Drug maker Mylan (MYL), under fire for sharply raising prices of a life-saving allergy treatment, two years ago urged executives to hit ambitious five-year sales and profit targets with a special incentive plan.
If achieved, the special one-time award, offered to more than 100 "key employees," would mean tens of millions of dollars in bonuses for the executives of the Netherlands-based company.
The plan's goal is to double
Since the incentive plan was enacted, the cost of EpiPen two-packs negotiated by insurers and employers has risen from less than $400 to more than $600. The medication is used to treat severe allergic reactions, which can include throat or tongue swelling, shortness of breath and a rash.
The Wall Street Journalreported Thursday on the incentive plan, which was alsodetailed last week by
"When they thought they would have a revenue or profit shortfall somewhere else they decided to get more aggressive on EpiPen, because that is where they thought they would be able to raise some prices, make some more profit and make their targets," Ronny Gal, an analyst at
Mylan, in a statement said that the targets in the "one-time special (employee incentive) program ... are not practically achievable based on pricing of any single product."
EpiPen sales, the company said, represents less than 10% of revenues with Mylan's acquisition earlier this year of Swedish drugmaker Meda. "Mylan has a large and diverse business, with more than 2,700 products sold in 165 countries and 600 products sold in the U.S. alone. As a result, our business performance is not reliant on any one product or region," the company said. "
Earlier this week, Mylan said it would begin offering a generic version of the EpiPen for half the list price of the brand-name drug. That move came after the company became embroiled in controversy prompted by the skyrocketing price.
Mylan shares closed down 1% at $41.92 Thursday. The stock has fallen approximately 9% over the past month.
Full value of the incentive bonuses would be awarded only if Mylan's stock price has reached $73.33 per share during the period covered by the plan.
Should the drug maker hit its stock and earnings targets, CEO