2 questions EpiPen's maker desperately wants America to forget while it faces Congress

Heather breschCNBC, screenshotMylan CEO Heather Bresch

Heather Bresch, the CEO of Mylan, the company that makes EpiPen, faces Congress on Wednesday. She’ll try to answer for why her company raised the price of the
life-saving autoinjector 500%, to $608 for two pens.
Based on her opening remarks, which have already been released, she will fail. At least, as long as Americans keep two very important questions in mind.

  1. Who exactly do you intend to pay $608 for a drug that it costs you from $1-$3 to make?
  2. And, who else is making money off the EpiPen and how much?

Here’s why.

In her remarks, Bresch defends her company by saying that, through its lobbying and marketing efforts, Mylan has increased awareness of and access to the EpiPen and its benefits. She then listed all the measures the company was taking to reduce the cost for patients.

“Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full WAC [Wholesale Acquisition Cost] price or more,” She said. “We never intended this. We listened and focused on this issue and came up with a sustainable solution.”

We’re all bagholders

Which brings us to our first question: Who exactly did you intend to pay for this if not patients?

If your answer is insurers, then that’s the wrong answer.

Just because patients don’t pay the full price for a drug on their end, doesn’t mean their insurers don’t have to pick up the tab. That means higher costs for everyone. Out of pocket costs are increasing for Americans across the board, and this is part of the reason why.

In other words, passing costs on to insurers hurts Americans too. The only thing that will really alleviate the cost of EpiPens for Americans is lowering the price, something Bresch has never said she will do even when asked directly.

In a press release after Mylan announced a bunch of measures to help patients, Congressman Elijah Cummings (D-MD) called the discounts a “PR stunt” aimed to “distract from their exorbitant price increases.” Senator Elizabeth Warren (D-MA) has accused drug companies of not just using to distract from high prices, but as an excuse to preserve them.

Feeding a bigger beast

And the preservation of price leads us to our next question: Who all is getting a piece of this $608 here?

In an interview with CNBC last month, Bresch blamed middle men for inflating the price of EpiPen. These middle men are Pharmacy Benefit Managers (PBMs). They’re the companies that manage the list of drugs your employer/insurer etc. will or will not pay for, and three of them control over 70% of the market in this country.

In other words, they control distribution. And Bresch says that unless they get a fat cut, they won’t put your drug on their lists.

“The system incentivizes higher prices on the band. And if you don’t play in the system… you products aren’t going to get to patients,” she said on CNBC. “Because of the lives covered by all the middle men… patients are paying right now twice.”

The PBMs work in a complicated system of lists, rebates, and (sometimes) internal pharmacies that would make your head spin. Some run the patient assistance programs that politicians say contribute to keeping prices high.

Bresch said on CNBC that she wants to change this. OK, then. Give us names. Give us prices. Tell us how the system works. Because if this is it, then it’s time to break to pieces.

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