By jacking up the price of EpiPen injections, which act as a lifesaver in life-threatening allergic reactions, Mylan may have earned a bad reputation. However, all the people associated with the production of the ready-to-administer Epinephrine vaccination, are extremely happy.
Mylan, the company that is the primary maker and seller of the life-saving epinephrine devices, commonly referred to as the EpiPen, has been at the receiving end of severe criticism for steadily increasing the price of these injections. These devices administer an emergency dose of the life-saving hormone, epinephrine, to stop a potentially fatal allergic reaction. While these devices are often considered the first line of defense to stop an allergic reaction and prevent death by asphyxiation, for Mylan, the EpiPen turned out to be a goldmine that the company has been exploiting since 2007.
One senator's daughter is CEO of the company behind EpiPen price hike. Another senator's daughter needs the device. https://t.co/Z306us4DqE
— CNN (@CNN) August 24, 2016
The company cleverly bought the rights to manufacture and distribute EpiPen and immediately began to steadily increase the prices. While 2008 and 2009 saw a rather humble price hike of just 5 percent, the company gradually increased the hike exponentially by 10 and 15 percent in the years to come. While a few of the hikes in the early years were annual, the company realized the demand for EpiPen never subsided owing to its efficacy and criticality. Hence, from the fourth quarter of 2013 to the second quarter of 2016, Mylan steadily jacked up the prices of EpiPens by 15 percent every other quarter.
Mylan’s monopoly on EpiPens is costing low-income allergy patients thousands of dollars https://t.co/MDL3D14foK
— Quartz (@qz) August 23, 2016
Essentially, a single administrable EpiPen costs a whopping 461 percent more than its retail price in 2007. While the price of a single EpiPen was around $56 in 2007, it costs more than $317 today. As the single product alone contributes 40 percent of the company’s operating profits, one can only imagine how much Mylan earned from the life-saving EpiPen.
EpiPen plot thickens: "Mylan CEO Heather Bresch's compensation went from $2,453,456 to $18,931,068; a 671% increase. https://t.co/8mgNZx0Yif
— Emily Willingham (@ejwillingham) August 23, 2016
While Mylan made huge profits off of the humble EpiPen, the employees of the company, especially in the upper management, and more notably its CEO Heather Bresch, made a tremendous amount of money. According to New York Daily News, Bresch was showered with a 671 percent raise during the time the price of EpiPen kept increasing.
— Forbes (@Forbes) August 24, 2016
With the company doing so well, its shareholders are a delighted bunch. Mylan once traded for as low as $14.84 per share, but that was in 2007. The script’s price could reach $50 in the near future if the news about their business practices doesn’t halt its upward movement.
EpiPen Price Gouging Came As Mylan Pulled Off Tax Inversion https://t.co/CqY4jIEPL5
— Scott Knoer (@ScottKnoer) August 24, 2016
Shockingly, despite doing so well, Mylan cleverly avoids paying a huge amount of tax by the loophole referred to as inversion, which involves buying a foreign generic manufacturer of the drugs and then reincorporating the company in the foreign land. Hundreds, if not thousands of companies in the United States substantially slash their tax liability by acquiring a foreign firm and moving its tax domicile to the acquired company’s homeland.
Mylan bought a generics manufacturer located in the Netherlands from Abbott Laboratories, and for tax purposes, incorporated there. If the story sounds familiar, that’s because quite recently, Turing Pharmaceuticals, and more specifically its notorious CEO, Martin Shkreli, had jacked up the price of a drug used by HIV patients by 5,000 percent overnight.
Congress is now joining the fight against the soaring cost of Mylan’s EpiPens: https://t.co/UusVO2e9ok
— MarketWatch (@MarketWatch) August 24, 2016
American parents of kids with allergies and adults who are also at risk consider the EpiPen an indispensable component in their medicine cabinet. More often than not, families who have children with allergies purchase and store several of these devices in multiple, easy to reach locations. Administering an EpiPen is one of the simplest tasks. A small dosage of Epinephrine is enough to stop an allergic reaction and significantly reverse the effect of the allergen. While a visit to the emergency ward is often mandated, these visits are more precautionary in nature.
— CNBC Now (@CNBCnow) August 24, 2016
[Update] The news about the profit-focused price increase of EpiPens has had a negative impact on the share prices of Mylan. The company’s share prices were down more than four percent as pressure continues to mount on the company to bring the prices of EpiPen down.
[Photo by Jeff Swensen/Getty Images]