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Mylan to expand discount programs as EpiPen prices spike

| Thursday, Aug. 25, 2016, 9:06 a.m.
Sales of Mylan’s EpiPen generate $1 billion a year for the company.
Sales of Mylan’s EpiPen generate $1 billion a year for the company.

Mylan NV responded to mounting criticism over the skyrocketing cost of its highly profitable EpiPen by expanding programs that help some people pay for the lifesaving allergy injection but the company stopped short of cutting the price.

CEO Heather Bresch appeared on cable TV Thursday to defend the company and blamed pharmacy managers, health insurers and a broken U.S. health care system for EpiPen prices that have soared from about $100 in 2007 when the company acquired the emergency allergy treatment to $608 this year for a twin pack.

“No one's more frustrated than me,” Bresch told CNBC's Squawk Box. She said Mylan charges $274 for the EpiPen twin-pack but middlemen tack on additional charges before the drug gets to consumers.

“There are four or five hands that the product touches and companies that it goes through before it ever gets to that patient at the counter,” she said.

Bresch declined an interview request from the Tribune-Review.

In a written statement, Bresch said Mylan is taking steps to help patients hit with high out-of-pocket costs for EpiPen. Mylan, which is based in the Netherlands and run from offices in Cecil, is offering a discount card that will reduce the out-of-pocket payment for patients by up to $300 for an EpiPen two-pack. The drug injectors are used to treat severe allergic reactions.

In addition to the discount card, which previously reduced the price by $100, Mylan said it will allow families with higher incomes to qualify for another program that provides subsidies that could eliminate out-of-pocket costs for uninsured and underinsured patients. Mylan is also looking at allowing patients to order EpiPens directly from the company to help reduce the price. Spokeswoman Nina Devlin would not say what the direct-purchase price would be.

But the actions didn't quell the outrage from Mylan's critics.

“This step seems like a PR fix more than a real remedy, masking an exorbitant and callous price hike. This baby step should be followed by actual robust action,” Sen. Richard Blumenthal, D-Connecticut, said in a statement.

Blumenthal demanded Mylan drop its prices and has asked the company to explain its price hikes. He said he would “continue to push for a federal investigation and Congressional action.”

Mylan, one of the world's largest producers of generic prescription medicines, is facing a growing firestorm over the cost of EpiPen, a branded drug that has increased in price by more than 500 percent since 2007 when, according to the Elsevier Clinical Solutions' Gold Standard Drug Database, the average cost of a two-dose package was around $94. In Mylan's statement, Bresch linked consumer outrage over EpiPen to changes in health insurance coverage that increasingly require patients to cover a greater share of their medication costs. The growth of high-deductible health plans has meant some patients pay thousands of dollars out of pocket each year before their insurance coverage kicks in.

“We recognize the significant burden on patients from continued, rising insurance premiums and being forced increasingly to pay the full list price for medicines at the pharmacy counter,” Bresch said. “Patients deserve increased price transparency and affordable care, particularly as the system shifts significant costs to them.”

The price hikes became apparent to many parents as they refilled EpiPen prescriptions to send children with severe food allergies back to school. Justine Quach was relieved that she and her husband already had purchased EpiPens earlier this year for their 2-year-old daughter who has a peanut allergy.

Quach, 24 of Mt. Lebanon, said she hopes she won't have to buy additional EpiPens before sending her daughter to school because she is uninsured and her husband expects to lose his coverage soon. She said she has called pharmacies about the smaller dose EpiPen Jr. she keeps on hand and was quoted a retail price of $734 for a two-pack.

“My husband and I really don't make much money,” she said. “The fact that we are supposed to be able to afford hundreds of dollars for an EpiPen is so heartbreaking, infuriating and unrealistic.”

Politicians, including Democratic presidential nominee Hillary Clinton and a list of congressional leaders, have denounced Mylan. Several senators asked the company to provide information on why it boosted EpiPen's price dramatically. The company generates about $1 billion a year in revenue from EpiPen, or about 11 percent of the company's total sales.

Reacting to Bresch's comments that shifted the blame for high prices onto middle men, Pharmaceutical Care Management Association CEO Mark Merritt said Mylan was adopting a “failed PR strategy.” The Pharmaceutical Care Management Association is a Washington, D.C.-based trade group for pharmacy benefit managers.

“It's not credible to assert that Mylan's price hikes are the fault of those paying the bills: namely the employers, unions, and government programs that work hard to provide affordable prescription drug coverage,” Merritt said. “Blaming payers for these massive prices hikes is a red herring and doesn't pass the laugh test with policymakers.”

Despite the moves to cut out-of-pocket costs for some EpiPen users, Sen. Bob Casey, a Scranton Democrat, said the company needed to do more than provide discounts. Casey sits on the Senate Special Committee on Aging, whose Chairman Susan Collins, R-Maine, sent a letter to Mylan on Wednesday demanding an explanation for the escalating EpiPen price.

“Senator Casey believes that Mylan should find a way to actively work with patients, advocacy groups, pediatricians, allergists and other stakeholders to ensure that their pricing decisions strike the right balance,” spokeswoman Jacklin Rhoads said in an email.

U.S. Rep. Tim Murphy, R-Upper St. Clair, said he would be “looking deeper into what is responsible for these price increases.” Murphy is a member of the House Energy and Commerce Committee and is chairman of the Oversight and Investigations Subcommittee, which has examined the impact of the Affordable Care Act on health care costs.

Industry experts contend that pharmaceutical companies often raise prices steeply in anticipation of competition from generic versions of branded medicines. Teva Pharmaceutical Industries, an Israel-based rival drugmaker, was expected to launch generic EpiPen late last year. But Teva unexpectedly delayed the product launch after running into problems in the approval process with Food and Drug Administration.

“There's an incentive, once you're in the market, you have to race to make up your costs,” said William Short, CEO of Dallas-based Ameriflex, a health benefits administrator that serves about 40,000 employers.

Mylan raised EpiPen's price three times since the end of 2014, from $401 to $609 for a two-pack, according to data from Wells Fargo Securities.

“They ended up as a monopoly with a higher price point,” Short said.

The Associated Press contributed to this report.

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