[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
REVIEWING THE RISING PRICE OF EPIPENS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2016
__________
Serial No. 114-124
__________
Printed for the use of the Committee on Oversight and Government Reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming ROBIN L. KELLY, Illinois
THOMAS MASSIE, Kentucky BRENDA L. LAWRENCE, Michigan
MARK MEADOWS, North Carolina TED LIEU, California
RON DeSANTIS, Florida BONNIE WATSON COLEMAN, New Jersey
MICK MULVANEY, South Carolina STACEY E. PLASKETT, Virgin Islands
KEN BUCK, Colorado MARK DeSAULNIER, California
MARK WALKER, North Carolina BRENDAN F. BOYLE, Pennsylvania
ROD BLUM, Iowa PETER WELCH, Vermont
JODY B. HICE, Georgia MICHELLE LUJAN GRISHAM, New Mexico
STEVE RUSSELL, Oklahoma
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Jennifer Hemingway, Staff Director
David Rapallo, Minority Staff Director
Natalie Turner, Counsel
Sarah Vance, Professional Staff Member
Willie Marx, Clerk
C O N T E N T S
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Page
Hearing held on September 21, 2016............................... 1
WITNESSES
Dr. Doug Throckmorton, Deputy Director, Center for Drug
Evaluation and Research, Food and Drug Administration
Oral Statement............................................... 6
Written Statement............................................ 8
Ms. Heather Bresch, Chief Executive Officer, Mylan, Inc
Oral Statement............................................... 17
Written Statement............................................ 19
APPENDIX
Statement from Representative Gerald E. Connolly................. 88
REVIEWING THE RISING PRICE OF EPIPENS
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Wednesday, September 21, 2016
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to call, at 3:08 p.m., in Room
2154, Rayburn House Office Building, Hon. Jason Chaffetz
[chairman of the committee] presiding.
Present: Representatives Chaffetz, Mica, Duncan, Walberg,
Amash, Gosar, DesJarlais, Gowdy, Farenthold, Massie, Meadows,
DeSantis, Mulvaney, Buck, Walker, Blum, Hice, Carter, Grothman,
Hurd, Palmer, Cummings, Maloney, Norton, Clay, Lynch, Cooper,
Connolly, Duckworth, Kelly, Lawrence, Lieu, Plaskett, Boyle,
Welch, and Lujan Grisham.
Chairman Chaffetz. The Committee on Oversight and
Government Reform will come to order. And, without objection,
the chair is authorized to declare a recess at any time.
We have an important hearing today, ``Reviewing the Rising
Price of EpiPens.'' Anaphylactic shock will kill about 1,500
people a year. Roughly four people a day will die if they don't
get the proper dosage of epinephrine. It's one of the ways that
you can stop your child or your loved one from dying if they
are going into this shock.
This is a generic drug that's been around for about 100
years, and it works, it's a good product. People, parents, they
need this. It's not optional for somebody who has severe
allergic reactions to a whole variety of things.
But what we're here to discuss today--and believe me,
trying to drive into the depths of individual drug pricing was
not something I set out to initially do--but it doesn't take
very long to talk to parents or talk to people who are afraid
that if this EpiPen is not within arm's reach when their young
child suddenly needs it, you don't have to talk to somebody
very long to figure out that they have to have this. It's not
optional.
And so here's the concern. Here you've got a drug that's
been on the market for 100 years, costs roughly a dollar, the
actual juice that's in here that you need costs about a dollar.
But the price of this has gone from, roughly, $99 for one to
more than $600 for two in a very short amount of time. You
literally see year over year where the price will jump $100
here and $100 there. It's a product that is not available on
insurance plans, a lot of insurance plans, it's not mandated
like some of the other things in ObamaCare are mandated.
And so suddenly you have people who can't afford what is a
1-year dose, right? There's an expiration date of a year. So
you get two of them. Some families I've talked to have 10 of
them, because they need them in the car, in the backpack, they
have them all over. And now we're talking about more than $600
to the consumer to have two of those. And so we've got a lot of
questions.
Now, Mylan, as best I can tell from afar looking at it, has
done a lot of good in the world and they offer a lot of good
products. But of the 635 products they offer, this generates
about 10 percent, about 10 percent of their revenue is found in
this one product.
Now, they're here to tell us that they make about $50
profit, which I find a little hard to believe, and that's why I
think it's important that the CEO, and I appreciate her
willingness to come in and talk to us, is telling us that,
well, the middleman makes more than we do. We get less than
half of that revenue actually goes to Mylan.
But here's what doesn't add up for a lot of people, and
believe me, I'm a person who believes in profit, in profit
motivation: You have five executives in 5 years that earned
nearly $300 million in compensation. And this is, by all
accounts, as best I can tell, one of their biggest revenue
drivers and one of the biggest revenue items.
They used to have a competitor. That competitor dropped out
of the market, I believe it was 2010. I could stand to be
corrected, but I believe it was 2010. When that other product
left the market, the product price zoomed. It just went up.
So here's yet but another example of a life-saving drug
that you have to have, if you don't have it you're going to
die, and there's no competition. Which brings us to why we have
Mr. Throckmorton here from the FDA.
One of my concerns, based on the sole economics of it,
right, basic economics, you have a generic product that's been
on the market for 100 years and suddenly you see this massive
rise in the cost, the price to consumers. That would signal to
entrepreneurs that there is an ability to make a profit. And
when you understand that the cost of goods for the juice is
only a dollar, the delivery vehicle, which is unique and it's
innovative, there's a cost to that too, but when the juice is a
dollar and they're selling it for $600, there's some room for
some profit.
But if new market entrants aren't able to submit an
application and get it through the FDA, then guess what? You
have, in this case, Mylan, who is able to market a product,
quickly raise the price, bring home an exorbitant amount of
profit, with no competition.
It was actually my brother who said, ``Hey, why are you
trying get in the business of some private entity and how they
price?'' I said because the market forces aren't at work.
Competition cannot be in there. Competition would be good. It
would help drive down the price. So we want to hear about the
FDA approvals.
And the last thing I would also mention here along the way:
Suddenly, feeling the heat, feeling the pressure, Mylan has
offered a generic version and cut the price in half. So that
does beg the question, what was happening with that other $300?
I mean, driving the price down is great, but Congress shouldn't
be micromanaging that.
But I do think this is worth exploring because we, again,
saw one, a different drug earlier this year that we did a
hearing, and here we are again. And my guess is, if it's
happening in these two instances, it's probably happening in
others, maybe not as egregious, maybe not as big of a rapid
rise. But I find this to be so extreme.
And we're talking about tens of millions of Americans who
have to have it, there's no competition, it's extremely
expensive, it's not covered under insurance, there is not the
competition, it is driving exorbitant profits, and that's why I
think myself and Mr. Cummings are very jointly united in trying
to address this, understand it better. We may have different
solutions to it.
But let's come back to my original premise: Parents don't
have a choice. If your child, your loved one has to have this,
it better darn well be in that backpack. It better be there. It
better be at school. And we want to try to offer some
understanding and some relief to those parents and those people
that go through that, because every day four people a day are
going to die because they don't have this product handy.
I now recognize the gentleman from Maryland, the ranking
member, Mr. Cummings.
Mr. Cummings. Mr. Chairman, I thank you for holding today's
hearing. And as you know, this issue of the skyrocketing prices
of prescription drugs has been one of my top priorities for
several years.
This hearing is critical because yet another drug company,
Mylan, has jacked up the price of a life-saving product for no
discernible reason.
And I did read your testimony, Ms. Bresch, and I was not
impressed.
And they raised the prices, the reason being, I believe, to
get filthy rich at the expense of our constituents--at the
expense of our constituents.
May I hold your EpiPen?
The EpiPen has been around for decades. It was introduced
in 1988. The active ingredient has been around even longer, and
it costs just pennies to make, as the chairman said.
So what changed? What changed? What changed is that Mylan
acquired EpiPen in 2007. Then they used a simple but corrupt
business model that other drug companies have repeatedly used.
We've seen it over and over and over again. Find an old, cheap
drug that has virtually no competition and raise the price over
and over and over again as high as you can. That's what Martin
Shkreli did and that's what Valeant's CEO did. They sat at this
very witness table earlier this year with absolutely no
remorse. None.
In Mylan's case, they had a virtual monopoly over the
market, and they decided to take advantage of it. As a result,
today a product that used to cost about $100 for two EpiPens
now costs more than $600.
To understand why Mylan raised these prices so
dramatically, we need to understand how much money they are
making off of this drug. According to documents obtained by the
committee, EpiPen generated $184 million in net sales revenue
in 2008--$184 million. In 2016, listen to this, in 2016 Mylan
expects this number to go up to more than 1.1 billion, as in
``B.'' That's more than a fivefold increase over the 10 years.
What else changed since 2007? The EpiPen became Mylan's
first billion-dollar drug. Mylan has received more than $4
billion in net sales revenue on this one drug over the last
decade, and that's after rebates and discounts. My, my, my.
The company also engaged in a massive marketing campaign.
According to information obtained by the committee, Mylan spent
$100 million on advertising and marketing for EpiPens last year
alone.
Then came the price increases. When Mylan acquired EpiPen
in 2007, the cost for two EpiPens was about $100. In 2012, they
raised the price to about $218. Then they, in 2014, they raised
it again. You see the pattern? They raised it again, to about
$350. In 2015, they were on a roll, they raised it again, to
about $460. And now it's $608.
While the price of EpiPens shot up exponentially, so did
Ms. Bresch's paycheck and the lavish compensation of her fellow
executives at Mylan. In 2007, Ms. Bresch received $2.45
million, according to financial reports. Not bad. By last year,
her compensation had soared to more than $18 million, a 671
percent increase. Mylan's chairman, Robert Coury, got even
more. He made more than $22.5 million in 2014 alone.
After the public backlash to Mylan's most recent price
increase, they announced they would expand their patient
assistance program. We've heard that one before. This is the
same PR playbook other companies use. When your price
increases, finally spark public outrage, just say you're
expanding your patient assistance programs and make as much
money as you can along the way. That's what Martin Shkreli did,
that's what Valeant did, and that's what Mylan is doing.
Here's the bottom line. I begged Martin Shkreli to use
whatever influence he still had over his company to lower their
prices. I pleaded with Valeant's executives to lower their
prices. I called on Mylan to reverse its drastic increases. But
they all refused.
They talk about discounts and coupons and rebates, but even
with withering bipartisan criticism from Congress and desperate
outcries from the American people--and, by the way, the
American people that all of these folks up here represent,
every single person up here has somebody that's affected by
this--they never, ever, never lowered the prices.
I'm concerned that this is a rope-a-dope strategy. Today,
we'll hold yet another hearing where the industry will take
their punches, but then they go right ahead and keep on raising
their prices. I'm sure somebody said to them: You know, look,
you just go in there, the Congress is going to be upset with
you, but afterwards, you're just going to come out of there,
and we'll just keep raising prices, we'll keep doing it.
After Mylan takes our punches, they'll fly back to their
mansions in their private jets and laugh all the way to the
bank while constituents suffer, file for bankruptcy, and watch
their children get sicker or die. That's what we're dealing
with today.
Yesterday, someone asked me if I wanted the head of Mylan
to apologize today. I had to think about that for a minute. I
think it would be more appropriate, it would be nice if she
did. But that will not cause Mylan to treat my constituents
fairly and bring down the price to where it should be.
We need solutions, I agree, Mr. Chairman, and I'm glad that
this is a bipartisan effort. It's time for Congress to act. We
will hold today's hearing just like we held our previous
hearings.
And to our witnesses, when we had Mr. Shkreli before us, he
said something that was very interesting, and for some reason,
Mr. Chairman, I think about it over and over and over again. As
soon as he got out of the hearing, you know what he called us?
Imbeciles. He said every Member of Congress is an imbecile.
You know why he said that? Because he knew they would go
back and do the same thing over and over again. So he took his
punches. He rope-a-doped. As a matter of fact, he did worse
than that, he took the Fifth. And the prices kept on going on
up.
And so I beg all of our colleagues to take just a moment.
This is our moment. If there's going to be something that we do
in a bipartisan way, this is it, as the chairman said, and I
watched the chairman in an interview yesterday. And I can tell
that he and I were getting a little bit emotional. You know
why? Because we were thinking about children. We were thinking
about children who may have some kind of spell and need this
just to breathe.
So I hope, after the hearing is over, that you just don't
go back to the champagne, say: All right, we rope-a-doped it,
and now we go on to life as it was. Because our constituents
deserve better.
And with that, Mr. Chairman, I yield back.
Chairman Chaffetz. I thank the gentleman.
We'll hold the record open for 5 legislative days for any
members who wish to submit a written statement.
We'll now recognize our panel of witnesses. We're pleased
to welcome Dr. Douglas Throckmorton, deputy director of the
Center for Drug Evaluation and Research at the United States
Food and Drug Administration, and Ms. Heather Bresch, chief
executive officer of Mylan.
We welcome you both, and thank you for being here.
Pursuant to committee rules, all witnesses are to be sworn
before they testify. If you will please rise and raise your
right hand.
Do you solemnly swear or affirm that the testimony you're
about to give will be the truth, the whole truth, and nothing
but the truth?
Thank you. You may be seated.
And let the record reflect that both witnesses answered in
the affirmative.
We would now like to recognize you each for 5 minutes.
We'll be liberal in the time. If you want to go a bit longer
than 5 minutes, that's fine. But we want to make sure we
maximize the time for members asking questions. Your entire
written statement will be entered into the record.
Dr. Throckmorton, you are now recognized for 5 minutes.
WITNESS STATEMENTS
STATEMENT OF DOUG THROCKMORTON
Dr. Throckmorton. Thank you, Chairman Chaffetz, Ranking
Member Cummings.
Chairman Chaffetz. Bring that microphone way up close.
We're going to ask you some questions. Bring it uncomfortably
close.
Dr. Throckmorton. All right.
Chairman Chaffetz, Ranking Member Cummings, members of the
committee, I am Dr. Douglas Throckmorton, deputy district for
regulatory programs in the Center for Drug Evaluation and
Research at the FDA. Thank you for this opportunity to appear
before you today to discuss FDA's role in ensuring the safety,
efficacy, and availability of epinephrine auto-injectors.
As Chairman Chaffetz said, epinephrine auto-injectors, with
the most widely used and recognizable product being Mylan's
EpiPen, are critically important and potentially life-saving
for patients who suffer from a severe allergic reaction called
anaphylaxis. When a patient requires this medication, seconds
count, and it must work every time. To ensure this, it is
critical that both the medication and the device that delivers
it perform as designed.
At the FDA, we are aware of the recent spikes in the price
of EpiPen. In fact, I am personally aware of it as my son
carries an epinephrine auto-injector for his allergies.
Although FDA does not have a regulatory role in the pricing
of drug products, we do play a critical role in ensuring that
patients have access to beneficial medicines. We also recognize
that when more than one version of a drug, especially a generic
version, is approved, it can improve marketplace competition
and help to provide additional options for consumers.
With this role in mind, FDA is working hard to support the
timely, scientific, and efficient development of new
epinephrine auto-injector products.
I should first note that EpiPen is not the only product
approved to treat anaphylaxis in an emergency. To date, FDA has
approved four products to treat anaphylaxis, two of which are
currently on the market.
While doing what we can to support new epinephrine auto-
injector product development, FDA cannot approve a product for
which we haven't received an application, which is why we're
doing all we can to support manufacturers as they work to
develop innovative new products, including new epinephrine
auto-injector products, and bring them to market faster.
For example, in 2013, the agency provided technical
information to industry to design and test auto-injectors. More
recently, this year we released draft guidance on how to
determine whether these devices can be used effectively by
patients.
These efforts can help development by providing a clear
roadmap to reduce uncertainty that can slow development.
We also recognize the importance of generic drugs in the
United States and are working in this area to support their
development. For example, as a part of our larger work to
improve the review and development of generic drugs, FDA's
Office of Generic Drugs has a prioritization and expedited
review policy that allows for certain products to get priority
review, including products that are called, quote, ``first
generics.''
To close, thank you for your interest in this important
topic related to the safety, efficacy, and availability of
epinephrine auto-injectors. FDA takes our role, our public
health mission seriously, and is working hard to fulfill our
role as it relates to this issue.
One critical part of this mission is to assure that the
medical products on market are safe and effective and that they
can be used as needed. In addition, as a part of our mission,
FDA is also playing an important role in advancing public
health by helping to speed innovation that promotes the wider
availability of these products.
For complex medical products, such as epinephrine auto-
injectors, this means providing a roadmap to developers seeking
to market new products and working with them, whenever
possible, in support of new product development. These efforts,
coupled with the work of other groups with important roles to
play, will help assure access to these important medicines for
patients.
I'm happy to answer any questions that I can.
[Prepared statement of Dr. Throckmorton follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Chaffetz. Thank you.
Ms. Bresch, you're now recognized.
STATEMENT OF HEATHER BRESCH
Ms. Bresch. Good afternoon, Chairman Chaffetz and Ranking
Member Cummings and members of the committee. I'm Heather
Bresch, the CEO of Mylan, and I appreciate the chance to be
with you today.
Before I answer your questions, I would like to share with
you a little information on my background in Mylan and tell you
what we have done in the last weeks to address the concerns
about the price and the availability of EpiPens.
I grew up in a small town in West Virginia in a close
family with a strong work ethic. I joined Mylan in 1992 as an
entry-level clerk performing basic administrative tasks in the
basement of the company's manufacturing facility and worked
through 15 different roles in the company until I reached my
current position.
When I started with Mylan, our sales were approximately
$100 million with less than 500 employees, and today our sales
are in excess of 11 billion with more than 40,000 employees,
and 1 in 13 U.S. prescriptions is filled with one of Mylan's
medications.
I would like to highlight just two facts about Mylan.
