According to documents that have been released in an ongoing lawsuit, Heather Bresch, former CEO and president of drugmaker Mylan worked closely with Pfizer CEO to keep EpiPen prices artificially high. According to the documents, Bresch approved a plan to make customers buy two EpiPens simultaneously, regardless of their medical needs. An auto-injectable device, the EpiPen injects epinephrine to the body. It can make a difference in the outcome of severe allergic reactions.
These documents were made public as part of an ongoing federal antitrust case. In June Judge Daniel Crabtree issued an order in summary partially siding with Mylan, and partially siding against the plaintiffs. The case continues. The judge opened some documents that were underlying the case against the plaintiffs late last week. One of the documents is an email that Bresch sent to Ian Read, the then-CEO of Pfizer, in support of her father, Sen. Joe Manchin (D-W.Va.). The January 2011 email confirms that Read and Bresch had previously discussed the possibility of Pfizer investing in Adrenaclick, an EpiPen competitor. Mylan would be able to raise its prices by eliminating its main competitor.
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A two-pack of EpiPens cost less than $100 in 2007, when Mylan bought rights to market the drug from Merck. This was a fraction of today's price. Merck agreed to allow Mylan to manufacture a part of the EpiPen delivery systems, but not the medication, and Mylan would own the brand and the rights for distribution of the entire product. King Pharmaceuticals produced the drug, but it was exclusively manufactured for Mylan. King announced in 2010 that it would be bought by Pfizer. Pfizer was previously licensed to sell Adrenaclick (an EpiPen competitor). Pfizer and Mylan made it possible for the latter to pull its competitor out of the market and become a partner in Epipen. This secured a monopoly. Mylan increased the price to $600 in five years after the agreement with Pfizer. Gayle Manchin (Bresch's mother) lobbied for states to require that schools stock epinephrine. She is the head of the National Association of State Boards of Education. Gayle Manchin, the mother of Breschs, was confirmed as the co-chair for the federal Appalachian Regional Commission. This government agency is responsible for promoting economic growth in the region's 13 states.
While it may seem brazen to make a deal to buy Pfizer's competitor, the fact that the agreement was recorded in an email gives a glimpse into how corporate executives can manipulate markets. Bresch's assistant sent the email with the subject line "Our discussion." I am sending this email to remind you that I requested confirmation regarding our EpiPen discussion. You indicated in that conversation that you would be selling your Adrenaclick product after the Pfizer/King deal closes. Your tender offer closes today. I appreciate your prompt response. Bresch didn't respond to a request for comments, but Mylan has always maintained that it has not done anything wrong when it sets the price for EpiPens. Bresch testified before Congress in 2016 about price increases. He expressed regret that some customers paid more than the list price. However, he also noted that many other customers paid less because of agreements with pharmacy benefit managers and insurance companies. Bresch stated that we should have anticipated the increasing financial problems for a small number of patients, who could have ended up paying more or the full list price. According to market analysts, Mylan was concerned that Pfizer would continue with its generic version of King and cut Mylan off of the market. According to EpiPen's filings with Securities and Exchange Commission, EpiPen dominated the global market in 2010, controlling 91 percent and 96 percent respectively. Adrenaclick, however, was growing rapidly in market share. Both Mylan and Pfizer would benefit from a Mylan deal: Mylan would divest from Adrenaclick while Mylan would continue to sell EpiPen at high prices. This would allow Pfizer to make more money than if it reduced the price of its cheaper version.
Both schemes were distinct, but they worked in concert.
Mylan secured the monopoly and made the next move. It planned to discontinue the single-pack EpiPen in America and require that customers purchase two pens at a time. According to internal correspondence, the monopoly had made space for the new scheme. Mylan split with Pfizer to secure the monopoly, ward off generics, and create additional revenue. The new scheme also created additional revenue. Mylan also split with Pfizer, thereby enforcing the monopoly, ensuring that generics were not affected. Third parties could complain and Mylan set aside money to give out rebates to them. Both schemes were independent, but they were mutually supportive. According to emails obtained as part of the suit, the idea to eliminate the single-pack was being discussed internally in late 2010 or early 2011. Bruce Foster, a Mylan executive, suggested the idea to increase revenue and make a stronger generic defense. Executives spent the next few months executing the plan.
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At the beginning of the project, the company's executives did not cite any medical reasons for the change and sought one later. Ivona Kopanja is an associate project manager in Mylans sales and marketing operations division. She wrote to two employees in March 2011. Senior management will be meeting with Heather April 1, and I wanted to update her on Project X2. I am aware that you were creating a medical justification for Project X2. I am putting together a slide deck that will be used. Could you please send me information about the reasoning (and how it should be written) that I need.
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Bresch was notified by Lloyd Sanders, COO, that in May the company's medical staff raised concerns about the plan's alignment with medical guidance. Bresch discovered that the copay most patients pay for singles is the same as for two-packs. This motivated her to purchase singles. According to an email Sanders sent to Bresch, which was not made public but was quoted by the judge in the opinion. Market research was also done by the company. It was determined that customers would buy two pen if it was their only option. The lawsuit also includes marketing material that contains quotes from physicians and caregivers.
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Emails show that Mylan had started pitching Pfizer about the project in May. This suggests that it could be a billion-dollar brand if done correctly. Bresch continued to push the idea throughout June and July. In July, the two companies met. According to an email that was released in the recent judge's order, the team met with Pfizer. Bresch's deposition was also quoted in the judges' order. She stated that Mylan did not persuade Pfizer about anything and called Pfizer a partner in this product. The executives waited for any public backlash. According to an email, Mylan decided that it was not necessary to contact FDA and would raise more questions than answers. Pfizer announced that it would discontinue EpiPen's competitor on August 20, 2011. An analyst at Needham & Company noted that Adrenaclick had recently reached a peak of 10% in the epinephrine marketplace, reducing EpiPens dominance compared to a year ago, when all other competitors were at only 4 percent. Pfizer executives sent the note to them with the subject line "One Less Risk to Worry about; EpiPen Wannbe" from Greenstone Discontinued. This refers to the Pfizer division that owned Adrenaclick. According to correspondence not sealed as part of the suit, Joanne Van Deusen was the director of business operations at Pfizer. James Cannon was vice president for generic alliances for Greenstone. An assistant sent the email to Dennis OBrien. OBrien was previously president of King Pharmaceuticals Canada. He was also serving as Meridian Medical Technologies at Pfizer, which is the division that partnered with Mylan in the production of the EpiPen. OBrien then forwarded the news on to Tom Handel (senior vice president for commercial pharmaceuticals at Meridian). Mylan had already raised prices by October. Harry, Ron and Joe, Mike, as well as I, recommend a price rise for EpiPen. The original plan was for the price to rise in December or January, assuming that there wasn't any backlash from Project X2 towards payers. Project X2 implementation was successful without any problems. Last price hike was in May 2011. Sanders, the COO wrote to Bresch that there was no resistance. The incremental sales would have been $5.5M $6.0M, and all that goes to the bottom line is Sanders, the COO.
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