Tax-dodging Mylan Pharmaceuticals now under scrutiny for steep EpiPen price hikes

Rss@dailykos.com (hunter) · Wednesday, August 24, 2016, 5:30 pm

Mylan Pharmaceuticals has been on the hotseat after the U.S. Senate got wind of the price hikes that have inflated the price of the company's EpiPen, a key emergency treatment for life-threatening allergic reactions, from $100 to over $600 in recent years despite the product itself having been around for decades. Those price hikes have placed the drug out of reach for some parents and patients, and there seems to be no good reason for the price hikes other than the drug's near-monopoly status. The new attention on the company isn't doing it any favors. Consider:

• The company purchased $1.7 million worth of ads directing patients toward the drug during NBC's Olympic coverage. While the ads did not name the EpiPen, the website promoted during the spots directed patients toward it as "treatment."

• Mylan recently reincorporated in the Netherlands in what is known as an "inversion"—an accounting ploy to reduce its U.S. taxes. CEO Heather Bresch, who is the daughter of Democratic Sen. Joe Manchin, called the move necessary to overcome the "competitive disadvantage" of being subject to American taxes.

• Despite tax complaints, Mylan isn't hurting for cash. The price hikes lifted EpiPen revenue for the company from $200 million in 2007 to around $1 billion a year now, making it responsible for almost a tenth of the company's total revenue. And during the period Mylan has been raising the EpiPen's price, CEO Bresch's compensation went up by a similar margin: from $2.5 million to nearly $18 million.

• It's not the only one of the company's products to see steep price increases recently: Wells Fargo senior analyst David Maris found that "Mylan has taken some exceptionally large price increases in 2016," with price hikes "more than 20 percent on 24 products, and more than 100 percent on seven."

In his report on Mylan, Maris wrote that while some of the products "may be small relative to Mylan's overall business, we do not believe that the price increases come without a real cost to patients."
"And if this turns to headline risk, the could be an impact to reputation and shareholders as well," Maris wrote in June. "In this environment, we believe 400 percent and 500 percent price increases on products are beacons for scrutiny."

The company's stock price has indeed taken a dive in recent days now that that scrutiny is real. Congressional investigation of the price hikes now looks all but inevitable, with Rep. Elijah Cummings (D-MD) pushing for a September hearing and Sen. Amy Klobuchar (D-MN) asking both the FTC and the Senate Judiciary Committee to investigate.

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