First, we aren't the kind of niche pharmaceutical company that
offers only a handful of products. In fact, we are the exact
opposite. Over the last 55 years, we have grown to offer more
than 2,700 products, predominantly generic, made at more than
50 manufacturing facilities capable of producing up to 80
billion doses annually, and we see the need to do more.
This year alone we will invest approximately 1.2 billion in
research and development and manufacturing, or roughly 3
million a day, to bring affordable access to many more complex
products such as insulins and biosimilars.
Second, our business is predicated on high volumes of
hundreds of products. In the U.S. alone, we offer a portfolio
of 635 products, which translated last year to more than 21
billion doses available to patients, at an average price to
Mylan of 25 cents. Over the last decade, Mylan's medicines have
reduced the U.S. healthcare costs by approximately 180 billion.
This is an EpiPen. It may look simple, but it is actually
quite complex. In the event of anaphylaxis, a severe allergic
reaction, the more than 15 critical components in this device
must work every time, and in seconds, to deliver medicine to
treat life-threatening symptoms quickly and without fail, many
times self-administered by the person in the state of
anaphylaxis.
Before Mylan acquired the company that owned EpiPen in
2007, fewer than 1 million of the 43 million people at risk had
access to an epinephrine auto-injector. At the same time, it
was estimated that anaphylaxis was causing 1,500 deaths
annually. We've read stories of children dying at school
because they did not have access to an epinephrine auto-
injector or due to a lack of education about the need. We saw
this as an unacceptable and largely preventable health problem.
We've worked diligently and invested to enhance EpiPen and
make it more available. In fact, we have invested more than $1
billion in these efforts over the last few years and have
succeeded on many fronts. We put an improved EpiPen device on
the market in 2009. We now reach 80 percent more patients. And
today, approximately 85 percent of EpiPen patients pay less
than $100 for two and a majority less than $50.
We have made great strides in providing access to EpiPens
in public places, starting with schools. In the last 4 years
alone, Mylan provided 700,000 free EpiPens to more than 66,000
schools across America with no strings attached. Our pens were
used hundreds of times, including on many children who had no
known allergies.
I know there is considerable concern and skepticism about
the pricing of EpiPens, and I think many people incorrectly
assume that we make $600 off of each pen. It's simply not true.
Recent EpiPen price increases have not yielded the revenue to
Mylan that many assume.
In the complicated world of pharmaceutical pricing, there
is something known as the wholesale acquisition cost. Since
2014, the wholesale acquisition cost for two EpiPens increased
from 401 to 608, or 51 percent. But the net revenue to Mylan,
after rebates and fees, what we actually received, increased
from 235 to 274. In other words, the annual increase to Mylan
for the last 2 years was approximately 8 percent per year, or
16.6 percent cumulatively, during this period.
From that, you must subtract our cost of goods, which is
$69. This leaves a balance of $205. After subtracting EpiPen-
related costs, our profit is $100, or approximately $50 per
pen.
In the last few weeks, we have confronted the EpiPen issue
head on. Our program has four parts. We announced the first-
ever generic of the EpiPen product, which will be priced at
$300. This unprecedented move is the fastest and most direct
way to reduce the price for all patients.
Second, we are creating a direct-ship option, allowing
patients to purchase the generic product directly from Mylan.
Third, we increased our EpiPen savings card for the brand
product from 100 to 300.
And fourth, we doubled our eligibility of patients
receiving free pens from 48,600 to 97,200 for a family of four.
With these changes, our profit per pen will be
substantially lower than it is now.
I'm honored and proud to be the CEO of Mylan, and I've
spent my entire career working to break down barriers to access
and expand access to high-quality medicine and lower healthcare
cost. 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
wholesale acquisition cost or more. We never intended this. We
listened and focused on this issue and came up with an
immediate and sustainable solution.
Going forward, we will continue our leadership in
developing high-quality medicine and expanding access.
Thank you.
[Prepared statement of Ms. Bresch follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Chaffetz. Thank you. I'll now recognize myself.
Ms. Bresch, you never anticipated it? You raised the price.
What did you think was going to happen?
Ms. Bresch. Well, thank you, Chairman.
We raised the price over 8 years. And we raised that price,
and I think what is incorrectly assumed is that 608 is what
Mylan receives. We receive $274 of that 608.
Chairman Chaffetz. So here is what I don't understand.
Explain to me, when you buy the generic version, what's the
difference in the generic version? Is it just the name?
Ms. Bresch. It will be the same product with epinephrine
auto-injector on it. It will be the same product.
Chairman Chaffetz. So suddenly it's $608. Now you're going
to have a generic of the generic, and that's going to be $300?
Ms. Bresch. Yes.
Chairman Chaffetz. And if they spend 300, I'm sorry, they
get two?
Ms. Bresch. Yes.
Chairman Chaffetz. So your revenue is actually going to go
up on the direct product because you say you only get $275 now.
You're going to get $300, correct?
Ms. Bresch. Well, I think the direct ship will be a very--
we're trying to do that in case--to catch everybody. We're
hoping that at least 85 to 80 percent----
Chairman Chaffetz. You're actually raising the price.
You're actually raising the price.
Ms. Bresch. No, sir. Our net----
Chairman Chaffetz. You're going to have more revenue.
Ms. Bresch. Our net sales will absolutely go down. Our net
per pen will go down dramatically.
Chairman Chaffetz. How does your net per pen go down when
you're collecting, as you say, I don't know that I believe you,
but $274, and under the direct program you're going to collect
$300?
Ms. Bresch. But from that then you take the cost of goods
out, which is $69, and then----
Chairman Chaffetz. Which is the same on both.
Ms. Bresch. And then you take out the EpiPen drug-related
product.
Chairman Chaffetz. Wait a sec, Ms. Bresch, come on, you're
very bright here. If you're collecting $274 or $275 for two
right now, and you're going to do the generic to save people
money, you're going to charge $300, your revenue goes up. How
does it go down?
Ms. Bresch. But that's not--we said that will be the
wholesale acquisition cost, is 300. We've cut the wholesale
acquisition cost in half from 300----
Chairman Chaffetz. And the only thing you changed was the
name. The only thing you changed is the name. This is why we
don't believe you, is that if the price goes from 608 to 300,
your collection on that is actually higher, and you're telling
me that your net profit is going to go down?
Ms. Bresch. Sir, what I'm saying is the wholesale
acquisition cost--and I know I've provided this, too, if you
want to put it up--the wholesale acquisition cost is what is
going to 300. What we will actually receive we're estimating at
200, we believe it will be less than that, just as what we
receive is the 274.
Chairman Chaffetz. You said you're going to sell it direct.
Ms. Bresch. We offer that as an option. There's still----
Chairman Chaffetz. How much does that cost to a consumer?
$300 is what you told us.
Ms. Bresch. Sir, we hope that everybody will get it through
the channels of the--all of the programs. The patient reduces
the cost for everybody across all the channels.
Chairman Chaffetz. Wait, wait, the patient reduces the
cost. Explain that to me.
Ms. Bresch. By introducing a generic, which truly is
unprecedented, I mean, we cut the price in half, so I know
that----
Chairman Chaffetz. Well, it's unprecedented to raise the
price $500--or 500 percent. So you're raising it to lower it,
but your net revenue goes up. How can you claim it goes down?
Ms. Bresch. What we receive is the 200, and we're
estimating that.
Chairman Chaffetz. You said you're telling it direct for
300.
Ms. Bresch. We said that the wholesale acquisition price
would be 300.
Chairman Chaffetz. You've got to help clarify this for us
because this does not make sense. And I don't know how you
suddenly offer that generic.
Let me go to Dr. Throckmorton for a second.
What is the current FDA backlog overall, not just for the
epinephrine, overall what is the current backlog on the drug
approvals at the FDA?
Dr. Throckmorton. Currently there are around 2,300
abbreviated new drug applications that we are reviewing. That
is not backlog. The backlog I believe you're referring to would
be the products that were in the queue prior to 2012, prior to
the passage of the----
Chairman Chaffetz. And what's that number?
Dr. Throckmorton. The number of products that were in the
queue in 2012 that remain unreviewed, less than 100. We have
reviewed well over 90 percent of those products and provided
feedback to the sponsors.
Chairman Chaffetz. How many epinephrine-oriented products
are in the pipeline right now?
Dr. Throckmorton. I can't answer that question, I'm afraid,
Congressman. I can tell you that----
Chairman Chaffetz. No, no, no, wait. Do you know that
number?
Dr. Throckmorton. I do not know that number right now, sir.
Chairman Chaffetz. We're having a hearing about this. Do
you know that number?
Dr. Throckmorton. What I can tell you is----
Chairman Chaffetz. Look, here's the thing. They may tell
you at the FDA: Hey, we don't ever talk about this. I don't
care, okay. Congress doesn't care about that. I want to know
how many epinephrine-oriented products are in the queue right
now.
Dr. Throckmorton. I wish that I could answer that question,
sir, but----
Chairman Chaffetz. When can you give me that answer?
Dr. Throckmorton. I can get back whatever information I can
to you as quickly as I can.
Chairman Chaffetz. Are you going to get back the answer to
the question I asked?
Dr. Throckmorton. I'll be able to provide whatever
information I can.
Chairman Chaffetz. Are you going to answer the question
that I asked?
Mr. Lynch. Mr. Chairman.
Chairman Chaffetz. Yes. Mr. Lynch.
Mr. Lynch. Just on a parliamentary inquiry. We've done this
before with witnesses, we give them 5 minutes to go out in the
hallway there and call the people at his office and get that
answer for you. I think it's a pertinent question and you
should have an answer.
I yield back.
Chairman Chaffetz. How hard is it to get this answer? Who
knows that answer?
Dr. Throckmorton. It's simply a legal answer. I'm not
allowed to----
Chairman Chaffetz. It's simply a what?
Dr. Throckmorton. A legal answer. I'm not allowed to
disclose commercial confidential information in this setting.
And my understanding is that----
Chairman Chaffetz. Let me talk about it with staff here as
this hearing progresses. I don't want to slow it down for just
that. But it is a question we want to understand the answer to,
and I do think we should be able to get this.
Last question, Ms. Bresch. This came up late in the
process. It was a surprise to us. But can you explain or
clarify, from your own vantage point, the role that your mother
played in this process? I mean, we're reading these articles
that seem sensational. I don't know what's true, what's not
true. I'm giving you an open-ended opportunity to express your
version of what is going on there.
Ms. Bresch. And I greatly appreciate that. The article is
completely inaccurate.
We, Mylan, when we acquired this product and realized the
complete lack of awareness and access to the product, and the
fact that public places, let's take schools, that if a child at
a school or on a playground were to go in and have a severe
allergic reaction, go into anaphylaxis, and if that child
didn't have a prescription in their name at that school, the
school couldn't use it.
So there were deaths in schools happening because there may
have been EpiPens or other epinephrine auto-injectors, but they
weren't allowed to be used, and children, like I said,
tragically died.
We saw this as unacceptable. So there had only been a
handful of States that had started to recognize that
epinephrine auto-injectors could be in a public place in a
school's name, not in a child's name, therefore, the nurses and
trained administrators could use it in the case of a tragic
event.
We then started helping, and I applaud the Federal
legislatures as well as State legislatures who quickly
recognized these tragic events and that they could be largely
preventable, and legislation began to get passed to allow
schools to stock epinephrine.
We then launched our EpiPen for Schools program, which, as
I said, we've given 700,000 free pens to over 66,000 schools
with no strings attached, and I hope that one of the benefits
of this would be that the other 65,000 schools will participate
and receive free EpiPens.
During this period of time, you know the burden on schools
from a policy perspective, training perspective, so we gave
amounts to various groups, whether it was the National School
Board, National Education Association, National School Nurses,
that we could help, and only helping to fund them train
personnel and educate so that people could recognize an
anaphylactic event and know how to use and know how to
administer product.
My mother has dedicated her life to education, has been a
volunteer for years, and rotated 1 year into the president of
the National School Board in 2012, and then rotated out. We
have continued to work with these organizations to continue to
help train and educate.
So while people may want to criticize Mylan for giving free
pens and having access in public places to EpiPens, I certainly
thought it was a very cheap shot to bring my mother into this.
Chairman Chaffetz. I now recognize Mr. Cummings.
Ms. Bresch. Thank you.
Mr. Cummings. Thank you very much.
Ms. Bresch, on August 29, the committee sent you a
bipartisan request for documents. We included a simple request,
and I quote, ``We ask for the company's profits from the sales
of EpiPen for each year since acquisition,'' end of quote. Do
you recall getting that? Did you see that?
Ms. Bresch. Yes, sir.
Mr. Cummings. Ma'am?
Ms. Bresch. Yes, sir.
Mr. Cummings. Your company has started to produce
documents, and we appreciate that. We now have information
about your marketing expenses and a number of other costs.
But one thing that is absent, Ms. Bresch, from your
document production is your profits for each year. Given how
much you are now charging for EpiPen, I think the American
people have a right to know how much you and your fellow
executives are making off of the exorbitant prices you're
charging for this drug.
So let's start with last year. I see you've got all kinds
of charts, so maybe this is on one of those charts. How much
profit did you make in 2015 from the sale of EpiPens? In 2015.
Ms. Bresch. So, sir, what I think we provided is what I did
as in my testimony, is that about $50 per pen is our profit,
and that's just direct EpiPen. It's not taking any kind of
company allocation or anything else out of that other than just
direct related EpiPen cost.
Mr. Cummings. Have you got a number for me? How many did
you sell?
Ms. Bresch. We sold--I'll give you, roughly, over the last
12 months number, roughly, about 4 million packs of two. So 8
million pens, but 4 million packs of two.
Mr. Cummings. Okay. And according to the documents, you had
net revenues of $912 million in 2015 for EpiPens, and that was
after all rebates and discounts. Is that right?
Ms. Bresch. Yes, sir. What we recognize is the $274 per
pen, and so our revenue is calculated on that average of what
Mylan receives.
Mr. Cummings. And so according to these documents, you
spent $97 million on marketing in 2015 alone, and that is a
huge amount, and that's what the documents say. So that brings
you to a number--your number down to about 815 million.
Wouldn't you agree?
Ms. Bresch. Sir, I'm not sure what documents or what
you're--what I can confirm is that we absolutely have spent----
Mr. Cummings. You don't know how much you're making off of
these pens?
Ms. Bresch. We've spent about a billion dollars on EpiPen
since 2008.
Mr. Cummings. So the next documents say you spent $255
million on costs of goods sold in 2015. So that brings the
total to 560 million, and that's pretty simple math. So okay,
so you have patient assistance programs and school-based
programs for EpiPens, but the documents do not say how much you
spent on them last year. So how much did you spend on those
programs in 2015 for EpiPens?
Ms. Bresch. Sir, I don't have the exact breakout, but, like
I said, when I took the walk from 274 with cost of goods coming
out at $69, which gets you to about the $205, and then down,
about $105 for EpiPen-related costs, which is what takes you to
the $100 for two or the $50 per pen of profit.
Mr. Cummings. The fellow behind you is getting a chart, and
maybe that will help us.
Ms. Bresch. Okay.
Mr. Cummings. So this is your biggest product. Is that
right?
Ms. Bresch. Yes, sir.
Mr. Cummings. And are you telling me you don't know how
much you spent on patient assistance programs and school-based
programs last year? Is that what you're saying?
Ms. Bresch. I just don't have it broken out. I said about
$105 would be the EpiPen related, so all of those costs from
marketing as well as the patient assistance program, and
everything else that we spent on the product.
The disease awareness, we've done quite a bit on just
anaphylaxis itself, that because there was such a low awareness
of even what anaphylaxis was. Over the last 8 years, the
ability to really be able to educate about not only is
anaphylaxis something that is obviously life-threatening, but
we now know that at least 25 to 30 percent of the time, when
someone goes into anaphylaxis, they've never had a known
allergy before, whether a child or adult, which really drove
our need to want to get it in public places.
Mr. Cummings. So that leads me to the next question. I know
we've got some 43 million people that are a possible customer
base, but let me ask you this. Let's talk about R&D. How much
did Mylan spend on research and development projects that
directly related to EpiPens in 2015?
Ms. Bresch. Sir, actually we've spent over the years trying
to do several things that failed and trying to----
Mr. Cummings. Can we talk about 2015?
Ms. Bresch. And we hope that within the next 12 months
we'll have approved a new formulation that will extend the
shelf life, which means----
Mr. Cummings. That's not what I asked you. I said, how much
did you spend on R&D in 2015? And I think the hearing is about
EpiPens. And I've got to tell you, I talked about in my opening
statement about rope-a-doping, that's what I'm feeling like. I
mean, I feel like you're not giving me answers, ma'am.
And I think, in fairness to us, you knew what this hearing
was about, you knew what our concerns were, and I just, I'm
asking you questions that--you're the CEO?
Ms. Bresch. Yes, sir.
Mr. Cummings. That I would think you would know. I mean,
seems like this stuff would be jumping out of the top of your
head.
Ms. Bresch. Sir, as a company, Mylan spent $750 million
this year, is what we're projected to spend on R&D. For EpiPen
it's not broke down so much in products.
What I can tell you is that our overwhelming majority of
what we've spent has been on access and awareness programs. We
have, like I said, we've been developing over the years,
working on smaller different devices due to patient feedback.
What we have been successful in is reformulating it so it will
have a longer shelf life, and that will extend the time needed
between refills.
But the majority of our----
Mr. Cummings. Can we stop right there, right there?
Ms. Bresch. Sure.
Mr. Cummings. Let's put a pen in that one. This longer
shelf life, how are we coming with that? Right now it's about a
year. Is that right?
Ms. Bresch. Eighteen months.
Mr. Cummings. Eighteen months. So how long are we trying to
get it up to? Because I heard that it was a year, but I'm glad
to hear it's 18 months. But go ahead.
