THE EPICENTER OF GREED

epipen

This past weekend, the Penguins of Youngstown State University played a little tackle football inside the hostile confines of a place called Milan Puskar Stadium in Morgantown, West Virginia.  Puskar sort of rhymes with “push car,” something I did with alarming regularity in the early 1980’s, a time regarded as The Era of the Really, Really Crappy Mustang. Milan rhymes with MY-lan, just like the pharmaceutical giant that was born in West Virginia and whose global headquarters are now near Pittsburgh (even though it’s registered in the Netherlands with separate executive offices north of London, England – it takes Google Maps to keep track of ‘em.)

Milan rhyming with Mylan is no coincidence. In 1960, Milan Puskar, fresh out of a fine institution of higher learning known today as YSU (which is a coincidence), co-founded Mylan with another young fellow by the name of Donald Panoz.  I’m not sure why they didn’t call the company Milald, Pankor, or Puskanoz, but I’m guessing Panoz caught the fuzzy side of the lollipop after losing an arm-wrestling match in a Morgantown bar to his college bud. Yeah, let’s go with that.  It doesn’t make much difference because Panoz walked out of their business relationship nine years later when Mylan said ho-hum to the development of a transdermal patch Panoz invented.

If you want the whole fast-track skinny on Mylan, watch this short video. Pay attention to the first 25 seconds because there will be a quiz.

 

Did you hear that?  At 19 seconds the announcer says Mylan believes in “doing what’s right, not what’s easy.”  They may want to revisit that part of the script.  If you’ve been keeping up with the news lately, you probably heard that Mylan is a monopolistic distributor of a life-saving device called the EpiPen, a precious little gizmo that delivers a dose of epinephrine by plunging it into your leg to counteract the effects of anaphylaxis which can lead to almost certain death if left unchecked.   Mylan has launched the price of their EpiPen into the stratosphere, raising the price from under $100 in 2007 to $600 today, a whopping 500% boost.

“Doing what’s right” indeed.

Let’s put a little perspective into that price hike.  If a loaf of basic white bread costs $2.50 right now, then by Mylan’s arithmetic you can expect to pay 15 bucks for that bread nine years from now.

Thank God Mylan’s not in the baking business.

A price increase to stay ahead of inflation is understood, but even if you double the estimated time-value of money between 2007 and now, an EpiPen twin pack retailing at $100 then would cost only about $135 today.

The acute nature of anaphylaxis that an injection from an EpiPen races to reverse can be horrifying.  In extreme cases, one’s whole body can be affected within minutes if exposed to the wrong substance.  In some people, deadly allergic reactions can take place if they come in contact with peanuts, shellfish, or even dairy products.  Insect stings can cause it.  So imagine if you’re someone with hyper-sensitivity to bee stings, you literally may have minutes to live unless you stick yourself in the thigh with an EpiPen.  Without it, your airways constrict, you can’t swallow, your throat gets swollen, your heart races in panic; you collapse.  And you don’t get to see your granddaughter get married.

It’s a sudden and ghastly way to die.

Even though I’ve had my share of bee and wasp stings without going into anaphylactic shock, I still keep my mouth shut when I’m cutting the grass around that bee haven of a peegee hydrangea tree in my back yard.  Not taking any chances.

So, again, imagine yourself as someone who needs to be packin’ one of these devices every minute of every day because you never know when that assassin bee will come buzzing out of the peegee at you.  Or when a rogue peanut will find its way onto the sundae you just picked up at the DQ window.  That plastic tube of life-saving nectar is suddenly invaluable.  But almost just as suddenly, the price is now more than your car payment.

The CEO of Mylan is Heather Bresch whose name reminds me of Fuller Brush (you have to be ancient like me to appreciate that).  I don’t really know what motivated Ms. Bresch to rapidly ratchet up the price of the EpiPen over recent years, but I’m going to go out on a limb and guess that bottom line profits and boosting Mylan’s stock price (traded on NASDAQ as MYL) played a role.  My worst scenario has her emerging from some underground bunker deep within the mountains of West By God Virginia, smiling like a butcher’s dog following a “eureka!” moment when she realizes that with a 90% share of the EpiPen market she can do whatever the hell she wants with the price and seize the opportunity to make a fortune.

I have to wonder if Milan Puskar would have done this.  We’ll never really know because he passed away from cancer five years ago, well before the EpiPen price reached its current zenith.  However, he was quite alive when Ms. Bresch came into the company as a data entry clerk in ’92.  And he was certainly around to observe her as she rose through the ranks and became Chief Operating Officer in 2007.  I am curious if at any point he saw evidence of a desire by Ms. Bresch to turn their stated code of moral responsibility on its head and do what’s easy and not what’s right.

Here’s why.

Back in 2007, the Pittsburgh Post-Gazette made some routine phone calls after receiving a release that Heather Bresch was promoted to COO, a release that claimed she earned an MBA from West Virginia University.  WVU initially said no, she hadn’t earned an MBA there, but then a few days later turned that around as if to say, “Oh, gosh, those silly knuckleheads in the record-keeping department flubbed it up again.  Ha ha!  Yeah, Heather definitely got her MBA here.  Yeah, that’s it.  It was just a booboo we made when you guys called the other day. Oh! Look at the time.  Gotta go.  See ya.  Bye!”

