Mylan CEO defends EpiPen cost to angry lawmakers

U.S. lawmakers on Wednesdayblasted steep price increases for Mylan's EpiPenemergency allergy treatment as they grilled the company's ChiefExecutive Heather Bresch at a congressional hearing.

The House Committee on Oversight and Government Reformcalled Bresch to testify after the company raised the list pricefor a pair of EpiPens to $600 US compared with $100 US in 2007, whenit acquired the product.

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Congressman Elijah Cummings, ranking Democrat on thecommittee, said Mylan "jacked up" the price of the life-savingproduct "to get filthy rich at the expense of our constituents."

"After Mylan takes our punches they'll fly back to theirmansions in their private jets and laugh all the way to thebank," Cummings said.

The EpiPen is an automatic injector designed to treatlife-threatening allergic reactions to anything from nuts to beestings, delivering a dose of epinephrine through a quick jab inthe thigh.

The price increases ignited a national controversy inAugust, as a growing number of families protested and said they
were unable to afford the device through their health insurance.

Committee Chairman Jason Chaffetz of Utah noted that Mylansaid it would soon sell a generic version of EpiPen for about$300. "Suddenly feeling the heat Mylan has offered a genericversion and cut the price in half, so that does beg the questionwhat was happening with that other $300?"

Holding up an EpiPen, he said: "the actual juice that's inhere that you need costs about a dollar."

The hearing comes after Democratic presidential candidateHillary Clinton previously called Mylan's price increases
outrageous, while both Democratic and Republican lawmakers havecalled on federal agencies to investigate Mylan's businesspractices. Several U.S. states are probing the impact of theprice increases on government healthcare programs such asMedicaid.

Mylan has responded to the criticism by offering discountsmore widely to families, and said it plans to launch ahalf-price version of EpiPen soon, a move Bresch said onWednesday would cannibalize its brand-name product.

"Our concern was absolutely that anyone who needs an EpiPenhas one," she said.

EpiPen has more than a 90 per cent market share for emergencyepinephrine auto-injectors. In 2015 it accounted for $1 billionof Mylan's overall sales of $9.45 billion. The device accountsfor about 20 per cent of company profits.

Critics say EpiPen would remain profitable at a lower price.

A recent analysis by the consumer watchdog Public Citizenfound that an EpiPen two-pack costs $69 in the United Kingdom,$181.81 in Canada and $210.21 in Germany.

"The EpiPen clearly is profitable at prices far lower thanMylan's U.S. prices," Robert Weissman, president of PublicCitizen, said in a statement. "Mylan has dramatically hiked theprice simply because it could, not because it needed to recoverany cost of making the product."

Bresch said during testimony that after rebates, fees andcosts, the company makes about $100 per EpiPen pack. The pricingfuror has also had an impact on company shares, bringing them toa historically low valuation.

Mylan shares were up about 1.6 per cent at $41.91 onWednesday as testimony got underway.

Lawmakers are also trying to determine whether Mylan mademore money on the EpiPen than warranted from state Medicaidprograms by having it classified as a generic product ratherthan a branded drug, resulting in much smaller rebates to thegovernment health plans.

The U.S. Food and Drug Administration classifies EpiPen asbranded but the Centers for Medicare and Medicaid Servicesclassifies it as a generic for the purposes of Medicaid's drugrebate program.

Every company that participates in the Medicaid rebateprogram pays 13 percent in rebates back to the states on genericdrug prices. They pay back 23 percent on the price of a brandeddrug. Mylan has said it complied with all laws and regulationsregarding rebates.

Senate Republicans have asked the U.S. Department of Healthand Human Services Inspector General to investigate whether itsagency CMS made sure states were getting the correct rebates oncovering EpiPen prescriptions.

EpiPen has also increased the cost burden to the Medicareprogram for the elderly, according to an analysis from theKaiser Family Foundation, a health policy research group. Beforerebates, EpiPen costs for Medicare Part D increased more than1,000 per cent between 2007 and 2014, from $7 million to $87.9million, the report said.