Ms. Bresch. So----
Mr. Cummings. What are your researchers--what are you
projecting?
Ms. Bresch. Twenty-four months is what we're hopeful for,
and maybe even longer, but a minimum of 24 months.
Mr. Cummings. How soon will we know, do you think? What do
your researchers--since you're spending all this money on it,
what are your researchers telling you, how soon do they say
they'll have an answer?
Ms. Bresch. Sir, we're looking to submit it within days to
the FDA. We've been working on this for a couple of years. And
it will be with 24 months that you do kind of--you continue
to--after you submit it to the FDA, you're able to continue to
work on stability, and that there is an opportunity that it
could go longer. But we, at a minimum, 24.
Mr. Cummings. I'm running out of time. I only have about a
minute left. How about this? Would you agree that you made
hundreds of millions of dollars in profit in 2015 based on the
sale of EpiPens alone?
Ms. Bresch. Sir, we have an $11 billion company. I run an
$11 billion company. And, yes, EpiPen is our largest product,
but by no means driving the entire performance of our company.
Mr. Cummings. Now, you answered my question. So you agree
that you made hundreds of millions of dollars in profit in 2015
based on the sale of EpiPens?
Ms. Bresch. Yes, sir.
Mr. Cummings. Thank you.
Ms. Bresch, here is what--I'm almost finished--Ms. Bresch,
here is what I want. I want you to produce to this committee a
breakdown for each year for the past 10 years since you
acquired this drug in 2007. I want you to include a detailed
list of all your costs for each year, all of your expenses for
each year, and all of your profits for each year for EpiPen.
And that's what we asked for nearly a month ago.
And the chairman is real big on documents, and I am too,
and we want to--it makes it--it's very unfair to us when we ask
you for documents and we don't get what we want. Because what
that means is, is that the hearing is over, as I said before,
you go back, you fly back to wherever, you know, your company
is, and we are then--we have then lost a chance to get the kind
of information we need.
With that, I yield back.
Chairman Chaffetz. I thank the gentleman.
I now recognize the gentleman from Florida, Mr. Mica for 5
minutes.
Mr. Mica. Thank you, Mr. Chairman.
Dr. Throckmorton, there is no generic available for
competition to the EpiPen, or is there?
Dr. Throckmorton. There is no generic product to any auto-
injector formulation of epinephrine. The generic form that Ms.
Bresch is talking about is a so-called authorized to generic,
which, as has been previously characterized, is the brand name
product marketed without the brand name on its label. That it
is the generic the way we----
Mr. Mica. Do you have under consideration, I guess it would
be public knowledge, anyone producing, attempting to produce
generic competition?
Dr. Throckmorton. I think it's public knowledge that there
are companies that are looking at that.
Mr. Mica. You would have to approve them. Do you have any
being considered for approval now?
Dr. Throckmorton. I can't comment on any specific
applications. I can tell you----
Mr. Mica. No, but do you have applications now?
Dr. Throckmorton. They would have to be approved by us.
Mr. Mica. How long have you had the applications?
Dr. Throckmorton. I'm not--I'm sorry, I can't comment.
Mr. Mica. You can't tell us.
Dr. Throckmorton. I'm sorry I can't comment about this.
Mr. Mica. Because we need to know. I mean, one way to bring
the price down is to have competition. Wouldn't that be
correct?
Dr. Throckmorton. I absolutely agree with that.
Mr. Mica. Can you let the committee know for the record how
many applications you have--you don't even have to tell us the
name--and how long you've had them and how long you've been
processing?
Dr. Throckmorton. I'm sorry, I can't provide that
information to you.
Mr. Mica. I can't--that's not acceptable, to come here on
this subject and not have that answer.
So the pen is available, and I understand under the
Affordable Care Act there is some exceptions to that. Is that
correct?
Dr. Throckmorton. I'm sorry, I don't understand.
Mr. Mica. Under the Affordable Care Act, is the EpiPen
available?
Dr. Throckmorton. Currently, there are two products that
are available on the market. Both of them have been approved as
new drug products. So the first is the EpiPen. The other is a
product called Adrenaclick, which is another epinephrine auto-
injector that prescribers can write for and is available
through pharmacies.
Mr. Mica. How long would it take to get a generic approved
and on the market?
Dr. Throckmorton. Beginning in October, on October 1, we've
committed to 10-month review times for any new application.
Some products----
Mr. Mica. I want to know how long you've had any
applications. You can't tell me----
Dr. Throckmorton. I'm sorry, I can't provide that
information, but I can tell you that in addition to the 10-
month clock that we've committed to, beginning on October 1,
some products that are particularly high public health value,
including so-called first generics, are eligible for priority
review. So those things would happen more quickly.
Mr. Mica. Thank you.
Ms. Bresch, in a media interview, you said: ``As the health
insurance environment has evolved, driven by the implementation
of the Affordable Care Act, patients and families enrolled in
high-deductible health insurance plans, who are uninsured, or
who pay cash at the pharmacy, have faced higher costs for their
medicine.''
Is that correct?
Ms. Bresch. Yes.
Mr. Mica. And the chairman talked and the staff had talked
about the ingredients cost about a dollar. Is that correct?
Ms. Bresch. No, sir, we pay $69 for the cost of goods, for
the EpiPen.
Mr. Mica. $69.
Ms. Bresch. For two.
Mr. Mica. For two. Is this your major profit center for the
company?
Ms. Bresch. So, sir, it represents----
Mr. Mica. Is this your major profit center?
Ms. Bresch. It's our largest product.
Mr. Mica. Is it your major profit center?
Ms. Bresch. So it's--we have, like I said----
Mr. Mica. It's your major profit center.
Ms. Bresch. It's our largest product, but we have----
Mr. Mica. And one of the things that concerns us, some
people can't get this for their family, their kids, the prices
are high. There isn't competition, and then it's also reported
that the top five executives within your company earned a
collective $292 million from 2011 to 2015. Is that correct?
Ms. Bresch. Sir, I think that there is----
Mr. Mica. Is that correct?
Ms. Bresch. I don't----
Mr. Mica. Okay. Well, what's your salary, what was your
salary last year?
Ms. Bresch. About $18 million.
Mr. Mica. About $18 million. Sounds like you're doing
pretty well on this.
How does your compensation compare to peers in the
industry?
Ms. Bresch. It's in the middle.
Mr. Mica. It's in the middle. So there are some with even
bigger salaries?
Ms. Bresch. Yes, sir.
Mr. Mica. Okay. Were your payments or executive
compensation packages tied to the result of EpiPen sales?
Ms. Bresch. No, sir. EpiPen's performance is a factor in
Mylan's overall performance, but the board sets the
compensation based on Mylan's overall performance.
Mr. Mica. My time is up, but I have other questions I'll
submit to the witness.
Mr. Walberg. [Presiding.] I thank the gentleman. The
gentleman's time has expired.
I now recognize the gentlelady from the District of
Columbia, Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman. I appreciate this
hearing.
Could I ask you, Ms. Bresch, after an avalanche of
criticism, perhaps the worst--and that is really saying
something--of any pharmaceutical in recent memory, will you
reverse the increase in price of EpiPens?
Ms. Bresch. So, Congresswoman, thank you. We have, by the
introduction of a generic, which has never been done before. I
mean, an unprecedented event for a brand to cannibalize their
own. So we--to $300.
Ms. Norton. And that you did in response to the criticism.
That's your response to the criticism you've gotten from the
public long before you came to this hearing, but nothing about
the brand-name product. Is that right?
Ms. Bresch. Because the way that we can make the most
immediate impact to the patient----
Ms. Norton. Would be to reduce the price of the brand-name
product.
Ms. Bresch. But that would not be guaranteed to flow
through to the patient. What we did was to give immediate
relief to the patients that fall under this----
Ms. Norton. But that was your concern. You know, this just
might not go to the patient, so we will go immediately to----
Ms. Bresch. Yes. Our concern was absolutely that everyone
who needs an EpiPen has one. And so putting a generic into the
market would, we believe, be the most effective and efficient
way to make that happen.
Ms. Norton. I asked staff, because there have been some
responses from you about this being only one of your products,
how much, how substantial was EpiPen. I was amazed by the
answer that--and I would ask you to verify this--that Mylan is
0.3 percent of the products, percent of the products you
produce, but 10 percent of the revenue.
Ms. Bresch. EpiPen is less than 10 percent, a little less
than 10 percent of our overall----
Ms. Norton. But only about three one-hundredths of the
products you produce?
Ms. Bresch. Because we absolutely produce billions and
billions of doses; in the U.S., 21 billion doses.
Ms. Norton. Yes, but, you know, this turns out to be a
minute amount of the products you produce, yet out of that
comes 10 percent of the revenue.
What bothers me, when we try to--what we ought to do is
compare you with others, because you're certainly not the only
one. The ranking member brought up the names of others who have
become notorious. But even in that notorious grouping, Mylan is
11th in revenue in the drug industry. Can you confirm that?
Ms. Bresch. I'm not--no, I'm not sure.
Ms. Norton. That is our information. And unless you get
back to us with different information, 11th in revenue in the
entire drug industry, which is perhaps the most criticized
sector of an economy, and 16th by market capitalization, and
that Mylan is paying its executives far more, for example.
You have already testified that you earned $18 million.
That is last year. I understand you earned $2.45 million in
2007. So you got a hefty increase. But from $2.5, less than 10
years ago, to $18 million last year. That's the figure?
Ms. Bresch. I am blessed and fortunate, not only
financially, but to have worked with this company for 25 years
and to----
Ms. Norton. Could I ask you this: What have you done to
earn a 671 percent increase? What have you done to earn that
kind of increase?
Ms. Bresch. Well, I believe Mylan has done a tremendous
amount, starting with----
Ms. Norton. No, I'm asking what you have done. I'm
interested in your compensation. What have you done to earn
that kind of an increase, 671 percent increase in less than 10
years?
Ms. Bresch. I would say, starting with saving the U.S. over
the last 10 years $180 billion. Our products alone have saved
this country $180 billion.
Ms. Norton. I'm talking about--I'm talking about this
product. This product.
Ms. Bresch. I'm talking about Mylan, but my compensation--
--
Ms. Norton. I'm talking about this product, Ms. Bresch,
this product. What have you done? Is your compensation based on
what you've done with this product, which turns out to be the
epicenter of your products for--of the many products you make?
So I'm trying to find out what you've done about this product
that has earned such an increase.
Ms. Bresch. First, I would say having 700,000 free EpiPens
across 66,000 schools across America, could not be more proud
about that, and hope that we can get them in the other 65,000.
Ms. Norton. For which you will, of course, then want
another increase.
Thank you, Mr. Chairman.
Mr. Walberg. The gentlelady's time has expired.
I now recognize the gentleman from Tennessee.
Mr. Duncan. Thank you very much, Mr. Chairman.
And, first of all, I want to associate myself with the
opening remarks of both the chairman and the ranking member.
And according to MBC, since it's been brought up by the
previous question, according to MBC, Ms. Bresch made
$18,931,068 in 2015. I suppose when you get to salaries at the
level that we're talking about, it's easy to forget an extra
$931,000. But the greed is astounding. It's sickening. It's
disgusting, almost any words that you can think of and not only
by Ms. Bresch but the other executives.
And I am a very conservative pro-business Republican, but I
am really sickened by what I've heard here today and what I've
read before about this situation. I can tell you that, in my
opinion, nobody can really earn or deserve $19 million a year.
And lest anyone be under a misunderstanding that the free
market or capitalism hasn't worked here, you don't have a free
market. That's the problem. A true free market, you have ease
of entry. You certainly don't have that in the drug industry.
And, also, you have plenty of competition in a true free
market, and you don't have that here. And it's primarily the
fault of the FDA. We've let the--I've read article after
article, for many years, we've let the Food and Drug
Administration become so big and so bureaucratic that it's
become almost impossible for a small company to get a drug or a
medical device to market. And the cost of getting a drug or a
medical device to market, on average, has become in many cases,
most cases over a billion dollars to get a drug to market. And
because of that, the drug industry has ended up in the hands of
a few big giants.
And then I've read article after article that all these
giant drug companies and pharmaceutical companies have hired
many or most of the former FDA Commissioners and top-level
employees, just like the Defense Department--defense
contractors have hired so many retired admirals and generals.
And what they've done in the drug industry, they've come in and
they've manipulated the market.
Now, Ms. Bresch justifies all this, saying that they only
get $274 from the EpiPens, but these pens were selling by this
other company, this German company, for $100 in 2007. We've
only had I think around 30 percent inflation in those years,
and yet they have almost tripled the price that this German
company was paying.
Then Congress, with good intentions, made the situation
worse by giving incentives for the schools in grants to get
these pens. And then I understand that the New York State
attorney general is getting ready to investigate Mylan, because
they have required--they've given these first pens out for free
as marketing devices but then required them to buy the next
times they had to buy pens.
But what does concern me, one thing that really concerns
me, according to a September 1st story on NPR, the FDA as of
July had 4,038 generic drug applications awaiting approval, and
the median time it takes for the FDA to approve a generic is
now 47 months. That doesn't sound like a very expedited
procedure to me, Dr. Throckmorton.
And then it says, in March, generics giant Teva
Pharmaceuticals, another giant, told investors that its generic
version of EpiPen was rejected by the FDA and that it now
wouldn't be able to launch the generic at least until next
year. Another pharmaceutical company, Adamas--I'm not sure if
I'm pronouncing that correctly--reported a similar rejection
from the FDA in June. So that's two pharmaceutical--two giant
companies that have been turned down.
Dr. Throckmorton, the FDA needs to speed up its actions,
and it needs to allow more competition, and it's not doing that
now and in the opinion of I think almost everybody here. And
then it's all being done on the backs of sick children, and
it's shameful.
Mr. Chairman, thank you.
Mr. Walberg. I thank the gentleman.
I recognize my colleague Mr. Clay for 5 minutes.
Mr. Clay. Thank you, Mr. Chairman.
Ms. Bresch, since I have a limited amount of time, I want
to ask you a series of yes-and-no questions, and then I will
give you an opportunity to respond in more detail if you'd like
at the end.
First, epinephrine, obviously, is an essential lifesaving
drug, correct?
Ms. Bresch. Yes.
Mr. Clay. The formulation of epinephrine, the active drug
in the EpiPen, has not changed since 2007, correct?
Ms. Bresch. The pen has changed. The device has changed.
But the epinephrine----
Mr. Clay. The formulation of the----
Ms. Bresch. Right.
Mr. Clay. --drug has not. Do you admit that you have raised
the price of EpiPens by more than 400 percent since acquiring
it in 2007?
Ms. Bresch. Yes, the wholesale acquisition cost has
increased.
Mr. Clay. Do you admit that Mylan has spent millions and
millions of dollars to expand the EpiPen market?
Ms. Bresch. Yes, and to expand access.
Mr. Clay. And according to press reports, on September 17,
2015, you stated at a conference, and I quote: ``We are
continuing to open up new markets, new access with public
entity legislation that would allow restaurants and hotels and
really anywhere you are congregating, there should be access to
an EpiPen.''
Did you make that statement?
Ms. Bresch. Yes, sir.
Mr. Clay. In 2012, a settlement agreement was reached with
Teva Pharmaceutical Industries, preventing it from putting a
generic on the market until 2015 or earlier under certain
circumstances. Is that correct? Is that correct?
Ms. Bresch. Yes. Yes, sir.
Mr. Clay. Do you admit that by delaying the entry of a
generic drug into the marketplace, Mylan has had less
competition? Do you admit that, that you had less competition
by that delay? Not you-all delaying, but having the delay.
Ms. Bresch. But we've had competition to EpiPen every year.
Mr. Clay. Okay. The New York Times reported that although
Mylan, and I quote, ``was once taking two 10-percent price
increases a year, it has made two 15-percent increases annually
starting in 2014, when the generic competition seemed
imminent.''
Do you admit that, in anticipation of generic competition,
Mylan raised the price more sharply than it had in the past?
Ms. Bresch. Not due to generic competition. We did increase
the wholesale acquisition cost, but as I've stated, we get 274
out of the 608. So, over that time period, we received an
average of 8 percent increase.
Mr. Clay. So, raising the price, do you admit that these
price increases were intended to generate even more significant
revenue before generics entered the market? Was that the intent
of the raising the price, that you-all receive additional
revenues?
Ms. Bresch. We certainly received additional revenue, but
on 274, just not the 608.
Mr. Clay. Have you ever witnessed an individual having an
epileptic seizure? I grew up in the 1960s and 1970s, and I had
a friend who I witnessed on a couple of occasions these
seizures. Have you ever seen an individual have a seizure?
Ms. Bresch. Due to anaphylaxis?
Mr. Clay. Yes.
Ms. Bresch. No, sir.
Mr. Clay. Well, it's not a pretty sight. And it's--I mean,
look, modern medicine has advanced in a way that's beneficial
to patients, but to have companies like yours take advantage of
this situation, take advantage of these people who are really
in need of this medication, I think it speaks to something that
is--that we are better than that.
And I would hope that corporate America, that the
pharmaceutical industry is better than that. I mean, look, in
the last few seconds, tell me what--you know, how did we get to
this point, that we have a culture like this in corporate
America that wants to stick it to consumers?
Ms. Bresch. And, sir, all I can speak to is our culture,
which Mylan has for over 50 years spent and invested in being
able to produce low-cost pharmaceuticals and provide access. As
I mentioned, over 21 billion doses, we've saved this country
over $180 billion. So our premise is to provide access. And
what we worked on with EpiPen was to be able to give 700,000
free pens to schools with no strings attached, nothing----
Mr. Clay. But initially you put it out of reach of the
average consumer.
Mr. Walberg. I thank the gentleman. The gentleman's time
has expired. I think the question was answered.
I now recognize myself for 5 minutes of questioning.
