The Nexus Between Epi Pen Pricing Scandal and Public Education: A Mandate Without Money that Enriches Shareholders
Today’s NYTimes has a follow up article on the ongoing controversy surrounding the decision of the CEO of Mylan to increase the price of Epi-pens, a life-saving device that mitigates allergic reactions to foods like peanuts and a device that is mandated in public schools in 11 states. It seems that Mylan’s CEO, Heather Bresch, received a huge pay raise while overseeing a fourfold increase in the cost of Epi-pens, a product that was not developed by Mylan but WAS developed by (drum roll, please) the federal government. And to make matters even worse Mylan spent over $4,000,000 advocating the passage of a Federal bill that encouraged public schools to stock the epi-pens and then relocated its HQ overseas. Its telling that the Times didn’t go into the details on all of this nearly as much as Alternet, which cross-posted Travis Gettys’ Raw Story article that included these gems:
Mylan completed a corporate inversion to change its legal residence to the Netherlands, a tax haven, while keeping its headquarters and most of its employees in the Pittsburgh area.
The move allowed Mylan to cut its U.S. effective tax rate from 9.4 percent in 2013, the year Congress helped protect its market dominance, to negative 4.7 percent in 2015, according the group Americans For Tax Fairness.
Mylan’s worldwide effective tax rate fell after moving to the Netherlands from 16.2 percent to 7.4 percent—even as its global profits shot up by 22.5 percent between 2013 and 2015.
The company receives millions in U.S. taxpayer funding through federal programs such as Medicaid and the Children’s Health Insurance Program, which has helped offset consumer costs as Mylan has jacked up EpiPen prices.
EpiPens now cost $609, more than twice the $265 rate in 2013 and more than five times higher than their $104 cost in 2009, not long after the company acquired the drug from the German drugmaker Merck.
The company’s CEO, Heather Bresch, has raised her own pay at similar rates to the drug she lobbied Congress to promote through federal law.
Bresch took home $4.9 million in 2009, but last year she made $13.1 million—and the year before, when she moved Mylan overseas after securing the Emergency Epinephrine Act, she made a whopping $25.8 million…
The pharmaceutical company’s “EpiPen4Schools” program, which started in August 2012, before the bill was passed but after it was introduced, offers free or discounted EpiPens to schools with one catch.
To qualify for the discounted $112.10 price, schools must agree not to purchase similar products—such as the lesser known Adrenaclick—from Mylan’s competitors.
So Mylan “generously” offered public schools a discount on Epi-pens in 2012 if and only if they agreed to purchase their pens exclusively and then jacked up the price fourfold. And the loser in all of this: taxpayers. We paid for the research and development that led to the development of epi-pens, we’re losing the taxes Mylan used to pay, and we’re paying more for the product Mylan now owns and sells to our publicly funded institutions. Any way you look at it we, the taxpayers, lose and Mylan shareholders win. If there is any justice in the free market this scandal will result in a lowering in Mylan’s stock.