Two weeks ago, in the midst of the hubbub surrounding Mylan and its EpiPen, Jason Chaffetz and Elijah Cummings, Chairman and Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Mylan’s CEO, Heather Bresch. The bipartisan letter requested documents and communications regarding the increasing price of EpiPens, including documents relating to the company’s revenue from sales of EpiPens since 2007, manufacturing costs, and the amount of money the company receives from federal government health care programs. Chaffetz and Cummings requested the documents by September 12, 2016, and to date, have not received all documents.
Several days before the joint letter, Representative Cummings called for a hearing with representatives from Mylan about their pricing tactics for EpiPens, lumping Mylan in with Turing Pharmaceuticals’ Martin Shkreli,
“The tactics we have seen recently with Mylan are not limited to a few ‘bad apples,’ but are prevalent throughout the entire drug industry, as our investigation has shown repeatedly and as Mr. Shkreli himself has indicated. This is an issue that the American people care deeply about from both a health and a pocketbook perspective, and I thank Chairman Chaffetz for continuing to cooperate with us on this critical investigation.”
On September 21, 2016, the House Committee on Oversight and Government Reform convened a hearing to examine the recent price hike of the EpiPen, the epinephrine auto-injector device manufactured by Mylan. Mylan CEO Heather Bresch faced scrutiny on the witness panel for nearly six hours, as Members inquired about the drug’s price increase from about $100 to over $600 since 2007. Douglas C. Throckmorton, M.D., Deputy Director for Regulatory Programs at the Center for Drug Evaluation and Research (CDER) of the Food and Drug Administration (FDA), was also present to provide testimony on the agency’s role in generic drug approvals.
Adding insult to injury, the day before the hearing, USA Today published a story reporting that Bresch’s mother, Gayle Manchin, led an effort as the head of the National Association of State Boards of Education to encourage states to require schools to stock the auto-injectors. Eleven states drafted laws to that effect, and in 2013 President Obama signed the School Access to Emergency Epinephrine Act, referred to by the White House as the “EpiPen Law.” The law made changes to the Children’s Asthma Treatment Grants Program, authorizing the Department of Health and Human Services (HHS) to give funding preferences to states that maintain an emergency supply of EpiPens in schools.
Opening Statements
Committee Chairman Jason Chaffetz opened the hearing by discussing how important the EpiPen is for children with allergies, noting that there are many American families that have no choice but to purchase the injectors, which have a shelf-life of eighteen months. He alluded to the aforementioned requested documentation that had not yet been fully produced, noting that the arguments and figures in Ms. Bresch’s testimony did not add up with the few documents that were provided.
Opening the hearing, Representative Cummings once again raised the idea that the business model Mylan employed in their 2007 acquisition of the drug is something Congress has seen before, most notably by companies like Valeant and Turing Pharmaceuticals, formerly headed by Martin Shkreli. He stated his concern that Congress had convened “another hearing where the industry will take their punches,” but then go right back to raising their prices–the industry’s “rope-a-dope strategy.”
Heather Bresch Testimony
Heather Bresch appeared before the House Committee on Oversight and Government Reform on September 21, 2016, testifying about Mylan, EpiPen, the benefits EpiPen provides, and what Mylan has already done in response to the outrage over pricing. Ms. Bresch, who started with the company as an administrative clerk for the company in 1992, focused on the fact that over the eight years Mylan has owned the EpiPen product, they have invested “more than one billion dollars in the efforts” and have succeeded “on many fronts.”
Ms. Bresch noted that an improved EpiPen device was put on the market in 2009 and they have reached 80% more patients. Focusing on the price of the product, she stated that roughly 85% of EpiPen patients pay less than $100 for a two-unit package and a majority pay even less than $50.
Ms. Bresch believes the larger discussion about price should be had, “price and access exist in a balance, and [they] believe [they] have struck that balance.” She continued on, explaining Wholesale Acquisition Cost (WAC) and believes that there is a misconception about their profits, as they make roughly $50 profit for each pen sold, not the imagined $300 per pen. However, EpiPen’s cost to produce is only $69.
Douglas C. Throckmorton, M.D. Testimony
Dr. Throckmorton is more than just the Deputy Director of the CDER at the FDA. He is also a father to a son with allergies so severe he carries an epinephrine auto-injector. He testified that the FDA has approved four epinephrine auto-injectors to treat anaphylaxis, but only two of them are currently on the market and there are no FDA-approved generic epinephrine auto-injectors are currently on the market.
He continued on, discussing the work the FDA does with individual companies to support their development of specific products and working to create a publicly-available roadmap, telling companies what they need to do to bring various types of medical products to market.
He closed with his view of what FDA’s role is in the intellectual property landscape. He believes that while the FDA can – and does – encourage generic drug development, the decisions of whether to seek approval for a proposed generic drug and whether to market an approved generic drug are controlled by the generic drug industry. He also noted that with respect to patents, FDA only has a “ministerial” role, listing them in the “Orange Book.”
Question and Answer
Several representatives scrutinized the financial figures Ms. Bresch presented in her testimony, against the company’s soaring profits and executive compensation. Other topics of discussion included: pharmacy benefit managers (PBMs) and the pharmaceutical delivery chain; Mylan’s patient assistance programs, school programs, and planned introduction of a generic device; classification of the EpiPen within the Medicaid Drug Rebate Program; and barriers to approval for new drug applications at the FDA.
Pharmacy Benefit Managers
Many members asked for clarification about the chains of delivery for generic and branded pharmaceuticals in the United States healthcare system, especially with respect to the role of PBMs. Ms. Bresch kicked the response to PBMs, explaining that PBMs serve as an administrator for most employer health plans and it would be best to seek those answers directly from a PBM.
School Programs
Members focused on Mylan’s EpiPen programs for public schools. Ms. Bresch denied any wrongdoing or conflict of interest on the part of her mother and expressed pride in Mylan’s efforts around increased access and awareness. She highlighted a program that provides up to 66,000 schools with a free supply of EpiPens annually.
Representative Tammy Bruce supports the connection with schools, but raised concerns about the form that the schools have to sign in order to receive the EpiPens, which requires the signatory to certify “that it will not in the next 12 months purchase any products that are competitive to EpiPens.” Ms. Bresch did confirm the form wording, but clarified that along with that form, the schools receive a “heavily reduced” price for schools that wish to purchase additional devices beyond the free ones.
Drug Classification
Chairman Chaffetz briefly discussed the classification of the EpiPen at the Centers for Medicare and Medicaid Services (CMS) as a generic (or non-innovator) drug, despite its branded status. Chaffetz asked Ms. Bresch to provide the names of all employees at Mylan and CMS staff who have engaged in communications regarding the classification. Part of the issue is Mylan may have been wrongly underpaying under the Medicaid Drug Rebate Program.
Barriers to Drug Approval
Members questioned Dr. Throckmorton about the current backlog and wait time for a drug application to receive approval through the FDA and how the backlog may be impacting market competition. Dr. Throckmorton reported that the FDA is currently reviewing 2,300 new drug applications (NDAs), but there is also a misconception regarding the backlog the agency faced prior to 2012. He mentioned that beginning October 1, the FDA is committed to a ten-month review time for all new applications submitted after that date.