Recent news articles, Ms. Bresch, have documented a
lobbying effort on behalf of Mylan to add the EpiPen to the
list of preventative medical services managed by the U.S.
Preventive Services Task Force. Preventive medical services are
those that prevent illnesses before they cause symptoms or
problems, as I understand it.
Currently, treatments receiving a grade of A or B by the
task force are required to be offered to the consumers with no
out-of-pocket costs. Supporters of adding the EpiPen to the
list of preventive medical services argue that this measure
will help consumers get access to EpiPens with no cost-sharing.
So, Ms. Bresch, will adding the EpiPen to the preventive
medical services list, will it do anything to lower the actual
price of the device, the overall reason for our hearing today?
Ms. Bresch. So the preventive--the preventative drug list,
as you mentioned, would make sure everyone has access. But what
we've now done with the generic drug and dropping the price to
300, we believe provides that similar access but believe that,
obviously, the importance of epinephrine auto-injectors should
be part of the preventative drug list.
Mr. Walberg. So you are still pushing to have it on that
list?
Ms. Bresch. I absolutely still think it should have----
Mr. Walberg. Even with the generics?
Ms. Bresch. Yes.
Mr. Walberg. Do you believe that spending lobbying
resources to add the EpiPen to the preventive medical list and
thus shifting the price of the drug to other sectors is a
realistic solution to stem rising drug prices?
Ms. Bresch. But, sir, that's why what we did was so
unprecedented. It wasn't to shift. We dropped the price by half
by introducing the generic.
Mr. Walberg. But you still want it on that list?
Ms. Bresch. Just to ensure that--just showing the
importance of epinephrine.
Mr. Walberg. Why not reduce the price instead of spending
those lobbying resources?
Ms. Bresch. Sir, there has been--the lobbying resources
have been primarily about creating access and getting
epinephrine in public places, like schools and eventually--just
like a defibrillator. I mean, what we recognized is that when
you need one, seconds count, and they should be where you are.
So----
Mr. Walberg. Absolutely. We don't disagree with that at
all. And we appreciate the fact that the product can be there
and can be useful.
But this list also, I think we need to plumb the depths of
that. We've gone the generic route; we've had some questions on
that. But the list also--won't this, in fact, just shift the
full cost of EpiPens to government payers, such as Medicaid,
Medicare, health insurers, employers, eventually leading to an
overall increase in premiums and other copays on consumers?
Ms. Bresch. No, sir. We believe, by, one, putting the
generic in like we have at 300, over 85 percent of our patients
pay minimal out-of-pocket costs. So, by now reducing it by
half, it even reduces that further. So this is not all about
cost-shifting. It's just making sure everyone has access and
understands the importance of epinephrine.
Mr. Walberg. It certainly takes the pressure off of bad
publicity for cost factor to get it paid for by Medicare,
Medicaid, et cetera, the process.
Let me shift over to Mr. Throckmorton, because there
definitely is a concern about just the delay, the time period,
the bureaucratic maze. Some drug companies are taking advantage
of your agency's failure to approve more generic drugs. I think
we've seen that. We are questioning that today.
What can we do to expedite approvals to ensure we have
multiple generic competitors to prevent drastic price spikes?
And we heard testimony in our last go-round that said it's a
lot of bureaucracy. What are we doing to get to that?
Dr. Throckmorton. So thank you for that question. I want to
take issue slightly with that characterization of where we are
as an agency. There was a time when our resources were not able
to keep up with the applications that we were receiving for
true generic drug products, not authorized generic but true
drug products approved under the abbreviated new drug
applications.
There was a time in 2012 when we were--we did have the
backlog. We had over 4,400 applications that needed to be
reviewed. In 2012, with Congress' help, we got additional
resources, allowing us to hire new individuals, put in place
new processes. The result of that have been over 2,200
approvals or tentative approvals since 2012. So we have, in
fact, made progress in reaching conclusions regarding approvals
of true generic products.
Mr. Walberg. What about the markets? Are you doing anything
to identify markets that are at risk of becoming monopolized by
a single generic?
Dr. Throckmorton. Absolutely. We, first and foremost, agree
with everything that has been said today about the power of
competition and the importance of us taking that challenge on,
us making it possible to develop new products. In particular,
when you are talking about products like auto-injectors for
epinephrine, the public health value is even higher. And we
understand, for those products, we need to put particular work,
attention.
We've made several--we've done several things specifically
about difficult-to-develop products like the epinephrine auto-
injector. I mentioned a couple of them earlier, the guidances
that we have put out, talking about how to put these products
on the market efficiently, quickly, how we're going to review
the data, the kinds of information you need.
In addition, we meet with any company that comes to us with
a product that has this public health value. We offer to meet
with them individually. We offer to respond to their questions
in writing. We have put out----
Mr. Walberg. I appreciate that. My time is expired. But I
would make a statement that if there are companies that are
having difficulty, I certainly think that members on this panel
would love to hear directly from them and then come directly to
you----
Dr. Throckmorton. I would welcome----
Mr. Walberg. --and ask those questions, because we want to
deal with this. We want to have the competition. We want to see
the price reduced. And we don't want to have hearings like this
on a regular price.
Dr. Throckmorton. If there is a case, I hope they call.
Mr. Walberg. My time is now expired.
I now recognize Mr. Lynch of Massachusetts for his 5
minutes of questioning.
Mr. Lynch. Thank you, Mr. Chairman.
Ms. Bresch, I want to go back to the $50 profit number
you've been giving us today. Last year, the price was about
$460 per 2-Pak. Is that right? So let's go to your chart there.
That's not what I have.
The numbers, the documents you gave us are totally
deficient in terms of trying to figure out how much you're
charging people and how much it costs you, just so you know.
And I know we have some outstanding document requests for your
company, so I really hope you can comply with those as soon as
possible to help the committee with its work.
So let's even just go off your chart there: $401 one year,
that was 2014; 530 in 2015; and then a whopping $608 this year
so far. So how much money were you making per EpiPen back in
2014 then when you were charging $400?
Ms. Bresch. So, sir----
Mr. Lynch. Please, not another chart. Can you just----
Ms. Bresch. I'm just saying that the 235----
Mr. Lynch. I'm not talking about that. I'm talking about
the top price.
Ms. Bresch. We received----
Mr. Lynch. I'm talking about the overall price.
Ms. Bresch. We received $235.
Mr. Lynch. Look, that's not what I'm asking you. Can you
just answer the question? When you were charging $400 back in
2014, how much were you making?
Ms. Bresch. Equivalent to the $50, approximately $50 here.
Mr. Lynch. Okay. Okay, $50, fair enough.
Ms. Bresch. I think it was about $40.
Mr. Lynch. $40?
Ms. Bresch. Yes.
Mr. Lynch. Okay. $40 back then?
Ms. Bresch. I believe it was approximately----
Mr. Lynch. Okay. 2015, you went up to $500. How much were
you making that year?
Ms. Bresch. Out of the--we received 219 and----
Mr. Lynch. No, no, no.
Ms. Bresch. --out of that, the profit was probably about--
it was around $38.
Mr. Lynch. $38. Okay. And now it's up to $50 this year?
Ms. Bresch. Approximately.
Mr. Lynch. Okay. So if you're only making $50 this year,
you must have been losing money in the previous years, because
you've gone up $200 on the overall price, the top price, and
you're still only making $50. I just can't understand that. The
numbers don't work, based on the documents you've given us.
Ms. Bresch. So, sir, the 608 is the wholesale acquisition
cost. The price to Mylan is 274.
Mr. Lynch. Yeah, we've done that dance. We've done that
dance. I understand that.
Ms. Bresch. And then it's 50--approximately $50 of profit
off of the 274.
Mr. Lynch. Mr. Throckmorton.
Oh, let me ask you, Ms. Bresch, do you do business with the
VA? I know it's a different population and the EpiPens are
usually for kids with allergies, but----
Ms. Bresch. Yes, sir, we do.
Mr. Lynch. Okay. What is the VA paying?
Ms. Bresch. I'm not sure of the cost, but I know it's----
Mr. Lynch. They have the ability to negotiate their own
drug prices.
Ms. Bresch. Yes, sir.
Mr. Lynch. It's a hell of a lot less, I bet.
Ms. Bresch. Yes. We've had a----
Mr. Lynch. So maybe that's what we ought to do for Medicare
and Medicaid and everybody else, let them negotiate their own
drug prices directly with the pharmaceutical companies. That's
what I think should happen here. That's really what--I think
maybe--it was not your intention, but I think it might have
helped Congress get around an issue by showing the blatant
disregard you have and disrespect you have for people who
desperately need this medication.
And you talk about expanding the ability for people to have
the EpiPen. People in my district can't do it at $608, can't do
it. And a lot of those people don't have discounts. They're
regular middle class people. They don't have that discount. And
Medicare part D, their increase is--I know the access went up
by 164 percent since you bought the company from Merck, but the
cost increase are up 1,151 percent, based on a study here that
I have from Juliette Cubanski and Patricia Neuman. I want to
enter this for the record.
Mr. Walberg. Without objection.
Mr. Lynch. It's disgraceful what's going on here, but I
think, in a way, like I say, you've done us a little bit of a
favor here by just showing you what's wrong with this system,
what's wrong with our healthcare system. I think it's
disgusting.
I'll yield back.
Mr. Walberg. The gentleman yields.
The chair recognizes the gentleman from Tennessee, Mr.
DesJarlais, for 5 minutes.
Mr. DesJarlais. Thank you, Mr. Chairman.
Ms. Bresch, I just wanted to try to get inside the mind of
a large drug company CEO for a minute. When did you guys sit
down and decide after 2008--you acquired the EpiPen--when did
you decide to use this model of price increase, and how did you
come to that decision?
Ms. Bresch. It was first recognizing the fact that there's
a severe shockingly low understanding of anaphylaxis, and there
is a shockingly low number of people who were prepared or
protected with EpiPen.
Mr. DesJarlais. So you decided you should raise the price?
Ms. Bresch. No, sir. We committed to investing in this
product, which we have about over a billion dollars over this 8
years to provide access.
Mr. DesJarlais. And how much have you made over 8 years?
Ms. Bresch. It is absolutely our largest product, but----
Mr. DesJarlais. No. I just said, how much have you made?
You said you invested a billion dollars. You know how much you
invested. How much did you make?
Ms. Bresch. I don't have the cumulative number.
Mr. DesJarlais. So you know what you spent. Okay. Do you
think that you are charging too much? Do you think $600 is too
much, or are you going to keep raising the price?
Ms. Bresch. Sir, which is why we took the unprecedented
action of putting the generic in at $300.
Mr. DesJarlais. Okay. We'll get to that. But did you plan
on increasing the price in 2017?
Ms. Bresch. No, sir, we did not plan on raising the price.
Mr. DesJarlais. Okay. But you did have a plan then to raise
it every year for 5 or 6 years?
Ms. Bresch. And if you look at what we received out of that
money----
Mr. DesJarlais. I just asked you a question. Did you have a
plan to raise the price every year for 6 years and then stop?
Ms. Bresch. We have raised the price. We have raised the
price. And I think managing to--what we received, that 274 out
of the 608 is what we were managing.
Mr. DesJarlais. You are obviously proud of your company.
You think that was fair then to raise the price each year to
that point, even though you got a drug at $100, which was
probably too much for the drug, considering what the cost is. I
know you made a fancy clicker, because I had one of your reps
come by my office back in 2009 or 2010 and show me how to use
it. So I know that cost a little bit of money. But, generally,
when a drug goes to generic, doesn't the price go down?
Ms. Bresch. Which is why we dropped it to $300.
Mr. DesJarlais. Only after you jacked it up to $600. It's
like if I go buy this tie and they say it's $600 but were going
to sell it to me for $300, that doesn't make it worth $300. You
fixed the price on the drug and now you know--when did you know
you were going to release the generic?
Ms. Bresch. We announced it several weeks ago.
Mr. DesJarlais. Okay. But when did you know as a company? I
mean, you knew it was coming. You've got a gentleman sitting
next to you say it takes months, maybe years.
Ms. Bresch. No, sir. We're putting an authorized generic in
the market which is equivalent to EpiPen.
Mr. DesJarlais. Okay. So we're supposed to feel good
because you've taken a drug that you're overcharging six times
what it's worth and you're going to drop the price to 300.
Ms. Bresch. Sir, we were receiving $274 out of the $608.
Mr. DesJarlais. Do you think you were charging too much at
$600?
Ms. Bresch. Sir, we believe it was a fair price, and we've
just now lowered that price by half.
Mr. DesJarlais. Why did you lower it by half if you thought
it was fair? If you thought it was fair, leave it where it's
at.
Ms. Bresch. Because we wanted to make sure we're addressing
the patients out there that are facing higher out-of-pocket
costs and paying the wholesale acquisition cost, which was not
intended. The system wasn't intended for people to pay the
wholesale acquisition cost, and that's what's happening at an
alarmingly rising rate, which is--we took the unprecedented
step of putting the generic in to sidestep that and be able to
lower the cost for----
Mr. DesJarlais. You're doing everyone a favor by charging
three times what you acquired the drug for as a generic. If
you're trying to make us feel good about that, I just don't.
I'm not buying your argument. Do you have a guilty conscience
about any of this?
Ms. Bresch. Over that period of time, putting it in public
places, giving free--700,000 free EpiPens to 66,000 schools and
wanting to get it into all of the public schools across
America.
Mr. DesJarlais. Well, if it cost 20 bucks, they could
afford to buy their own. You wouldn't have to give them to
them. But, instead, you chose to jack the prices up and then
somehow make everyone want to feel good about you by saying how
much you do.
The bottom line is you took a very inexpensive drug and you
profited handsomely off it. And I don't have a problem like a
lot of my colleagues that you can make money in a free market
enterprise, but what I do have a problem with, as a physician,
when you take drugs that are lifesaving drugs--and people don't
have a choice. They can't go to a different department store to
get their tie. They have to have that drug, because, you know,
a mother would cut off her right arm to get that dose of drug.
You decided to charge 600 bucks instead of cutting off her arm.
And now you're saying you're dropping it to $300 and that
should make us all feel better when, in fact, that's probably
about 10 times what the drug should cost.
And I understand you got to make some money, but you can
really sit there with a clear conscience today and say that
that's okay and you just decided, because you're such a good
company, to cut the price from $600 to $300? I mean, is that
your testimony?
Ms. Bresch. Congressman, we want everyone who needs an
EpiPen to have an EpiPen, and we're going to continue to work
to expand access.
Mr. DesJarlais. Lower the price so they can afford it. Are
you going to lower the price so other people can afford it?
Ms. Bresch. We believe that all the programs that we put in
place, from the generic to the higher--patient assistance
program to the copay card. So trying to address every facet of
patients to make sure they can have access to EpiPens is what
we will remain focused on.
Chairman Chaffetz. [Presiding.] I thank the gentleman.
I now recognize the gentleman from Virginia, Mr. Connolly,
for 5 minutes.
Mr. Connolly. Thank you.
Ms. Bresch, I was listening to your earlier testimony, your
formal testimony, and I was just struck with what humanitarians
you people of Mylan really are. And if you listen to your
testimony, you'd never know what the uproar is about. Do you
understand the nature of the uproar?
Ms. Bresch. I do, sir. And I truly believe it's--the story
got ahead of the facts, because I think people had--because of
the complexity around the pharmaceutical system, I think that
us being able to now release, put on the record what we're
making, what comes to Mylan, in fact, is making $50 a pen.
Mr. Connolly. You will forgive me. I only have 5 minutes,
so I have to manage my time like you have to manage yours. I
don't mean to cut you off, but I want to get to some questions.
Okay. So let me get this straight in terms of the
chronology and sequencing. You took over the previous
manufacturer in 2007, Mylan did. Is that correct?
Ms. Bresch. Correct.
Mr. Connolly. And beginning in that time--the price of
EpiPen had been fairly stable up to that point. Is that
correct?
Ms. Bresch. Yes. The product----
Mr. Connolly. Yes. So, since 2007, you've raised the price
15 times, if I understood it correctly. About that?
Ms. Bresch. Yes, sir.
Mr. Connolly. Yeah. So what happened between 2007 and 2016
different than the previous manufacturer and producer? Did
production costs skyrocket for you?
Ms. Bresch. Cost of goods increased for sure.
Mr. Connolly. Well, how much?
Ms. Bresch. Almost 100 percent over that period----
Mr. Connolly. 100 percent. And what was the comparable cost
on the price of EpiPen in that 100-percent cost increase?
Ms. Bresch. I'm saying over the last 8 years.
Mr. Connolly. Right. And I'm saying, what did it--you went
from what to what in 8 years in what you charged, maximum
price? I took your point that not everyone pays that. I
understand. We have a medical system where we have all kinds of
different layers of pricing.
But, nonetheless, the cost to consumers, at least as pegged
at an official cost, what was the comparable increase? While
you're absorbing in 8 years 100 percent you say, 100 percent
cost to you to produce, what was the comparable cost, in
theory, to consumers, maximum cost increase in that time period
that you charged by raising costs 15 times, a price?
Ms. Bresch. And, sir, today that is $274 that we receive
for the EpiPen.
Mr. Connolly. Well, I was asking for a percentage increase.
Let's do apples and apples. If you're going to contend that
production costs went up 100 percent, all right, what is the
comparable price increase for consumers during that time
period? Your own testimony, you've acknowledged you raised the
price 15 times.
Ms. Bresch. Sir, I believe it's almost 300 percent.
Mr. Connolly. 300 percent. So presumably, that's profit.
Ms. Bresch. After--I mean, from that----
Mr. Connolly. The delta.
Ms. Bresch. After the cost of goods come out and then you
take out all other EpiPen-related costs.
