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.
Much has been written over the past several months about Trump University’s horrible track record and until earlier this week I was surprised that Hillary Clinton didn’t make his oversight of his eponymous college more of a campaign issue… But then I read an article on Facebook earlier this week and one today in the NYDaily News on Bill Clinton’s service as “honorary chancellor” of Laureate University and it became clear why Ms. Clinton has steered clear of specific criticism of her opponent. Why? Well… it seems that as “honorary chancellor” Mr. Clinton was paid over $17,000,000 over a five year period that ended just before Ms. Clinton declared her run for President, Doug Becker, the founder of Laureate contributed $5,000,000 to the Clinton Foundation, and as Secretary of State Ms. Clinton made certain Mr. Becker was invited to dinners where he presumably could come in contact with people seeking college education for its citizenry. As for Laureate itself,
…one of Laureate’s largest schools in the U.S., Walden University, was found to have burdened students with the second-highest debt load of any American school, according to a 2015 study by the Brookings Institution.
Three of the five schools the company runs in the U.S. have been under what the federal Education Department calls “heightened cash monitoring” due to questions over its finances, CNN reported this week.
So while Ms. Clinton promises to “…“crack down” on for-profit schools operating in “lawbreaking” ways” her husband and the Clinton Foundation was willing to accept millions from a college whose finances were under review by the Education Department. All of this makes Ms. Clinton’s pledge to avoid privatization of public education seem hollow and any specific criticism of Mr. Trump’s “University” difficult to level. To quote Paul Simon: “Any way you look at it you lose”.
After years of reading that “school reform” is rooted in and allied with the civil rights movement, it is heartening to read that three civil rights groups— the NAACP, Black Lives Matter, and the Southern Poverty Center— are pushing back. Sunday’s NYTimes featured an article by Kathy Zernike highlighting the emerging rift between civil rights organizations and the for-profit charter schools they portray as “...the pet project of foundations financed by white billionaires”:
In separate conventions over the past month, the N.A.A.C.P. and the Movement for Black Lives, a group of 50 organizations assembled by Black Lives Matter, passed resolutions declaring that charter schools have exacerbated segregation, especially in the way they select and discipline students.
Instead of standing on the sidelines as charter schools take over public education in urban areas, civil right groups are beginning to see the corrosive effects of charter school cherry-picking on the students left behind in underfunded public schools. As Zernicke notes:
Although charters are supposed to admit students by lottery, some effectively skim the best students from the pool, with enrollment procedures that discourage all but the most motivated parents to apply. Some charters have been known to nudge out their most troubled students.
That, the groups supporting a moratorium say, concentrates the poorest students in public schools that are struggling for resources.
But the NAACP and Black Lives Matter are not alone in their disdain for charter schools. The Clarion-Ledger, a part of the USA Today newspaper chain, reports that the Southern Poverty Law Center is filing a suit against the Mississippi state government to “…strike down the Mississippi Charter School Act” because:
The Mississippi Constitution requires schools to be under the supervision of the state and local boards of education to receive public funding. But under the act, charter schools receive public funding even though they are exempt from the oversight of the state Board of Education, the Mississippi Department of Education and local boards of education.
While only 3% of the state funds currently go to charter schools, those filing the suit know where this train is headed and want to make sure it doesn’t leave the station.
“I sent my children to a public school because I believe in traditional public schools,”Cassandra Overton-Welchlin, a plaintiff in the case and mother of two children enrolled there, said in the news release. “I’m outraged that state and local tax dollars are funding charter schools in a way that threatens the existence of important services, including services for those with special needs, at my child’s school. As a taxpayer, I expect my property tax dollars will be used to support traditional public schools, which educate the vast majority of students in Jackson.”
Here’s hoping these public actions by traditional and new civil rights groups compels “…the pet projects of foundations financed by white billionaires” from making the claim that their efforts to tap into what they call the “potentially profitable public school market” is a civil rights issue!
Diane Ravitch’s wrote a post yesterday critiquing questions Michael Hansen of the Brooking Institute would pose to the Presidential candidates regarding public education. Mr. Hansen’s questions were:
- What kind of person would you choose for Secretary of Education?
- How can Title I be improved?
- Have the Obama administration policies for higher education helped students?
- Which federal education programs would you expand, which would you shrink?
- How much would you increase funding for education research?
Diane Ravitch added these questions:
1. Do you think the federal government should continue to support the privatization of public education? Does the federal government have a role in strengthening and protecting public schools that have democratic governance?
2. Would you expand or shrink the funds now dedicated to privately managed charter schools?
3. What is your view of vouchers that allow public dollars to be spent in religious schools?
4. How would you define the federal role in education?
5. What do you see as the federal role in increasing equitable resources among districts and schools?
6. Would you be willing to persuade Congress to reduce the burden of standardized testing? Specifically, how would you change the federal law to ease the federal pressure to test students annually, a practice unknown in high-performing countries?
7. Do you think that every child should be instructed by a professionally prepared and certified teacher? How can the federal government verify that states are hiring fully qualified teachers?
She invited commenters to offer their own questions. Here are three I suggested I would pose:
=> We have tested children for over two decades and all the results show a strong correlation between low test scores and poverty. What steps should the federal government take to address persistent poverty?
=> The lack of affordable housing in affluent communities is contributing to resegregation. What steps would you take to promote fair housing practices in the suburbs?
=> Do you think that schools should be run like a business? (i.e. Do the rules of free markets apply to public education?)
But here’s what is especially frustrating from my perspective: I doubt very much that either Presidential candidate will be asked any questions about public education because now that ESSA is on the books the questions about public education are delegated to the State level.
An article by Phil Ciciora in Phys.Org reports that a study by University of Illinois economist Andrew Weaver finds that the report of a “skills gap” in the US manufacturing arena is overstated. What the article doesn’t say is that the “skills gap” itself may be manufactured by those who want to demonize publicly funded schools (see post from earlier today). Here’s Weaver’s quote about the supposed “skills gap”:
Three-quarters of U.S. manufacturing plants show no sign of hiring difficulties for open positions, says new research from Andrew Weaver, a professor of labor and employment relations at Illinois.
“Not a week goes by without someone declaring that a huge skills gap exists in the U.S. workforce,” he said. “A lot of ink has been spilled on this topic, but it’s frequently without evidence. The popular sentiment encourages people to think that employers have high skill demands, but U.S. workers just aren’t up to snuff, and that’s why manufacturing work is being outsourced overseas.”
However, the results show that U.S. manufacturers are generally able to hire the skilled workers they seek.
“We estimate an upper bound of job vacancies due to a potential skills gap of 16 to 25 percent of manufacturing establishments – a finding that sharply contrasts with other surveys that have reported figures of more than 60-70 percent,” Weaver said.
Neither the researcher, Weaver, nor the journalist, Ciciora, pose the question of who benefits from the canard that a skills gap exists, but it is clear that the businesses doing the outsourcing can increase their profits by avoiding an increase in their wages to reflect the demand for high skill workers, or by outsourcing their work as opposed to working in tandem with community colleges to provide training, or by providing the training themselves. The desire to reward shareholders instead of employees leads manufacturers to suppress wages, to sub-contract to overseas venues, and to avoid any expansion of publicly funded institutions that could assist them in increasing the marginal number of employees needed to fill the supposed skills gap. Any time a corporation bemoans the lack of skilled employees journalists should ask them when the last time was they increased their compensation packages, if they have reached out to local community colleges to seek their assistance in training, and if they ever considered offering training for those jobs themselves. Those solutions all cost money and the last two take time… but all three are superior to outsourcing.