Mylan CEO defends price boosts for lifesaving EpiPen

WASHINGTON -- The CEO of the drug maker that sells the EpiPen allergy-reaction injector defended the company's six-fold price increases Wednesday in congressional testimony, painting the lifesaving treatment as less profitable than it might appear.

Despite Mylan CEO Heather Bresch's best effort to to squelch her company's role in the political firestorm over pharmaceutical profits, she was assailed in a bipartisan chorus over the increases. EpiPen has gone from $100 for a two-pack in 2009 to $608 today.

Mylan raised EpiPen prices "to get filthy rich at the expense of our constituents," U.S. Rep. Elijah Cummings, D-Md., said at the House Oversight Committee hearing.

Bresch, however, stood her ground when it came to the price, not apologizing. She said there is a misunderstanding about the profitability of the treatment, which is stocked individuals and by many schools around the country and requires regular replacement when it expires.

"I know there is considerable concern and skepticism about the pricing," Bresch said. "I think many people incorrectly assume we make $600 off each EpiPen. This is simply not true."

Bresch said the company receives $274 per two-pack after rebates and fees are deducted. When factoring in "our cost of goods" and other "related costs," she said the company reaps a profit of $100 per two-pack.

Mylan joins the growing list of drug companies facing political scrutiny over sharp price increases, including Valeant Pharmaceuticals and Turing Pharmaceuticals, whose former CEO, Martin Shkreli, called the same committee "imbeciles" following his own appearance earlier this year. Congress has also questioned the pay for many drug giants. Before the committee, Bresch defended her $18 million annual pay package.

Marianne Udow-Phillips, director of the University of Michigan's nonpartisan Center for Healthcare Research and Transformation, said Mylan's profit margin on the EpiPen will fluctuate depending on the payer. But based on the volume of sales, it's a "considerable profit for the company," Udow-Phillips told USA TODAY.

"Taking her $50 per EpiPen at face value, I would describe that as a very good (profit) margin on a product where we know the drug itself costs something like $1 and the device was developed long before Mylan bought it," Udow-Phillips said. "It is likely that the R&D cost for this device was recovered long ago. Whether a continuing profit margin of $50 per device is 'reasonable' or not is a judgment question."

Bresch acknowledged that "a growing minority of patients" may have paid the full price, something that Mylan never wanted to happen. "We never intended this," she said. "We listened and focused on this issue and came up with a sustainable solution."

The solution has included rebates for certain patients and a recent plan to introduce a generic version of EpiPen for $300 per two-pack.

Some 85% of EpiPen users pay less than $100 out of pocket, she said, although critics say that cost is simply passed along to insurers, who then pass the cost along to consumers in the form of higher premiums.

Medicare Part D enrollees paid an average of $56 out of pocket per EpiPen prescription in 2014, up from $30 in 2007, according to a study by the Kaiser Family Foundation. During the same period, Medicare's EpiPen costs rose from $71 per prescription to $344.

Near-term political solutions are unlikely.

Rep. Jason Chaffetz, R-Utah, chairman of the committee, pressured the Food and Drug Administration to remove bureaucratic hurdles to innovation that may be blocking competitors. The agency recently delayed a prospective competitor offered by Teva Pharmaceutical Industries, leaving Mylan as the only readily available option for most consumers.

Rep. Stephen Lynch, D-Mass., said Mylan's "disgraceful" price increases show that Medicare needs the power to negotiate drug prices. The Obama administration relinquished that right to win the drug industry's support for the Affordable Care Act.

Cumming said Mylan is taking the same approach as other drug makers: accepting the criticism but refusing to change.

"I’m concerned this is a rope-a-dope strategy. They will take their punches but then they go right ahead raising their prices," Cummings said.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.


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