Mr. Connolly. Well, I got to tell you, unlike some of my
colleagues, I don't care what your profit is. I mean, America
is built on profits. Profits are an incentive. What I care
about is what you charge consumers who have no choice. If I
understand it, you've got a stranglehold on the market. You
control 94 percent of this market. Is that correct?
Ms. Bresch. Sir, we have a large market share. We don't
control. At any point in time----
Mr. Connolly. All right, I'll withdraw the word
``control,'' Ms. Bresch, if it offends you. You have 94 percent
of the market share.
Ms. Bresch. Correct.
Mr. Connolly. Yeah. I'd call that a stranglehold. I'd call
that a lot of control. You don't want to call it control,
don't. But consumers are experiencing it a little differently.
And so, because you have such a stranglehold on the market, you
could do what you want in terms of pricing, and you have.
Ms. Bresch. Sir, we have had many competitors in and out of
this marketplace. In fact, that just underscores the complexity
of the product----
Mr. Connolly. Your competitors don't even equal 6 percent
of the market, Ms. Bresch. I mean, that doesn't even pass the
giggle test, what you're asserting. You virtually have a
monopoly and you've used it to your advantage, but,
unfortunately, it's at the expense of people who need it.
This is a lifesaving drug in some cases. People who risk
anaphylactic shock don't have a choice; they have to use it.
And I'm wondering what your sense of social responsibility is
to those people. I mean, how do you balance--I'm looking--I
could go through for you statements you've made and the company
has made in the annual report to investors, and it sure is a
different set of statements than what we've heard here today.
I didn't hear the humanism. I didn't hear the philanthropic
call. I heard statements about favorable pricing. I heard
statements about how EpiPen continues to post strong results
and has delivered double-digit growth to date. That's because
of your pricing.
Ms. Bresch. But, sir, it's also because we are reaching
almost double the amount of patients in protecting and having
the ability to be prepared with an EpiPen. So we absolutely
expanded access and reach to patients who are at risk, as well
as putting them in public places like our schools program.
Mr. Connolly. During the call to investors, one question
asked to you was, what are the prospects for future price
increases for EpiPens? This is an investor meeting. And your
answer is, and I quote: ``You should foresee that just
continuing as we continue to maximize the EpiPen franchise.''
What did that mean if it wasn't reassuring investors that we
were going to maximize every opportunity to maximize our
profit? And, again, I don't think profitis a bad thing, but I
do think it's a bad thing when somebody exploits it at the
expense of consumers who live on its price or don't.
Ms. Bresch. And, sir, that's why we have taken every step
to ensure everyone who needs an EpiPen has one. And all of our
programs, from whether it's the access program or copay card or
the schools program, so that our 700,000 free EpiPens
throughout the 65,000 public schools. And we want to reach the
other 65,000 public schools.
Mr. Connolly. Well, again, Ms. Bresch, I think my time is
running out. But there's sort of this Dr. Jekyll-Mr. Hyde,
maybe in this case Dr. Jekyll-Mrs. Hyde, quality to your
testimony. There's one message for us here in the public and
quite another for investors.
I yield back.
Chairman Chaffetz. Thank you.
I now recognize the gentleman from South Carolina, Mr.
Gowdy.
Mr. Gowdy. Thank you, Mr. Chairman.
Mr. Chairman, as you know, I'm not a physician, which is
why I was consulting with one, and I'm not an expert in
economics, like Mr. Meadows and Mr. Mulvaney, but I am trying
to understand--Ms. Bresch, maybe you can help me. Walk through
the different chains of delivery for name-brand drugs versus
authorized generics. From the manufacturer to the patient, what
is the difference in the chain of delivery?
Ms. Bresch. Do you mean in the product or how it's
distributed?
Mr. Gowdy. Distributed.
Ms. Bresch. So the supply chain for a generic is different
than the supply chain for a brand. Primarily----
Mr. Gowdy. Authorized generic.
Ms. Bresch. Authorized generic and a generic would be the
same channel.
Mr. Gowdy. Okay.
Ms. Bresch. So the distribution channels do differ,
primarily given the fact that generics are for the retail
pharmacy. So there's the supply chain from a pharmacy manager
or the formularies differ quite a bit from the brand to the
generic.
Mr. Gowdy. Well, that leads me to another question. I'm
sure there's a really obvious answer, but given my background,
I don't know what it would be. Why don't pharmacies just deal
with the manufacturer? If a doctor has to write a prescription
and a pharmacist knows what the prescription is for, why is
there a middle person in the delivery of drugs?
Ms. Bresch. So, sir, for many--on the generics, for many,
we do deal directly with pharmacies, whether they're large
chains or if they're independents and have----
Mr. Gowdy. I guess that's my point. If you can do it for
generics and authorized generics, why not for name brands too?
Ms. Bresch. Because most of America falls under a formulary
of payers, and pharmacy benefit managers manage those
formularies for insurers or for employers. So they manage what
products can be--it's tiered. They decide what products can be
on a tier two or a tier three, so whether it's preferred or not
preferred. So they serve as an administrator for most
employers.
Mr. Gowdy. A drug middleman serves as an administrator?
Ms. Bresch. As far as deciding what products are on--that
they'll reimburse for or at what rate they'll reimburse for
them.
Mr. Gowdy. Well, let me ask you this: Is it theoretically
possible that your profit margin could increase with an
authorized generic as opposed to the name-brand drug?
Ms. Bresch. No, sir. It will be considerably less.
Mr. Gowdy. Walk me through how that would be. You're
cutting out the middleman, but yet you're making less money.
How?
Ms. Bresch. So there still is--there is still--there is
still fees and rebates and discounts on the generic side, on
the generic channel. They're just not as significant. So we're
charging, we set a wholesale acquisition price at 300, and we
estimated that our net, what would come to Mylan, would be 200.
After you take cost of goods out of that and EpiPen-related
costs, it will certainly be less than the $50 that we talked
about today around the profit per pen that Mylan receives on
the brand.
Mr. Gowdy. I think you answered this question, but I want
you to do it again for me, just because it's important. I want
this to be on the record. Tell me what your--walk me through
the cost all the way down to what Mylan gets for treating it as
a name brand versus treating it as an authorized generic.
Ms. Bresch. Sure. So this is the math of--you can see the
wholesale acquisition, the Mylan revenue of 274 minus the cost
of goods minus the direct cost, which is the $100 or $50 per
pen. And what we've said for the generic--and what we have said
for the generic is that the wholesale acquisition would be at
300. Mylan received 200, less cost of goods, less EpiPen-
related cost. So it will be substantially less than the $50 of
profit per pen that we receive on the brand.
Mr. Gowdy. Thank you, Mr. Chairman.
Mr. Cummings. Would the gentleman yield just for one
question?
Mr. Gowdy. I will be thrilled to yield to the gentleman
from Maryland.
Mr. Cummings. Thank you.
Just one question. Just following up on what you just said,
it seems like you would be taking a loss, unless I've got my
math wrong. When you go to the generic, and you said you've got
certain costs, but it seemed like you would be taking a loss on
the generic. Am I missing something?
Ms. Bresch. Not a loss, sir. I just said we would be making
less than the $50, substantially less than the $50 per pen
we're making today.
Chairman Chaffetz. I thank the gentleman from South
Carolina.
We're now going to recognize the gentlelady from Illinois,
Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman.
I want to highlight the stories of two families from my
district. The Brock family, Lisa and Bob, from Rolling Meadows
have an 8-year-old son Brian who was diagnosed with severe food
allergies before he turned 1. Lisa carried an EpiPen for 5
years, and one day Brian ate something and began foaming at the
mouth and vomiting and her nightmare come true. When he came
home from the hospital, he told his mom: ``Mom, I don't want to
die.'' Even at 5 years old, Brian knew how serious his body's
reaction was. He knew his throat was closing. On this occasion,
an EpiPen saved his life.
Then there's Michele Hanson from Schaumburg, Illinois. She
is deeply concerned about Mylan's skyrocketing prices. Her
husband Mark and her 7-year-old daughter both have life-
threatening peanut allergies. So, as a result, their family has
to ensure they have two auto-injectors at school, camp, each
set of grandparents' homes and mom's purse. The Hanson family
knows what it's like to depend on this small device for the
safety of their family, and that's why Michelle took the time
to write to me and urge me to do everything in my power to
ensure everyone, even those less fortunate, can protect their
children with the same level of care.
The Brock and Hanson families are lucky; they have good
insurance. But, like Lisa shared with me, we don't know we'll
always be in this position, and one day they may not be able to
afford the EpiPen, whose prices keep going higher and higher.
And I agree with Lisa and Michelle. Even a single life lost due
to lack of access and affordability to this drug is one life
too many.
Now, Ms. Bresch, I'm going to ask you to keep your answers
short. I'm going to ask you yes-or-no answers or short one-word
answers. Please don't try to filibuster and run up my time. So
I need you to answer yes or no.
Earlier, you said that EpiPen has given out over 700,000
EpiPens--Mylan has given out over 700,000 EpiPens to schools
across the Nation. Is that correct?
Ms. Bresch. Yes, we've given free EpiPens.
Ms. Duckworth. Okay. Mylan also offers schools discounted
EpiPens through your EpiPens4Schools program. Is that correct?
Ms. Bresch. Yes, they can purchase additional pens if they
want.
Ms. Duckworth. Okay. So this is particularly important in
Illinois, States like Illinois that have laws that require
schools to stock epinephrine auto-injectors. In fact, this is a
program in schools that your own mother was instrumental in
getting States to adopt in her capacity as the president of the
National Association of State Boards of Education.
So we can better understand the scope of this program, from
August '12 through May '16--May of 2016, approximately how many
schools signed certification forms purchasing discounted
EpiPens at a price of $112.10 per carton?
Ms. Bresch. Schools that have decided to purchase just
additional--besides the four, because we give four free
EpiPens----
Ms. Duckworth. So how many schools have done this?
Ms. Bresch. I think around 5 percent. So I think there has
been about 45,000 EpiPens.
Ms. Duckworth. So 45,000 schools?
Ms. Bresch. No, no, EpiPens purchased.
Ms. Duckworth. Okay. How many schools? So answer my
question.
Ms. Bresch. I'm not sure how many. I don't know how many
schools.
Ms. Duckworth. So, as CEO of Mylan, you don't know. You
just quoted a number of how many schools you had given them to
and how many schools you had not given to and that you wanted
to get them to all of these other schools, but you can't tell
me how many schools have actually bought EpiPens from you under
this program that you are so proud of?
Ms. Bresch. It's a very small number. It doesn't--it's very
small. The 66,000 schools are who we've given free EpiPens to.
Ms. Duckworth. So I'm also not as concerned about your
profit making. I believe in the free market. What I am
concerned about is your monopolistic practices.
And so there's a little confusion in public reporting.
Could you simply confirm, yes or no, whether schools that
purchased discounted EpiPens had to make any representation and
warrants to Mylan that they would adhere to certain conditions
in order to access the discount price that you give them?
Ms. Bresch. Schools did not have to purchase any EpiPens.
Ms. Duckworth. No, no. The schools that are trying to get
the discounted price from you, did they have to certify or make
any representations or warrants to Mylan that they would adhere
to certain conditions in order to get that price?
Ms. Bresch. For people who wanted to buy it at the
discounted rate, yes. But that had nothing--the free EpiPens
had no----
Ms. Duckworth. I'm not talking about the free EpiPen. So
I'm holding here--and, Mr. Chairman, I'd like this entered into
the record and please pull this up.
Chairman Chaffetz. Without objection, so ordered.
Ms. Duckworth. It's a certification form. Thank you, Mr.
Chairman.
It's a certification form where EpiPen--where Mylan has
actually said that the school hereby certifies that it will not
in the next 12 months purchase any products that are
competitive to EpiPen auto-injectors.
So you actually put into practice forcing schools--and you
are so concerned about these kids that you actually are
limiting the school's ability to buy pens from someone else.
And so you're saying here: ``We'll sell it to you for 100
bucks. We've raised the price to $600. If you want it for the
100 buck price that it used to be at, you need to sign this and
say that you can't buy this from anybody else.'' Don't answer.
I'm not asking you a question. That's what you've done here.
Ms. Bresch. Well, I disagree with that, because they did
not have to buy our pens. Our free EpiPens----
Ms. Duckworth. But if they wanted to get this price.
Ms. Bresch. If they wanted a heavily discounted price, yes,
they bought EpiPens.
Ms. Duckworth. The heavily discounted price is $112.10,
which is where it was before you jacked up the price to $600.
So it's not a discounted price; it's only discounted because
you raised the price on them, and then you say: ``Oh, you want
it at the old price before we jacked it up for profit; here,
you need to sign this and say you will not buy this from
anybody else.'' Don't answer. I'm not asking you a question.
This is what you have done. Your own document says it.
Ms. Bresch. They don't have to buy them, and everyone is
eligible for a free one.
Ms. Duckworth. That's right. You don't have to buy them.
But your own mother is out there lobbying to make sure that
they're in all the schools. And this article says that many
members of the board at the NASBE didn't even know that there
was a family connection between you and your--between Mylan and
your mom through you, as she was out there trying to--passing
out your guide from Mylan, as she was out there talking to
school boards, as she was pushing for these EpiPens to be put
into school districts. And then they can't buy it for a lower
price, because----
Ms. Bresch. I'm sorry, Congressman. That is completely
inaccurate.
Ms. Duckworth. --you control 94 percent of the market. And
then you tell schools: ``You want it at the old price? Sorry,
you can't buy it at the old price unless you promise not to buy
it from anyone else.'' That, to me, is an unfair monopoly.
I yield back, Mr. Chairman.
Chairman Chaffetz. Thank you.
I now recognize the gentleman from Texas, Mr. Farenthold,
for 5 minutes.
Mr. Farenthold. Thank you very much.
Ms. Bresch, I think I now understand why you make $18
million. Trying to figure out the complexities of drug pricing
has me really flummoxed. Of course, I won't make $18 million in
100 years serving in Congress.
So let me ask you, you talk about this wholesale
acquisition cost of $608. Who pays $608 for an EpiPen? I mean,
what is the wholesale? Is that just kind of like the
manufacturer's suggested retail price?
Ms. Bresch. So it certainly was never intended for--the
wholesale acquisition cost, the system, we certainly didn't
make the system. Mylan didn't make the system.
Mr. Farenthold. No, no. I'm not coming after your company,
all right? I'm very tempted to, because I think you all have
behaved badly and have invited government regulation. I am a
free market person. I'm very much for free market. But this
whole drug pricing system that we have right now makes no sense
to me, and a free market can't operate in a system where people
like me, who are consumers, don't understand it.
So I'm going to lay aside my concern about what your
company is doing and why. I think it's wrong, but that's not
where I want to get. I want to get to the pricing. You said a
$600--I'm going to call it manufacturer's suggested retail
price. All right. So, in a free market, you've got a
manufacturer, a wholesaler, a retailer and the consumer.
In the drug market, you've got the manufacturer. You've got
the insurance company. You've got the pharmacy. You've got the
doctor. You've got the benefits manager. And there are probably
some more players in there, all who need to take a little bit
of money out. So we've created a very complex system. So,
basically, you said, manufacturer's suggested retail price is
$608. Probably the only sucker who's going to pay that is
somebody who doesn't have insurance. I don't know. And then you
come up with all these rebate plans that you have to go to the
Web site and print something out. You have a discount plan for
schools. It's so incredibly complicated; it makes airline
pricing look reasonable.
I want to fix this, because it's not just your product that
is the problem. Medical prices are skyrocketing. Doctors
complain to me they're not making any money. My insurance
premiums are going up. My deductibles are going up. How do we
fix this, where you can make a reasonable profit and the drug
can be available in a way that can--at a price that people
understand and that doctors know and I can talk to my doctor
about?
I mean, I had--my doctor today: ``Great. I got this new
pill you can take; you only have to take it once a day instead
of twice a day.'' Instead of being a $10 copay, it was $120
copay. God knows what my insurance company is paying. I'm going
to take two pills to save that kind of money. But in most
cases, people and doctors even don't have the information to do
that.
How do we simplify this and get the cost of these down,
where you can make a profit, the doctor can make some money,
the pharmacy can make some money, but people can afford health
care? How do we fix this?
Ms. Bresch. Well, I wish there was a simple answer. The
system has been around for decades, and it certainly has not
kept pace with the evolving health care that our Nation faces,
the crisis, to your point, that health care faces.
I believe that first there needs to be more transparency in
the system and certainly welcome the opportunity to sit down in
a more holistic way and have the conversation. But the whole
supply chain, to your point, has to be involved in that.
Mr. Farenthold. Let me ask, Dr. Throckmorton, with the FDA,
it seems like there may be something you guys can do about
this. I mean, I see--I had a doctor I was talking to just
Monday who said: ``Yeah, see this ad for this new drug. Do you
realize that it costs over $128,000 a year to do that?''
I mean, if you're not a doctor--and maybe even some doctors
don't even know it. Should we be requiring drug companies to
disclose the cost of medication in their advertising?
Dr. Throckmorton. That would not be a question for me to
answer, Congressman, but a very good question. The FDA is not
allowed to consider cost when we look at drug approvals.
Mr. Farenthold. Ms. Bresch, would your industry be
supportive of that?
Ms. Bresch. I absolutely believe that if we want consumers
to be able to shop and get them engaged in the system, they
absolutely have to know how much something costs to be able to
make the value proposition.
Mr. Farenthold. I'm almost out of time. I've got one more
question for you.
I applaud your company for trying to educate folks about
the need for the availability of EpiPens, but what I don't
understand is why your marketing costs have to jack up the
price that much. If you sell 100 EpiPens and make--what was
your profit on--$50 on each pen, and you sell 200 EpiPens at
the same price, you're going to make more money--or the same
amount of money, you see. I didn't say that correctly.
But what I'm saying is, as your volume goes up, your profit
goes up, and you don't have to jack the price up. That ought to
pay for the advertising. So if you'd like, I'm out time, I'll
let you answer if you want.
