excess, specifically mentioning former Turing Pharmaceutical CEO Martin Shkreli and Valeant Pharmaceuticals, both of which had been brought to Capitol Hill to account for exorbitant pricing of their products.

Noting that Shkreli had invoked the Fifth Amendment in refusing to testify before the committee, Cummings said that Bresch had provided so little information that "you might as well have taken the Fifth, too." He added, "I don't think you have been frank with us."

Mylan used "a simple but corrupt business model," which involved taking an older, cheap medication and raising the price as high as possible, said Cummings.

Several members of the committee said that Mylan might be engaging in anticompetitive practices, since EpiPen accounts for 94% of the epinephrine autoinjector market. It's not the first time antitrust concerns have been raised. In August, Sen. Amy Klobuchar (D-Minnesota) asked the Federal Trade Commission to investigate the company's pricing practices.

Douglas Throckmorton, MD, deputy director for regulatory programs at the US Food and Drug Administration (FDA), told the House panel that the agency has approved four epinephrine autoinjectors, but that only two are currently on the market.

No generic autoinjectors have been approved. Earlier in 2016, Teva Pharmaceuticals sought FDA approval for a generic EpiPen, but Mylan successfully blocked the attempt. Teva recently announced that it would meet with the FDA in the hopes of resubmitting its application and winning approval by early 2018.

Some committee members said that slow reviews of generic drugs at the agency were to blame for Mylan's near monopoly. But Dr Throckmorton said the agency had largely cleared a backlog and that it was reviewing products within 10 months.

Bresch Touts New Generic

Mylan CEO Bresch said that Mylan's plan to introduce an authorized generic version of the EpiPen — announced in late August — should alleviate concerns about pricing and lack of competition, as the generic would list for $300 for two pens.

House members were not impressed. "That's a crock," said Rep. Buddy Carter (R-Georgia) in response to Bresch's contention that the generic was equivalent to a price cut. "Don't try to convince me that you are doing us a favor here," said Carter, who is a pharmacist. "This is a shell game. That's all it is," he said, adding that Mylan could have reduced the price on the brand name EpiPen, especially because the generic will be identical to the brand name product.

"Suddenly, feeling the pressure, Mylan has offered a generic version and cut the price in half," said a dubious Chaffetz. "So that does beg the question what was happening with that other $300."

Undaunted, Bresch, at a different point in the hearing, said the company would also address pricing concerns by introducing an EpiPen with a longer shelf life. The current product expires after 12 months. Mylan will very soon seek FDA approval for an EpiPen that will last 24 months, said Bresch.

Questions About Salary, Mother's Role

Both Republicans and Democrats also criticized the perks and salaries of Mylan's top executives, with Chaffetz pointing out that five top executives had earned $300 million over the past 5 years. Bresch's $18 million salary in 2015 came under fire as well.

Bresch said her salary was "in the middle" in terms of compensation for those in similar positions in the industry. Committee members repeatedly asked whether her pay was tied to EpiPen sales, but Bresch danced around the question, asserting that her compensation was set by the Mylan board of directors.

The House members also asked Bresch about a USA Today article that alleged that her mother, Gayle Manchin, had helped boost EpiPen sales through her position as head of the National Association of State Boards of Education in 2012. Manchin, who is married to Bresch's father, Sen. Joe Manchin (D-West Virginia), reportedly pushed schools to stock autoinjectors — at a time when Bresch was CEO of Mylan and when Mylan dominated the market.

Ultimately, 11 states drafted laws requiring schools to keep epinephrine autoinjectors on hand, and President Obama signed a federal law that gave schools funding for doing so.

"The article is completely inaccurate," said Bresch at the hearing. She said Mylan had given away 700,000 EpiPens to schools. But she refused to say how many had been sold to schools.

"I thought it was a very cheap shot to bring my mother into this," added Bresch.


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