The PG to their credit wasn’t willing to accept the reversal on WVU’s say so.  They dug deeper and just prior to Christmas in 2007 published an expose that all but caused the campus to slide down the hill and into the Monongahela River.

The story revealed to anyone who didn’t already know that Ms. Bresch’s father was then West Virgina Governor (and now U.S. Senator) Joe Manchin.  It reported that Mylan had a titanium-strength bond to WVU because of Milan Puskar’s generosity which contributed to his having a 60-thousand-seat football stadium named after him.  But that wasn’t all.

The incredible capper of the PG’s investigation was the discovery that WVU’ s records had been altered to award an MBA to Ms. Bresch.

People lost jobs because of this.  People like university president Mike Garrison who was a close friend of the Manchin family.  People like the university provost Gerald Lang.  People like the dean of the business school Stephen Sears.

But while Morgantown watched WVU purge three top administrators, Heather Bresch remained on the job at Mylan.  Despite being central to the messy reason why Garrison, Lang and Sears became unemployed, Heather Bresch survived.  In fact, Heather Bresch thrived. And ultimately she became Mylan’s Chief Executive Officer and watched her personal income rise from an already healthy and allergy-free $2.5 million to nearly $19 million in roughly the same time frame as the series of EpiPen price increases.

So there was that scandal in which Ms. Bresch falsely claimed earning a master’s degree.

And now there is this EpiPen disaster with Ms. Bresch at the helm of the company.

You might say that Bresch really knows how to have her brushes with calamity.

Some will say let’s not rush to judgment because every pharmaceutical giant incurs millions of dollars worth of research and development costs associated with its products.  Pfizer has even made a nice TV commercial about it.

 

I get the R&D cost argument but won’t buy it in this case it because this device with the decidedly unsexy and almost scary technical name of epinephrine autoinjector was invented in the 70’s by a guy in Maryland by the name of Sheldon in what had to be a Big Bang moment of inspiration, I’m sure.  The FDA approved Sheldon Kaplan’s device almost 30 years ago.  This wheel had already been designed, tested, approved, and in the market for twenty years when Mylan bought the marketing rights for the EpiPen from German pharmaceutical firm Merck.  R&D on this was someone else’s baby, not Mylan’s, and if you want to argue this further all I have to say is:

wrongness

Now others will argue on Mylan’s behalf that the very bad, no good, evil federal government is to blame for this because of over-regulation and policies that allowed Mylan to suppress competition and build a 90% market share.  They also argue that insurance companies are getting stuck with the bill because of the dynamics of a thing called “moral hazard” where people (patients in this case) don’t feel bad about spending someone else’s money.  While some of this economic fire and brimstone may have a reasonable basis in truth, there is still no one between here and Morgantown who can convince me a conscious and calculated decision to escalate prices wasn’t made. They could have decided lots of times not to light the fuse on that price booster rocket because they believe in doing what’s right, not what’s easy.

I posted last week that I spend a few hours each day providing a floral delivery service.  About five or six weeks ago I delivered some arrangements to a church for a funeral.  The next day I was talking to someone who knew the 40-something-year old gentleman for whom the service was conducted.  He died of anaphylactic shock from a bee sting.  He left behind two children.  Mylan certainly was not to blame for any of the circumstances surrounding this man’s death, but the fact that lives were permanently altered by the effects of an insect sting that could have been halted by a plastic tube filled with a life-saving medication cannot be ignored.  How can that family’s situation justify a $500 price increase over nine years?

It can’t, of course.

And Mylan’s recent offer of a discount card reducing EpiPen’s retail price to $300 is weak, shameful, and an insult to everyone who paid less than half that amount for this device not that long ago.

Mylan should have their day in court to try to explain the inexplicable.  Actually, they should have their day somewhere else to explain themselves before it ever gets to a court of law.  I know how they can be accommodated.  To slightly change the words of fictional President Jed Bartlet’s press secretary C.J. Cregg: “Mylan needs to be investigated by someone who wants to kill them just to watch them die. They need someone perceived by the American people to be irresponsible, untrustworthy, partisan, ambitious, and thirsty for the limelight.  Am I crazy, or is this not a job for the U. S. House of Representatives?”

Investigations and hearings of this nature fall under the purview of the House Committee on Oversight and Government Reform.  It is chaired by Rep. Jason Chaffetz (R-UT 3rd) and its ranking member is Rep. Elijah Cummings (D-MD 7th).  Will I contact them with a polite but firm request to take up an investigation of Mylan, Ms. Bresch, and the outrageous escalation in price of the EpiPen?  You bet.

You can, too.  Click here to get more info on the House Oversight Committee

And when the House Oversight Committee is convened on this matter, Heather Bresch’s father, U.S. Senator Joe Manchin (D-WV), should stay on the other side of the Capitol and do what I do when I’m near my peegee hydrangea and all the bees:  Keep his mouth shut.

Mylan’s website says “Seeing is believing.”  Perhaps after Heather Bresch and her company are placed under public scrutiny in a high-profile Congressional proceeding on the EpiPen debacle we will begin to see some proof they are actually capable of living up to their own code of doing what’s right and not what’s easy.  Until then, I won’t believe it.

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