Ms. Bresch. Thank you.
Chairman Chaffetz. Did you want to answer?
Ms. Bresch. Well, I just would say that it's constantly
about trying to reach as many patients as we possibly can. So
we continue to invest in being able to reach and provide that
access.
Chairman Chaffetz. I now recognize Ms. Plaskett for 5
minutes.
Ms. Plaskett. Thank you, Mr. Chairman.
Good afternoon, Ms. Bresch.
It's my understanding, when we talk about Mylan and the
eligibility threshold in your patient assistance program, what
has that number come to at this point? What is the amount?
Ms. Bresch. It is, I believe, 97--97--I believe it's right
around 97,600 for a family of four.
Ms. Plaskett. For a family of four.
You know, many of us here, including yourself, come from
communities where I don't really know that many of the families
that make 97,000 as a family of four. You know, where in the
Virgin Islands, the average amount is about 50,000 for a family
of four. I would think, you know, in other places that you're
familiar with, that would be the case as well.
How do you as a company deal with those individuals who are
falling within the margins to be able to afford that?
Ms. Bresch. So the patient assistant program is for anyone
who falls under that 97,200. So it would capture anybody who--a
family of four making less than that would be eligible for the
free pens.
Ms. Plaskett. And then what happens to the other families
that are below that? Do you have other programs? What are you
doing for those?
Ms. Bresch. Anyone below 97,000 would get the free pens,
the eligibility.
Ms. Plaskett. Anyone below that number that's a family of
four?
Ms. Bresch. Right.
Ms. Plaskett. Okay. So that would mean, in places like
myself, they would pay--how much then would cost be at that
point?
Ms. Bresch. It would be free for any family of four making
$97,000 or less.
Ms. Plaskett. So a family of four then that's above that
margin, what happens to those families?
Ms. Bresch. It could be several. The majority, the
overwhelming majority of our patients, 85 percent are paying
little to--between $50, $100, it depends on the commercial
plan. But we know that about 85 percent or more are paying $100
or less than $50, but that's why we also have the copay card,
the savings card that would allow you to put that towards what
you're paying at the counter. So it would go against your out-
of-pocket cost.
Ms. Plaskett. So if the individuals, not the companies or
not the schools that are buying, individuals who purchase this,
what percentage you say fall within the PAP, the patient
assistance program?
Ms. Bresch. It's very small. Most of our--percentage-wise,
the majority of our patients are under commercial plans.
Ms. Plaskett. What percentage would that be?
Ms. Bresch. About 70 to 75 percent, I believe, are in
commercial plans.
Ms. Plaskett. And of that 70 to 75 percent that are in
commercial plans, how much do those individuals pay?
Ms. Bresch. It varies, depending, because all the plans are
different.
Ms. Plaskett. What is the variation?
Ms. Bresch. The majority pay $50 or less out of pocket.
Some of that group pays $100 or less out of pocket. And you can
use--we also offer a savings card of now $300 that you can use
towards any of your out-of-pocket expense.
Ms. Plaskett. Okay. That does give some kind of--and it
would be good if we could get the numbers then of what those
individuals are so that we understand what percentage of people
are really having to pay the $600, the $400, and the $300 that
really seem very outrageous. I'd like to know how many families
have to be subjected to that.
Ms. Bresch. And it's because of that growing minority that
we then took the actions we took about putting the generic in
place.
Ms. Plaskett. Then why would you say that minority is
growing?
Ms. Bresch. Because of the higher deductibles that people
are faced to pay, the rise of the higher deductible plans, as
you know, has grown tremendously, you know, this year alone,
and so that is having more out-of-pocket cost. And because of
that is why we took the, like I said, unprecedented step to put
the generic in that would lower the cost for everybody.
Ms. Plaskett. Now, you're doing other things as well. I
understand that you do have some lobbying efforts to get
EpiPens listed as preventative services under the Affordable
Care Act. Is that correct?
Mr. Bresch. Yes. We have definitely said it should be on
the preventative drug list.
Ms. Plaskett. And how much resources have you put towards
that?
Ms. Bresch. Minimal. I mean, it's been internal resources
about trying to educate, one, just about the need for
epinephrine auto-injectors to certainly make sure everyone has
access.
Ms. Plaskett. When you say education, who would that be
towards?
Ms. Bresch. Towards the formularies who make the decision
about whether or not to put a product on the----
Ms. Plaskett. Who are the formularies, for those of us who
are uneducated about these kinds of things?
Ms. Bresch. So it would be the people that are the large
pharmacy managers. So there's several--many companies out there
that are the pharmacy managers, and they're the ones that have
some decisions around what can go on the preventable drug list
or not for the lives they cover.
Ms. Plaskett. Okay. I'm out of time. I've got a lot more
questions, but sorry.
Chairman Chaffetz. Thank you.
I now recognize the gentleman from North Carolina, Mr.
Meadows.
Mr. Meadows. Thank you, Mr. Chairman.
Thank you both for being here.
Ms. Bresch, your new plan, so let me, as a business guy,
let me just give you some advice. Parents are upset with the
cost of the EpiPen and the potential of not being able to help
their children. That's the problem you have.
And what's happened is I started getting calls when I
didn't even know it was an issue from people that were saying
the out-of-pocket expense was 600, 700, the insurance wouldn't
cover it. And now you've come up with this unbelievable
marketing plan that only would suggest that there is
unbelievable profits.
I can't imagine anybody in their right mind coming up with
a plan like that, instead of just saying: You know what? We
screwed up. We knew we had 96 percent of the market, we
increased the prices, please forgive us, we'll adjust our
prices. So now you're putting out a generic, you're coming up
with a different plan for a great product.
And I guess my concern is that as we look at this, you're
being thrown in with other witnesses that had sat in your same
exact chair who have really stood out to gouge the American
people. And I guess my question is, do you believe the
increases that you've done with the market share that you have
was inappropriate and a mistake from a marketing standpoint?
Ms. Bresch. We believe that starting 8 years ago, balancing
that price and access and making sure that we could not only in
public places, but reach more lives and reach more patients,
was absolutely critical.
Mr. Meadows. So how much is this----
Ms. Bresch. And, look, that's why we put the generic.
Mr. Meadows. How much of this is a----
Ms. Bresch. That's why we cut.
Mr. Meadows. How much of this is a Medicaid, Medicare,
private insurance, private pay issue where you're charging
different amounts to different people? Because that's another
problem I keep hearing, is it depends on what plan you're on
and whether you're covered by high deductibles or not. How much
of that is just the nature of the pharmaceutical business that
you charge different amounts to different people?
Ms. Bresch. You're correct. I mean, all pharmaceuticals are
all different under every different plan.
Mr. Meadows. So your pricing model is not, like you say, it
cost us X, we make X. You have to come up with all kinds of
convoluted ways to make a profit, depending on the coverage for
the individual patient. Is that correct?
Mr. Bresch. Well, and that's why we were giving you what we
receive on an average, the 274.
Mr. Meadows. So I get that. So how are you affording to
give free pens to any family that makes less than $97,000 a
year? How are you affording to do that based on the profit
margin? I was doing the math. So that just means that if you
make $100,000 a year, you're going have to pay a big amount of
money, and you're going to give them free to everybody else? Is
that what I'm hearing?
Ms. Bresch. So, obviously, our patient assistant program is
to help those families, but the reality is that the majority of
the patients fall either with the commercial insurance that
have--that aren't facing those huge out-of-pocket costs.
Mr. Meadows. So your increased cost is actually being borne
by big insurance companies that provide insurance for their
employees. Is that what you're saying?
Ms. Bresch. No, sir, that's what our rebate----
Mr. Meadows. Is the giveaway figured into that cost?
Ms. Bresch. No. The uninsured is really the only person----
Mr. Meadows. So you didn't figure the giveaway of giving
away free EpiPens to people that make $97,000 or less into the
cost of your product?
Ms. Bresch. What gets factored into the cost of product
from free EpiPens to even our EpiPen for School program----
Mr. Meadows. It's part of the overall cost.
Ms. Bresch. --we've given over 700,000 pens. But really the
minority of patients, this uninsured patient that was faced
with that paying the wholesale acquisition cost or that price
is that growing minority is why we took the step we did was to
say, hey, we're going to----
Mr. Meadows. Well, I would ask you to revisit that. I'm
running out of time. I'd ask you to revisit that and make it
simpler.
So, Dr. Throckmorton, let me come to you, because this is
another hearing with another problem, and part of the problem
is, is the FDA has a laborious approval process for any drugs,
whether they're orphan drugs or anything else, and your 10-
month approval process I don't buy. Is that your testimony
today, that you can get drugs approved in 10 months, or just a
response?
Dr. Throckmorton. Beginning in October 1, we're committing
to 10-month review time. If it's a high-quality application----
Mr. Meadows. But I've seen some of those reviews. What you
do is you send out a letter and say, well, we need more--so you
buy time with your letters that may or may not be really in the
approval process.
Dr. Throckmorton. And we shouldn't be using those letters
to do that. Those letters should be----
Mr. Meadows. So when did you stop?
Dr. Throckmorton. Those letters should be----
Mr. Meadows. When did you stop? Because I've got copies of
them, if you'd like to see them.
Dr. Throckmorton. I'd be happy to look at them.
Mr. Meadows. When did you stop?
Dr. Throckmorton. What we should be using those letters for
is to signal true deficiencies in applications.
Mr. Meadows. Mr. Chairman, I just want one answer, and I'll
yield back.
When did you stop using those letters as normal practice.
Dr. Throckmorton. Since 2012, we have put in place a
process----
Mr. Meadows. Okay. I've got letters. I've got letters that
have been since then. I'll yield back.
Chairman Chaffetz. Okay. We'll now recognize the
gentlewoman from Michigan, Mrs. Lawrence, for 5 minutes.
Mrs. Lawrence. Thank you.
I have a question for you, Ms. Bresch, and thank you for
being here. I understand the profitmaking of companies, but
under your realm, the EpiPen has become Mylan's first billion-
dollar drug. Is that correct?
Ms. Bresch. Yes.
Mrs. Lawrence. In 2014, your company generated 1.19 billion
in sales only in their specialty drug section because your
company makes a lot more. Is that correct?
Ms. Bresch. Yes.
Mrs. Lawrence. And according to your SEC filing, and this
is a quote, as a result of favorable pricing and increased
revenue, in 2015, your company generated $1.2 billion in sales
revenue, driven largely by the continued strong performance of
the EpiPen Auto-Injector.
According to a press release you issued in February of this
year, your earnings per share also went up in 2015 by 21
percent. This increase was, and I quote, ``at the high end of
our previously communicated guidance range.'' Is that correct?
Ms. Bresch. Yes.
Mrs. Lawrence. Your company is continuing to make
incredible profits this year. Is that correct?
Ms. Bresch. Yes. Our company is strong, and we believe
that's the best way to serve our patients.
Mrs. Lawrence. Recently, while discussing the EpiPen's
massive price increase, you actually said, and I quote, ``No
one's more frustrated than I am.'' And so is it true that
you're frustrated that you didn't raise it higher, creating a
billion-dollar drug was a goal you acquired with the EpiPen,
and you're frustrated you didn't raise it more?
Ms. Bresch. No. What I am frustrated in is that because the
system is so opaque, and people--it's hard, it's complicated. I
was trying to share today that you don't typically have that
transparency of what the company actually receives and what
that wholesale acquisition cost is. So that was the
frustration.
Mrs. Lawrence. So on September 15 you sent a letter to the
committee stating that your sales revenue from over 2,700
products is 11 billion this year and your profit from the
EpiPen would generate 1.9 billion in net sales. So your company
expects to make 9 percent of its revenue this year just off of
one of your products. Is that correct?
Ms. Bresch. Yes. EpiPen is less than 10 percent of our
overall revenue.
Mrs. Lawrence. But one product can generate 9 percent of
your revenue, that one product?
Ms. Bresch. Yes.
Mrs. Lawrence. So this is the frustration. Not that you
don't have a product, not that you don't have your free
product, but where is the company in responding to this outcry
that I have received and every Member of Congress? What do you
plan to do with that? Do you hear the cry from the
constituents?
And while you and your company and I'm sure the employees
enjoy this profitmaking, where is the sensitivity and where is
the company in saying, I hear this, we have made a tremendous
amount of money?
Is it normal for one product, out of 2,700 drugs, one
product is almost 10 percent? And you have increased that. And
while if I'm sitting there at the boardroom, I would say, this
is great. You're doing a great thing. You're bringing money in.
We're making money. Where are you and the company in saying
what do we do about the outcry of the people on this situation?
Ms. Bresch. And we did listen and take immediate action to
put a generic in at half the price, and that's truly an
unprecedented action for a brand to do that. So we did listen,
and we believe that we took unprecedented action in getting the
generic on the market.
Mrs. Lawrence. You control that generic, and you're
actually making a higher profit range off of that generic,
correct?
Ms. Bresch. No, we're not making a higher profit off the
generic.
Mrs. Lawrence. If you raised the----
Chairman Chaffetz. I think the gentlewoman's time has
expired.
Mrs. Lawrence. I yield back.
Chairman Chaffetz. Members are advised that there is now a
vote on the floor. It is anticipated votes will go between an
hour and an hour-and-a-half. It's my intention to recognize Mr.
Mulvaney of South Carolina for his 5 minutes and then go into
recess. We will reconvene no sooner than 6:30, but it might be
later until we get done with the vote series.
We'll now recognize Mr. Mulvaney for 5 minutes.
Mr. Mulvaney. I thank the chairman, and I may not take all
5 minutes.
I've got to tell you, as someone who considers himself to
be a free market Republican, a part of me has been
uncomfortable with where some of this hearing has gone. I wish
we were talking, instead of what we've been talking about,
about why Mylan can charge $600 for this or $300 for a generic
or whatever, because I think that would be a really good
discussion, about why this same exact product costs between
$100 and $150 in Europe.
The same exact thing, from the same exact manufacturer,
costs 100 to 150 bucks in Europe. In fact, I think you can get
it over the counter in Europe for $75. One of the reasons, by
the way, is there's nine different people making this stuff in
Europe because it's easier to get drugs approved in Europe, Dr.
Throckmorton, than it is here.
I've heard you talk today about this new 10-month plan, and
you keep telling us, and it's sort of, well, we have a 10-month
plan that starts October 1, which makes you wonder how long did
it really take before this became a big national deal.
My guess is it takes a long time or to get this stuff
approved. And one of the reasons they can charge $300 or $600
is because it's too hard to get new products approved in this
country. My understanding is that an EpiPen competitor would be
even more difficult to get stuff approved because it's both a
drug and a delivery device.
By the way, for those of you, and this hasn't come up, the
stuff doesn't cost anything. This is one of the oldest
chemicals that we use. I think the stuff is more than 100 years
old, and on the Internet it says it costs between, like, 10
cents and 95 cents a vial for the stuff. It's a completely
generic--it's adrenaline. It's really easy to make the stuff
and really easy to get the stuff. But for some reason in this
country there's really only one provider.
So if you can really charge $600 for it and people will pay
for it, why aren't more people rushing in to make the stuff so
that they can get a piece of this huge market? Because it's too
hard to get the darn stuff approved, and that's what I wish we
were talking about.
Ms. Bresch, I wish we could talk about what you talked
about in your CNBC article, about how crazy the pricing is,
because it is bizarre, and we buy stuff in the healthcare
market in ways that we don't buy anywhere else.
The reason that this same product is more expensive every
single year, with everything else in this room gets less
expensive every year, is because it's in the healthcare market,
which doesn't function properly, and we could have talked about
that and how hard it is to figure out how much stuff costs and
the five and six people that touch it between the time it comes
out of your product and gets in the hands of the customer. We
didn't talk about that.
Instead we talked about your profit margins with people who
have no clue what that means. We talked about distribution
facilities. We talked about cost of goods sold. We talk about
board meetings. We talk about your salary. We talk about a
bunch of stuff that tries to make a lot of us look really good.
Somebody in my own party said that there's no way you could
really earn $18 million a year. That bothers me, okay, and I'm
not comfortable with that.
But at the same time, Ms. Bresch, and I've had this
conversation with other people who have sat in that same chair,
you get what you deserve. Not because you're a bad person, not
because you're charging too much or too little for a drug.
Nobody here has any clue as to whether or not you are charging
too much or too little. We don't like it. We know that. But we
don't understand the costs, we don't understand the
distribution system, we don't understand how healthcare
products get priced and sold and distributed.
I tell you what he we do know, though, is that you've been
in these hallways to ask us to make people buy your stuff. In
fact, I think there's laws in 11 States now that require
schools to have epinephrine in some immediately deliverable
fashion. You've lobbied us to make the taxpayer buy your stuff.
At the Federal level, we passed the law here. We did it. By
the way, I was here when we did it. Everybody was here when we
did it. We did it 2013. It went by voice vote, one of those
magical things that happens when we're not on the floor.
The White House called it the EpiPen bill, and it gave this
wonderful financial incentive to all of our schools to have
this product in the schools. My guess is that didn't happen by
magic. It may have happened because your mother works for the
State School Boards Association, whatever the group is, it may
happen because your dad is a U.S. Senator. But you came and you
asked the government to get in your business. So here we are to
today.
And I was as uncomfortable with some of these questions as
you were, I'm certain, sitting over there. But I have to defend
both my Republican and Democratic colleagues because you've
asked for it.
So I guess this is my message. If you want to come into
Washington, if you want to come into the State capitols and
lobby us to make us buy your stuff, this is what you get. You
get a level of scrutiny and a level of treatment that would
ordinarily curl my hair, but you asked for it.
I wish it weren't like that. I wish you could go off and
make your stuff, and I wish the market functioned, and I wish
you didn't get government involved, but that's not the world we
live in.
