Overview and analysis of Mylan's EpiPen price hike. Legal, financial, political, and ethical insights on the company matter. Group project.

1. Mylan’s Price Hike
on EpiPens

2. Heather Bresch
Daughter of Joe Manchin, a prominent politician
throughout her childhood.
Used her father's connections to help land a job at
Mylan, a generic drugs company (1992). Started off as
a sales clerk and worked her way to promotions.
Heather began to learn the business inside and out.
Was named President, COO, CIO of Mylan during her
time.
Was announced CEO of Mylan in 2011.

3. Heather Bresch
When she became CEO shortly
after the acquisition,
▫ Bresch focused on
marketing EpiPens, turning
a $200 million business into
a $1.1 billion business
▫ The EpiPen became Mylan’s
most important product,
accounting for $1 billion of
its $9.4 billion in sales in
2015.

4. 5 Year Stock Price

5. Financials: 2014 vs. 2015
Gross Profit: 4,216,100
Operating Income: 1,460,900
Net Income: 847,600
*In billions
Gross Profit: 3,528,000
Operating Income: 1,352,600
Net Income: 929,400
Income Statement

6. Epipen Price

7. Drug CEO Salaries
Epipen: Heather
Bresch - 18.9 million
REGN: Leonard
Schleifer - 47.5 million
VRTX: Jeffrey Leiden -
28 million
Johnson & Johnson:
Alex Gorsky - 23.8
million
http://www.cbsnews.com/news/whats-behind-the-sharp-rise-in-prescription-drug-prices/

8. EpiPen costs in other countries
Britain: $69
France: $100
Germany: $200
U.S: $600

9. Other Drug Companies
▫ Reuters analysis says that the
10 most popular drugs add
billions to U.S. health care
spending
▫ Conditions include arthritis,
asthma, abnormal cholesterol,
crohn's disease

10. EpiPen vs. Other
Drugs
Anti-Malaria drug, Daraprim,
5,000% increase
$13.50 to $750
Used to treat parasitic
infections and prevent a
nervous system infection in
those with HIV.
Will not allow a generic version
of the drug
Can do this because of
loophole ‘closed distribution
model’
http://www.cbsnews.com/news/whats-behind-the-sharp-rise-in-
prescription-drug-prices/

11. Blame on
intermediaries
including wholesalers,
retailers and
pharmacy benefit
managers
"That $608 is a list
price. What Mylan
takes from that, our
net sales is $274.”
The CEO’s Justifications for
Price Hikes
Mylan has costs that
include
"manufacturing the
product, distributing
the product,
enhancing the
product, investing."

12. “
No one's more frustrated
than me.
CEO Heather Bresch to CNBC

13. High-deductible health plans
High copayments
Out-of-pocket costs for
prescription medications
http://www.npr.org/sections/health-shots/2016/12/16/505851637/mylan-
to-sell-generic-epipen-at-half-the-price-of-original
http://www.cnbc.com/2016/08/25/mylan-expands-epipen-cost-cutting-
programs-after-charges-of-price-gouging.html
Blame on the Health-
Care System

14. Doubling eligibility for its patient assistance program
Pathway to order Epi-Pens directly from the company
Cut their generic to half the price of a regular epi-pen
Mylan’s Actions Towards Cost-Cutting

15. “
This isn’t a discount. It’s a
PR move.
Sen. Bernie Sanders

16. Allergy Statistics
In 2014, 4 million U.S
children had food allergies
▫ Almost 40% of these
children have severe,
life threatening
reactions
10% of people are allergic
to penicillin
5% have insect
allergies
40 U.S. deaths/year
Individuals, schools,
government offices
are all suppose to
carry multiple EpiPens.
http://www.aafa.org/page/allergy-facts.aspx

17. people are at risk from
anaphylaxis, or the
severe, life-
threatening allergic
reaction that EpiPen's
injection of
epinephrine is
designed to
counteract.
http://www.cnbc.com/2016/08/25/mylan-expands-epipen-cost-
cutting-programs-after-charges-of-price-gouging.html
Million

18. Legal Issues

19. Antitrust Laws
Do these laws apply to Mylan?
See:
http://www.cbsnews.com/news/whats-behind-
the-sharp-rise-in-prescription-drug-prices/
https://www.wsgr.com/publications/PDFSearch/
law360-0915.pdf
http://www.cnbc.com/2016/08/23/us-
lawmakers-press-mylan-on-epipen-price-
increases.html

20. Mylan’s
Contracts with
Schools
http://gizmodo.com/do-mylans-epipen-contracts-with-schools-break-antitrust-1786263484
There have been questions
whether Mylan broke antitrust
laws with their contracts with
schools.
Allegations that they had
contracts with schools that
they could not buy products
from their competitors (before
price was raised).

21. CEO Testifying
Refused to admit at any point
that her company raised the
price of the EpiPen to make
more money
Didn’t answer any questions of
revenue she was asked to
obtain ahead of time

22. Congress Didn’t Buy It.
Rep. Elijah Cummings acused
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.
http://www.businessinsider.com/mylan-ceo-heather-bresch-house-
oversight-committee-hearing-epipen-2016-9

23. Pending Trials
Several proposed class-
action cases against
drugmaker Mylan
involving EpiPens have
been brought in federal
courts.
http://www.usatoday.com/story/money/business/2016/12/30/la
wsuits-against-epipen-maker-mylan-moving-forward/95995348/

24. What about
Daraprim?
It seems that Daraprim has
acted alone in their price
increase.
There have not been any
proven evidence that they were
working with anyone in the
market when they spiked their
price.

25. Turing and the Closed Distribution Model
Open Distribution Model: “The allowance of the same types of
items to be carried and distributed in a certain area or region by
different sellers.”

26. Unclear Intentions
Stealing market share?
Kaleo Pharmaceuticals & the
Auvi-Q epinephrine auto-injector
Teva Pharmaceuticals & its own
generic EpiPen
http://www.npr.org/sections/health-shots/2016/12/16/505851637/mylan-
to-sell-generic-epipen-at-half-the-price-of-original

27. Looking to the
Future

28. Mylan’s Mission & Vision
http://www.mylan.com/en/company/about-us

29. Possible Impact of the Trump
Administration
Donald Trump’s New Promise: I Will ‘Bring
Down Drug Prices’
Trump looking to do something about drug
companies (populist appeal)
http://www.forbes.com/sites/patrickcox/2016/12/14/trumps-fda-chief-may-implement-progressive-
approval-for-drugs/#431eb7c11c34

30. The Future of the FDA
Potential FDA chief appointee: Jim O’Neill
O’Neill has publicly supported a
“progressive approval” process for drugs
http://www.forbes.com/sites/patrickcox/2016/12/14/trumps-fda-chief-may-implement-
progressive-approval-for-drugs/#431eb7c11c34

31. Governing
Issues
The FDA
Patents
Cozy insurance
relationships

32. Other Companies that May Follow Suit
Bayer AG
Johnson & Johnson
Pfizer

33. Final
Thoughts to
Consider
Final
Thoughts to
Consider

34. “
“It's a kind of pay-or-die pricing system for the EpiPen. Parents
are really frantic about how they're going to pay for this.”
Ralph Nader
“The cost of epinephrine is literally less than a Big Mac.”
Mark Baum, Pharmaceutical CEO developing an alternative