The headaches will continue at Mylan until transparency improves.
Congressmen Jason Chaffetz (R-UT) and Elijah Cummings (D-MD) have sent the maker of EpiPen a letter requesting additional documents clarifying the company’s pricing structure. This after the House Oversight Committee held a hearing with Mylan’s CEO, Heather Bresch that left it with more questions than answers.
That’s because the information she brought with her to Washington was incomplete. Instead of facts and figures she brought cartoonish graphics and numbers that calculated Mylan’s profits using a higher tax rate, making them inaccurate.
And so Congress stayed mad, and is getting madder. From the letter Chaffetz and Cummings sent:
“Failing to disclose tax assumptions that formed the basis for the $100 profit per pack claim, despite opportunities to do so before and during the hearing, raises questions. During the hearing, Chairman Chaffetz noted that Mylan’s ‘dumbed down financials’ did not make sense without explanation. Ranking Member Cummings similarly stated, ‘You know, your numbers don’t add up. . . . And it is extremely difficult to believe that you are making only $50 profit when you just increased the price by more than $100 per pen.’
“In response to scrutiny after the hearing, Mylan clarified that the profit figure you presented to the Committee included taxes. In conjunction with Mylan’s SEC filing, a Mylan spokesperson stated that “the information provided to Congress has made clear that tax was part of the EpiPen Auto-Injector profitability analysis.” Mylan had not directly referenced the tax assumptions for its EpiPen profit estimates, neither in its September 15, 2016, letter to the Committee, nor in the documents that the company produced.”
Mylan came under fire in August when it raised the price of the life-saving anti-allergy drug to $608 for a two-pack. When the company bought the drug in 2007, the same amount cost just $100.
And so all of the documents Congress requested have to do with the gap between the drug’s actual cost to Mylan (which hasn’t changed much since 2007) and its sky-rocketing price. It’s a very simple question really: Where does all that money go?
Congress seems to think that a trove of documents including anything prepared for the company’s board having to do with EpiPen, Mylan’s tax rate, profits connected to EpiPen, manufacturer contracts related to EpiPen, anything related to EpiPen pricing in the Netherlands, anything having to do with a generic EpiPen, and more could help answer that question.
Drug pricing has become an incredibly opaque and complex system in the US. In a CNBC interview in August Bresch blamed this complexity and the middle men that are able to profit from it for EpiPen’s price hikes.
That’s why over here at Business Insider, we’re especially excited to see the following documents requested from Mylan.
From the letter:
“A list of Mylan’s profits and expenses relating directly to the sale of EpiPens for each year from 2007 through 2015, including, but not limited to:
- profit (including operating and net);
- cost of goods sold;
- operating cost;
- rebates (including commercial, Medicare Part D, and Medicaid rebates);
- patient co-pay;
- charge backs;
- direct selling expenses;
- medical affairs;
- research and development;
- Patient Assistance Programs;
- EpiPens4Schools program;
- taxes; and
- any other expenses or costs.”
Have fun putting all this together, Mylan. You have until October 7th.
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