And since it is, I have to defend every single question
that was asked of you today, and I wish I had questions of my
own, and I do, but I've only got 5 seconds left, so I'm not
going to get a chance to ask them.
Thank you, Mr. Chairman.
Chairman Chaffetz. The gentleman's time has expired.
The committee will stand in recess and reconvene no earlier
than 6:30.
[recess.]
Chairman Chaffetz. The committee will come to order. We're
now back after votes, and we'll go ahead and recognize Mr.
DeSaulnier for 5 minutes.
Mr. DeSaulnier. Thank you, Mr. Chairman.
Thank you both for being here.
Ms. Bresch, you talked about your outreach in State
legislatures. Did you spend any money or your company on
lobbying or helping with that process?
Ms. Bresch. Yes.
Mr. DeSaulnier. Do you remember how much?
Ms. Bresch. I don't remember exact number, but I would say
minimal in the scope of what we've spent on awareness and
access. But that outreach and lobbying was for the epinephrine.
Mr. DeSaulnier. Uh-huh.
Ms. Bresch. To be able to have it in the school's name and
not a child's name----
Mr. DeSaulnier. When those, when that product has reached
its life expectancy, do the schools purchase it from you to
replace it?
Ms. Bresch. We give it every year free.
Mr. DeSaulnier. Every year for free.
Ms. Bresch. Yes.
Mr. DeSaulnier. All right.
Your quote in terms of your accepting some responsibility,
and I read here, is, ``Looking back, I wish we had better
anticipated the magnitude and the acceleration of the rising
financial issues for a growing minority of patients. We never
intended this.''
Is that pretty much your statement in terms of your
responsibility? Other than that, are you proud of the actions
of your corporation?
Ms. Bresch. Look, I am absolutely--I don't--I would hope
that nobody would want to go back in a period of time to where
the awareness was so shockingly low and the access was almost
nonexistent for EpiPens. I believe that we have continued to
balance that access. It does come at a price, and we've tried
to balance that price and access while at the same time
continuing to have access in more places. Like I said, I hope
the other 65,000 schools, that we can get free EpiPens to them.
I'm also proud of the hearing and understanding this
growing minority of patients and the uninsured or people facing
that high out of pocket, that we took immediate action to put
the generic out there, which is unprecedented, as well as some
of the actions from the tripling the copay card or raising the
eligibility of the patient assistance.
Mr. DeSaulnier. Okay. I appreciate that. So I'm going to
read a couple of quotes from a Los Angeles Times story, August
25, and this is quotes.
``Mylan, the profiteering, tax-dodging''--this is the Los
Angeles Times--``drug company currently taking immense heat for
jacking up the price of EpiPen by 500 percent, announced
Thursday that it will help more patients cover their soaring
out-of-pocket costs for their allergy drug device. That's good
for some individuals,'' the LA Time continues, ``patients, and
families, but at the heart, it's a cynical move that actually
protects the company's profits and harms the healthcare
system.''
As I explained before, the author continues, ``That's
because such moves are often marketing schemes dressed up to
look like altruism,'' and then he goes on to explain.
Are you familiar with this article in the LA Times?
Ms. Bresch. No.
Mr. DeSaulnier. Okay. No one ever showed you this?
He goes on to say, ``What Mylan is doing is expanding its
patient-assistance program by providing eligible patients with
a savings card worth up to $500 per prescription and doubling
eligibility to households earning up to 400 percent of Federal
poverty level,'' or $97,000. ``Many of them, therefore, would
pay nothing out of pocket for the device.
``The truth is, however, that these programs are detested
by insurers, healthcare economists, and government agencies--
with good reason. In fact, they're illegal when applied to
Medicare and Medicaid patients because they may violate Federal
anti-kickback laws, which bar payments made to induce patients
to choose particular services. Insurers and government programs
will have to cover everything beyond the copay at a price that
can be as much as $600'' a pack.
So you're not familiar with any of this, either the article
or what he's ascribing to your motives?
Ms. Bresch. Which is why we went the step of putting a
generic in the marketplace, so that we could make sure we
touched every patient and tried to make sure every access point
was covered. So by putting the generic in and dropping the
wholesale cost to 300, we believe went certainly beyond, and
again, to reach and provide access to as many patients as we
can.
Mr. DeSaulnier. Okay. In this article, he quotes a
healthcare economist from Emory University, David Howard, and
he talks about what you're doing as programs that are ``a
triple boom for manufacturers. 'They increase demand, allow
companies to charge a higher price, and provide public
relations benefits.' The manufacturers' costs look high in
absolute terms, but the payoff is even greater. 'Manufacturers
can afford to pay a lot of $25 of $50 copayments.'"
So again, the answer to this is the generic? Is it changing
the dynamics?
Ms. Bresch. Completely.
Mr. DeSaulnier. How long did you have the previous practice
before you changed to the generic?
Ms. Bresch. We still have the patient assistant program and
the copays for the brand, but by introducing the generic, we
hope that it's--you know, we hope there's 85-88 percent generic
utilization of the generic.
Mr. DeSaulnier. How long did you have the profits under the
old system before you switched to the generic? It sounds like
you did it for altruistic purposes. This article would portray
it a different way.
Ms. Bresch. Well, and, Congressman, at least the parts that
you were reading, I think, go to the patient assistant program
or the copay as what they were giving their description of
versus the generic. They didn't speak about the generic.
Mr. DeSaulnier. Yeah, but my point is that you're making it
sound like you introduced the generic for purely altruistic
purposes. The way he describes it was it was a business
practice that took advantage of the situation for some period
of time.
Ms. Bresch. Putting the generic in is, like I said, an
unprecedented move so that we could reach as many patients as--
--
Mr. DeSaulnier. That's not the question. I believe in
redemption, so I'll give you the generic, but prior to that,
you were making money off the situation the LA Times described.
So my question is, how long did you do that?
Ms. Bresch. I don't agree with the LA Times' description of
the programs or our process, and I don't think they spoke about
the generic program that we've now announced.
Like I said, we have invested, and with the point of
wanting to reach more patients, if we're now reaching almost 3
million patients, that's 2 million more that are protected and
hopefully much better--in a much better position if an
anaphylactic event occurs, aside from the school program,
again, because so many people have allergic events that had
never had a known allergy, so----
Mr. DeSaulnier. My time has gone by, but I'd just say, from
this article and other articles, I didn't bother to quote the
USA Today article or the Market Watch article, that you had a
business practice that was immensely profitable, you've
admitted to that, and you have changed it. But it seems as if
you've changed it in anticipation of what the public has
responded to.
So with that, I'll yield back the balance of my time.
Chairman Chaffetz. Thank you.
I'll now recognize the gentleman from Georgia, Mr. Hice,
for 5 minutes.
Mr. Hice. Thank you very much.
I think, Ms. Bresch, you've had a lot of questions today
and a lot of pressure put on you. I appreciate you coming. I'm
personally very hesitant to go down the path of government
getting involved in what individuals make and can't make. This
is a free enterprise system. And I get very worried when we
start going down that tree. My concern is where the bottleneck
is occurring.
And, Dr. Throckmorton, I'd like to ask you, an abbreviated
new drug application, as I understand it, is an application
when companies want to manufacturer a generic drug, that's what
they must utilize. Is that correct?
Dr. Throckmorton. For a true generic.
Mr. Hice. Sure.
Dr. Throckmorton. So an authorized generic like we've been
talking about up to now, that's not approved under that----
Mr. Hice. Okay. But a true generic.
Do you know how many abbreviated new drug applications are
currently pending with the FDA?
Dr. Throckmorton. We have 1,700 responses that we've sent
back to sponsors requesting additional information. We're
waiting for that information to come back. There are other
applications that are in-house that we're reviewing, again, on
the timeline that we've discussed earlier.
Mr. Hice. It's my understanding that the generic
applications submitted to the FDA are outpacing those
applications that are approved three to one. Is that correct?
Dr. Throckmorton. I can't verify that number. There are
2,300 applications before the agency and this year----
Mr. Hice. Twenty-four hundred?
Dr. Throckmorton. Twenty-three hundred.
Mr. Hice. Okay.
Dr. Throckmorton. This year we've approved 600 products
through the middle of this year.
Mr. Hice. Okay. Could you verify for me, could you get the
numbers back to us, what the number of applications submitted
versus those that are being approved?
And, next, can you tell me the median approval time for
generic drugs right now?
Dr. Throckmorton. I don't have that information before me.
It's also changing. So in the period before GDUFA I, before we
got the User Fee Act, those times were----
Mr. Hice. I'm talking about now. I would like that
information as well.
Dr. Throckmorton. I'd offer to get you the trend, if I
could. I think that would probably be more useful.
Mr. Hice. Okay. Because the generic pharmaceutical
association says it's taking 47 months. It's taking 4 years.
Dr. Throckmorton. Yeah, that's simply a misunderstanding.
And I'd be happy to----
Mr. Hice. What do you mean that's misunderstanding?
Dr. Throckmorton. Forty-seven months is from the beginning
of GDUFA I, from the beginning of User Fee Act. So any products
that are being approved now that have been----
Mr. Hice. All right. From beginning of the process to the
end of the process, are you disputing that it takes 4 years?
Dr. Throckmorton. I'm disputing that for products that come
in today, it will not make 47 months.
Mr. Hice. Well, I mean, you can make all sorts of promises.
I'm talking about realistically, for those who have been
trying, have they been trying for 4 years from the time they
start till the time they finish?
Dr. Throckmorton. There are products that come in and are
sometimes insufficient to get approval. Sometimes that's
because the data that they've submitted aren't appropriate.
Mr. Hice. Okay. All right. I don't want to run around the
bush. I'm trying to find out how long does it take from
beginning to end, and from those that have been involved in the
process, they're telling us it takes 4 years.
Now, since 2012, the generic manufacturers, of course,
they've been paying fees to the tune of billions of dollars to
try to speed the process up through the Generic Drug User Fee
Agreement. And this past July, as I understand, the FDA
actually said that they had acted on more than 90 percent of
the generic applications. I assume that's a little bit of what
you're referring to now.
Dr. Throckmorton. That's the backlog, the applications that
have been submitted to us.
Mr. Hice. The backlog is 90 percent?
Dr. Throckmorton. Prior to the beginning of GDUFA I, there
was a total of around 4,600 applications that we needed to
review. We've acted on more than 90 percent of those. In fact,
there are fewer than 100 of them that have not gotten a
response.
Mr. Hice. All right. So are you saying of the 4,600,
there's only 100 left, that 4,500 have been approved?
Dr. Throckmorton. Less than 100 of them remain to have a
response. Again, some of the--those products that have a full
dossier, have given us the data that we need, have been
approved or given tentative approval. Products that are not
sufficient, that haven't met the data needs for us, I don't
think you'd want us to rubber stamp those.
Mr. Hice. No, I don't want to rubber stamp, but the process
is bottlenecked. That is the frustration. The free enterprise
system works when you've got multiple companies out there
offering products and options for people. We have a scenario
now that EpiPen basically, you've got 94 percent of the market,
whatever, and you're the only major player.
And reason for is because you guys are not processing a
host of others who are trying to get in the market, and when
it's taking 3, 4, 5 years for that to occur and who knows how
many millions of dollars to go through the process, I mean, no
wonder the whole system is not working.
Dr. Throckmorton. I'd like to show you the trend data. That
is not the trend that we're seeing for the cohort that are
being--the applications----
Mr. Hice. The European counterpart only has 24 generic
drugs awaiting approval, and they do it from beginning to end
in less than a year. That is not what we're experiencing here.
Dr. Throckmorton. The European system is quite different
from ours.
Mr. Hice. Well, it must be because it's not taking nearly
as long as ours does.
Dr. Throckmorton. I would say they are apples and oranges
to try to compare honestly.
Mr. Hice. Well, Mr. Chairman, my time has expired, and I
yield back.
But, yes, we've got tremendous concerns with a drug going
from $100 to $600, and there's issues that you all have got to
deal with. But we can't place all the blame on you. FDA has got
to get their act together and start working the process and
getting this thing going through.
And I look forward to receiving the information that you
said you would send.
Mr. Hice. Thank you, Mr. Chairman.
Chairman Chaffetz. Thank you, Mr. Hice.
We'll now recognize the gentleman from Vermont, Mr. Welch,
for 5 minutes.
Mr. Welch. A couple of preliminary matters. First of all,
Mr. Chairman and Mr. Ranking Member, thank you for having this
hearing. And I thought your opening statements set the right
tone: What is it in the market that's broken that is causing
these prices to be increased?
Also, Mr. Hice is asking about whether there is something
we can do at the FDA in the approval process. I'm all in if
there are things we can do that won't compromise safety.
Second, full disclosure. Mylan has an excellent production
facility in St. Albans, Vermont. Many Vermonters work there.
I'm very proud of it. Good wages and it's a good employer.
And then third, what drug companies do, I totally agree, is
vitally important. You know, my first wife had cancer 9 years,
and medications extended her life and alleviated her suffering.
So it's important to get it right.
But here's the dilemma, and it's best summed up by a letter
that I received--we all got a lot of them--from a person in
Essex Junction.
``My 4-year-old son has a severe peanut allergy, and I'm a
single mother working a low-wage job with little healthcare
coverage. I can't afford to pay this much for EpiPens, and I
can't afford not to, because that cost is possibly his life.''
So the heart of the matter here is that moms and dads are
being given a Hobson's choice. They can pay more than they can
afford or they can risk a loss they cannot endure. And that's
why it's so urgent that we work together to get to the bottom
of this.
And I want to focus my questions on some of what I think
are the market breakdowns for lack of competition. And again,
Mr. Hice, I acknowledge, the FDA, maybe we've got to make some
reforms there, but there are some things that are happening.
When your company bought the EpiPen, the company and got
the EpiPen, that was in 2007, I think, right?
Ms. Bresch. Yes.
Mr. Welch. And how many EpiPens were sold then?
Ms. Bresch. Much less than today. I think it was--I mean,
it was certainly less than half of the----
Mr. Welch. Probably way less than half, right?
I have a question about the basic economics. Usually when
you sell more of something, the per-unit cost goes down. Is
that not the case with EpiPen?
Ms. Bresch. So, no, cost of goods has gone up every year,
and our investment has continued--we've continued to invest in
the product.
Mr. Welch. All right. So you're going to give us--you'll
give us the figures on that. Because I understand you're saying
it's 50 bucks that is the money in your pocket, which sounds
like it would be reasonable. But as you can tell from a lot of
the questions, there's a lot of head scratching going on here
about that.
Ms. Bresch. I totally appreciate that, and I appreciate
there has been a lot of misinformation, understandably so,
given the complexity as, you know, many of you have pointed
out, in the system.
Mr. Welch. Well, and I'm going to ask you to get your graph
out that you gave us where the wholesale acquisition price is
608 bucks, that's what people are paying. And then you got down
to the bottom, it's 50 bucks for the profit per pen.
Ms. Bresch. Yes.
Mr. Welch. That 50 bucks sounds reasonable. But the rebates
and allowances, who is getting all that money?
Ms. Bresch. So that goes--that is between the other people
in the supply chain, the pharmacy benefit managers, retail
pharmacy, wholesalers and insurers.
Mr. Welch. Okay. Isn't the service that a pharmacy benefit
manager provides essentially to negotiate a best price with the
pharmaceutical companies to get a given drug? And they get a
rebate, right?
Ms. Bresch. Probably be better to have a PBM.
Mr. Welch. Well, you work with----
Mr. Bresch. But, philosophically, I think that the pharmacy
manager, the system, that that is----
Mr. Welch. No, but I'm not talking philosophically. We're
all trying to understand, like, how it works.
So the PBM buys huge quantities of drug A, B, or C, and
then they get a discount from Pfizer or from you, and they keep
some of that, and it's the way they make their money.
And part of their way of negotiating is with the so-called
formulary, right? So if you have heart disease, there might be
an option of drug A, B, or C, and they put on the formulary
drug A, and there's increase volume there and they get a
rebate, right?
Ms. Bresch. Uh-huh.
Mr. Welch. With respect to epinephrine, there's no
formulary. If you're having anaphylactic shock, there's only
one thing you need, and it's the product that you sell.
Ms. Bresch. No. There has been competition, as we've said,
throughout the years.
Mr. Welch. All right, but----
Ms. Bresch. But I think this is kind of--if I only could
just get this point. Auvi-Q, which launched their product at
the end of 2013. So we did have to face formulary choices of
not even being on the formulary due to the competition in the
marketplace.
Mr. Welch. But somehow you've ended up with 94 percent or
97 percent of the market.
Ms. Bresch. But I would ask that people recognize our
product and that it is more complicated. Auvi-Q was completely
recalled off the market for safety reasons, which is a very
rare event.
Mr. Welch. No, I understand that. But in this graph, I
mean, what is just impossible to understand is how does
something cost $608 when the company that sells it is only
making 50 bucks, and that is hard to understand.
Ms. Bresch. And I understand how complicated and how head
scratching that is, which is why, you know, I've said I would
welcome the opportunity to sit down--you know, I know this is
about EpiPen, but look at the system.
Mr. Welch. All right. I don't have much time, so I have to
keep going.
You know, this is hammering that Vermonter who has that
Hobson's choice, but it's also very tough on taxpayers. Our
Medicaid program in 2011 was paying $111 per script, and we
spent in Vermont--and this is a lot of money for us--we spent
then $111. Now it's $557. We went from $256,000 in taxpayer
money to $1.7 million. That's tough. I mean, that really is
tough.
Ms. Bresch. And, look, and that's why the generic, being
able to put it into the market, that would help lower
healthcare costs across the board.
Mr. Welch. Right. But the generic--what I understand, it
used to be the position that you had, Mylan had, is that doing
these authorized generics was a real threat to the generic
industry. That's the public record of your point of view.
Ms. Bresch. A decade ago, and I know that this is
complicated, but the authorized generics of keeping a first
generic or competing with the generic, in this instance, that's
not this case, but----
Mr. Welch. If I can just go on a little bit. One other
thing. The cost of EpiPen in the Netherlands is 105 bucks, and
that's where your corporate headquarters are. How do they get
105--and you moved your headquarters from the U.S. to the
Netherlands--how is it they get to buy it for 105 bucks and we
pay 608?
Ms. Bresch. Sir, one, I'm not sure of the cost, but what I
would say is they have a completely different system.
Mr. Welch. I guess I yield back.
Chairman Chaffetz. We would appreciate some clarification
on that.
We do have a pharmacist, and I believe the only pharmacist
in the House and the Senate, pleased to have him on this
committee. We'll now recognize him. Mr. Carter of Georgia.
Mr. Carter. Thank you, Mr. Chairman. Mr. Chairman, before I
start, can I inquire of you, the witnesses took an oath and
they're still under oath now?
Chairman Chaffetz. Absolutely.
Mr. Carter. Okay. I just want to make sure.
Ms. Bresch, have you ever seen a child have an anaphylactic
shock? You ever witness that?
Ms. Bresch. I haven't.
Mr. Carter. Excuse me.
Ms. Bresch. I have not.
Mr. Carter. You have not?
Ms. Bresch. No.
Mr. Carter. Have you ever gone up to a pharmacy counter and
carried a pack of two epinephrines and two EpiPens and told a
mother of a child who has had anaphylactic shock, who has an
allergy, that the price of that is going to be $600?
Ms. Bresch. No.
Mr. Carter. Have you ever seen a mother cry because she
can't afford the medication for her child?
Ms. Bresch. No.
Mr. Carter. Well, the reason I ask you this, Ms. Bresch, is
because I have. I've experienced it. I've seen this. I've seen
a mother go out and have to call family members to see if she
can get the money together to try and see if she can pay for
this medication that she knows her child has to have. I've
witnessed that firsthand.
None of us are without blame here, Ms. Bresch, none of us,
and I include my profession as well.
Let me ask you a couple of yes-or-no questions. First of
all, the 608 wholesale acquisition cost, is that AWP.
Ms. Bresch. No, sir.
Mr. Carter. So it's just wholesale acquisition?
Ms. Bresch. Yes.
Mr. Carter. Okay. Wholesale acquisition cost is $608. You
said that your company receives approximately $274, is that
right, after rebates and allowances?
Ms. Bresch. Correct.
Mr. Carter. Okay. So after you take out the expenses like
manufacturing, acquisition cost, packing, regulatory
compliance, all of those things, your profit is even less than
that. Is that correct?
Ms. Bresch. Correct. That would be the $50 per pen.
Mr. Carter. Okay. So after you do that, Ms. Bresch, do you
have any contracts with PBMs? Does Mylan have any contracts
with any pharmacy benefit managers, PBMs?
Ms. Bresch. Yes.
Mr. Carter. You do have contracts with PBMs?
Ms. Bresch. Yes.
Mr. Carter. Okay. Can you describe some of those contracts
for me, very briefly?
Ms. Bresch. Well, the contracts are around products,
multiple products. To participate on the formularies, the
patients have access to the products.
Mr. Carter. Okay. So we established earlier that over half
of the list price does not go to Mylan. Do you know how much
the PBM receives?
Ms. Bresch. I don't have a breakdown between the channels,
but that's where showing that between those----
Mr. Carter. I understand, but do you know specifically how
much the PBM, the pharmacy benefits manager receives?
Ms. Bresch. I don't specifically know the breakdown between
those four buckets, between the PBMs, the pharmacy, the
insurers, or the wholesalers.
Mr. Carter. Nor do I, and I'm the pharmacist, and I don't
know either. In fact, nobody knows. That's the problem. Nobody
knows how much of this is going to the pharmacy benefits
manager, because there is no transparency. That's the problem.
Do you know how much the PBM receives in rebates and other
fees that are related to the EpiPen whenever one is adjudicated
through a pharmacy?
Ms. Bresch. I don't.
Mr. Carter. You don't. Nor do I. All I know is that my
computer calls the insurance and they tell me how much I'm
supposed to charge a patient. I don't know how much you're
getting as a manufacturer. I don't how much the insurance
company is getting. I don't know how much the PBM is getting.
That's where transparency comes in. That's what we need.
Do you know how much of the EpiPen savings, the related
savings and rebates that the PBM gives back to Mylan? You said
you had contracts with PBMs. How much do you get back from the
PBM?
Ms. Bresch. I don't know.
Mr. Carter. All right. Remember you're under oath. Do you
know how much you get back in rebates from a PBM?
Ms. Bresch. I just don't want to give you an inaccurate
number. I agree that we have contracts.
Mr. Carter. Do you know? Can you provide us with that
information?
Mr. Chairman, can I ask for that information.
Chairman Chaffetz. Absolutely.
Ms. Bresch. I'll certainly go back and look at that. I'm
just saying I don't want to give an inaccurate number to you.
Mr. Carter. Okay. So you don't know how much the PBM
receives or keeps for itself, nor do I, nor does anyone else,
whether it's the manufacturer, the insurer, or the pharmacist,
none of us know.
What we do know is this. Prescription prices, prescription
drug prices have soared, and so have the profits of PBMs. They
are in the billions of dollars.
Until we have more transparency in the PBM market, we are
going to continue to see these kind of cost increases. We're
going to continue to see them.
That's why we need bills like House Resolution 244. My good
friend, Representative Doug Collins from Georgia, has
introduced this bill dealing with the MAC transparencies. It's
called the MAC Transparency Act. This would help us and take a
step towards transparency.
Mr. Chairman, I want to thank you. I want to thank you for
holding this hearing today. And I want to reiterate my request
that I have made to you and to this committee from time to time
about further investigating how deceptive practice by PBMs are
impacting drug prices.
Would you agree with that, Ms. Bresch?
Ms. Bresch. I certainly would agree that transparency is
needed. The healthcare system has evolved dramatically over the
last decade, and I'm sure, as you've seen as a pharmacist, that
the system hasn't kept pace with this evolution of the
healthcare system.
Mr. Carter. The system isn't kept pace? PBMs have had
billions of dollars, billions of dollars in profits, yet I have
to sit there and take a prescription to the counter to a mother
whose child has suffered from anaphylactic shock and watch her
cry and watch her have to call family members in order to get
the money to pay for this medication.
And we don't know where it's going. You say it's not going
to you. Where is it going? I need to tell her. I need to tell
her where that money is going.
Ms. Bresch. The most immediate thing I could do was put a
generic into the market.
Mr. Carter. No, don't go there. You know I know better than
that. That is wholly--that is just--that is a crock, and you
know that I know that. It is. There is no difference
whatsoever.
Now, Ms. Bresch, don't----
Ms. Bresch. We cut the price.
Mr. Carter. You cut the price in half. Do not do that to
me. Don't try to convince me that you are doing us a favor
here. You are not doing a favor by that. You could have dropped
the price of EpiPens just as well, but instead you said, no,
we're going to make a generic.
Ms. Bresch. But to the----
Mr. Carter. Oh, no, no.
Ms. Bresch. --to the point of the wholesale acquisition
cost of getting to those patients and making a difference, to
your point, to make sure everyone who needs an EpiPen has one,
I couldn't ensure by the wholesale acquisition cost on the
branded side of this channel that that would get to all the
patients.
Mr. Carter. You did not want to cut the price on the EpiPen
brand, whatever you want to call it, because you wouldn't have
gotten your rebates from the PBMs like you get them now. I am
waiting for the information that you have promised me that you
will send to this committee.
Mr. Chairman, I am going to hold her to that.
Ms. Bresch. And, sir, what I can tell you is that to bypass
this, the most immediate thing that we could do was to put a
generic in, because it bypassed the formulary, everything
you're just describing.
Mr. Carter. Are you getting a rebate on those generics from
the PBMs? Are you getting a rebate on the generic version of
EpiPen from the PBMs?
Ms. Bresch. I don't--I don't--those are still under--we
haven't done those arrangements yet because we're launching----
Mr. Carter. But are you planning on getting a rebate? Are
you planning on getting a rebate from the PBM for the generic
version of EpiPen that you are introducing?
Ms. Bresch. I don't know. I honestly don't know how----
Mr. Carter. Remember the oath, I'll tell the truth.
Ms. Bresch. I have not negotiating those--but I can tell
you, as you know, the formularies, the PBMs, and the generics,
it's very different than on the brand side of the house, the
channel.
Mr. Cummings. Would the gentleman yield? I know that he
doesn't have any more time, but I just want to help clarify
something.
Mr. Carter. I yield.
Mr. Cummings. And this is to help. I just want to take just
one step further.
Do you know what you get from the PBMs for the regular
EpiPen, how much rebates? The gentleman was talking about that.
Do you?
Ms. Bresch. That's what I said. I don't want to give an
inaccurate number---
Mr. Cummings. But you can get us that information?
Ms. Bresch. I absolutely will go back and work on that
information.
Mr. Cummings. Okay. And two, you expect to be getting
rebates from the generic. Is that right? Yes or no?
Ms. Bresch. He asked specifically about the PBM, and I
don't want to give an inaccurate answer.
Mr. Cummings. But I didn't ask you that. I said are you
getting--are you getting----
Ms. Bresch. We pay rebates. We pay rebates on the generic
as well.
Mr. Carter. That's not what he's talking about. You know
what he's talking about.
Ms. Bresch. I don't--I can't sit here today and tell you
what comes back on the generic. What I can tell you is that
there's discounts and rebates paid, but it's a much smaller
degree on the generic.
Mr. Carter. Mr. Chairman, reclaiming my time. This is a
shell game. That's all it is.
Ms. Bresch, I hope you never have the experience of going
to a counter and telling the mother of a child who has suffered
from anaphylactic shock that she needs to pony up with $600. I
hope you never experience that, Ms. Bresch.
Mr. Chairman, I yield back.
Chairman Chaffetz. I thank the gentleman.
Ms. Bresch, when could we expect this committee to have
that information that was asked by Mr. Carter? What's
reasonable?
Ms. Bresch. I mean, I have no----
Chairman Chaffetz. You're the CEO. You've got how many
employees?
Ms. Bresch. Yeah, no--yes. Just I'm not sure what's asking
or how--I don't want to promise something----
Chairman Chaffetz. You don't know what he's asking? You
want him to ask again?
Ms. Bresch. No, no, I know what he's asking about what it
takes to give you that information, but we will do it as soon
as possible.
Chairman Chaffetz. I'm asking you what a reasonable date
is. A week? Can you get that to us in a week?
Ms. Bresch. Ten days?
Chairman Chaffetz. Okay, 10 days. Yes. Ten days. Thank you.
Appreciate it.
Let's now recognize Mrs. Watson Coleman for a generous 5
minutes.
Mrs. Watson Coleman. Thank you, Mr. Chairman.
And I'm really sorry I couldn't be here all day. I may ask
you some questions that have already been asked.
So I want to talk about sort of the company and how
generous it is and what a good life it seems to be associated
with being associated with the company. Your perks, in
particular, aren't limited to just an astronomical salary and
stock benefits. You also have access to the company jet. Is
that true?
Ms. Bresch. Yes.
Mrs. Watson Coleman. Mylan's public filings list the amount
of money that that you spent on the company's jet. In 2015, you
spent 310,000, and in 2014, you spent 319,000. Does that sound
correct? Does that sound correct?
Ms. Bresch. I believe that sounds correct.
Mrs. Watson Coleman. Did you fly here today?
Ms. Bresch. Earlier in the week, not today. Yes, I flew,
but just not today.
Mrs. Watson Coleman. And did you fly on the private jet?
Ms. Bresch. I did.
Mrs. Watson Coleman. And were you accompanied by anybody?
Ms. Bresch. Other employees.
Mrs. Watson Coleman. That's a yes or you're asking me?
Ms. Bresch. Yes. No, I'm saying other employees accompanied
me.
Mrs. Watson Coleman. Okay. Do you have any idea how much
that costs?
Ms. Bresch. Look, I know that--it's fortunate and it's for
efficiency and safety. And, yes, I understand----
Mrs. Watson Coleman. Let me ask you another question. From
where did you fly?
Ms. Bresch. From Pittsburgh.
Mrs. Watson Coleman. From Pittsburgh. Is that where you're
located?
Ms. Bresch. Yes.
Mrs. Watson Coleman. Okay. Yeah, it is a little stunning to
see that so much money could be spent on your traveling around
in a jet while we're having this discussion here about whether
or not Americans are being bilked for a life-saving drug like
EpiPen.
I know the importance of EpiPen because when I was a
legislator in the State of New Jersey, we voted legislation to
make sure that all the schools had it. And so I was sort of
very interested in your response to Mr. Welch, if this drug use
had increased so very much, wouldn't there have been then an
associated decrease in the cost to people because it was so
widely used? That's just the economies of scale, but apparently
that's not the case.
I want to talk a little bit about the company and some of
its tax benefits, because I think I want to participate in the
backdrop of a picture here.
We know that you've profited from increasing the price of
EpiPens, but you've also--this company has also increased its
profits in another way, and that's by taking advantage of a tax
loophole, particularly the tax inversion, which involves a
company moving its official headquarters abroad to lower the
amount of taxes they pay in the United States.
In 2014, Mylan moved its official headquarters to the
Netherlands. Is that true?
Ms. Bresch. Yes.
Mrs. Watson Coleman. You wrote in a letter to shareholders
about the tax inversion, and I quote: ``The transaction also is
expected to lower Mylan's adjusted tax rate, currently
forecasted to be approximately 24 to 25 percent in 2014, to
approximately 20 to 21 percent in the first full year after the
consummation of the transaction and to the high teens
thereafter.''
What was Mylan's companywide effective tax rate in 2014?
Ms. Bresch. I believe it was in the mid-20s to low-20s,
before we inverted.
Mrs. Watson Coleman. What is it today?
Ms. Bresch. It's between 15 to 17 percent.
Mrs. Watson Coleman. So, from our perspective, last year,
hardworking Americans had to pay 25 percent on all amounts that
they've earned over $38,000. But Mylan, which, according to the
SEC filings, had earnings in 2014 of close to a billion
dollars, you paid a lower tax rate than many individuals who
are struggling and who are possibly parents who need access to
those drugs for their children.
Did you lower the cost of the EpiPen since Mylan would be
saving so much in taxes by this move?
Ms. Bresch. So the 15 to 17 percent is our global tax rate.
I mean, that's after averaging everything out. So we in the
United States are still paying higher taxes on everything that
we sell here in the United States.
Mrs. Watson Coleman. So, from the benefit that you derived
from moving your headquarters, did you lower the EpiPen cost
here in this country?
Ms. Bresch. We're still paying taxes----
Mrs. Watson Coleman. That's a yes or a no, ma'am.
Ms. Bresch. --higher taxes.
Mrs. Watson Coleman. So that's a no or a yes? That would be
no.
Ms. Bresch. We did not lower.
Mrs. Watson Coleman. Okay. According to an article in the
Washington Post, as a result of this tax inversion, some Mylan
executives based in the U.S. faced higher personal tax
liability related to stock that they received as part of their
compensation. That same article stated that Mylan paid you more
than $5 million to cover these taxes.
So, while Mylan skirted its tax liability and left our
country, leaving hardworking Americans to foot this bill, you
didn't have to worry, because Mylan paid more than $5 million
to cover your personal taxes. That's really hard to deal with
and hard to believe.
You are the CEO of Mylan, right?
Ms. Bresch. Yes.
Mrs. Watson Coleman. When Mylan moved its official
headquarters abroad, did you move to the Netherlands?
Ms. Bresch. No.
Mrs. Watson Coleman. According to your Web site, and I
quote: ``The chief executive officer and other executive
officers of Mylan N.V. carry out the day-to-day conduct of
Mylan N.V.'s worldwide business at the company's principal
offices in Canonsburg, Pennsylvania.'' Is that true?
Ms. Bresch. Yes.
Mrs. Watson Coleman. So is there anything more than a
virtual office in the Netherlands so that you could claim to be
a tax purposes resident there?
Ms. Bresch. We are now domiciled in the Netherlands and
handle our--and run our global business, but physically, yes,
we work out of Canonsburg.
Mrs. Watson Coleman. So, basically, you're running the
business out of Canonsburg. So you simply moved your address to
another country so that you didn't have to pay at the tax rate
in this country at the same time you present this drug, this
lifesaving drug at this increased cost to families who can
barely afford it. It sounds to me like this is really a sham
and a shell, and it's very sad to hear this.
Do you really think that it's fair that you don't have to
pay the taxes as a U.S. company?
Ms. Bresch. So, again, we do pay taxes here in the United
States for all of the sales of all the revenue that we receive
here in the United States. So we are absolutely paying our
taxes for everything that we sell here in the United States.
Mrs. Watson Coleman. The one thing I get is that you all
are very smart about avoiding responsibility and
straightforwardness, you know, but there is a bill that could
close the loophole that you have your virtual office over in
the Netherlands and claim to be a resident for tax purposes,
and that is the Stop Corporate Inversions Act of 2015, which
was introduced in January of last year.
And I'm sorry to say that my Republican colleagues have
failed to act on it, but I think that, having had a hearing of
this nature, we can expect, I think, to have more attention to
this matter.
And, with that, I thank you for the generosity of time, Mr.
Chairman, and I yield back.
Chairman Chaffetz. Thank you.
We'll now recognize the gentlewoman from New Mexico, Ms.
Lujan Grisham.
Ms. Lujan Grisham. Thank you, Mr. Chairman.
And I too want to thank the ranking member and the chairman
for bringing this hearing together and having you.
Unfortunately, it's not our first hearing on such matters.
I mean, we are talking and dealing with Turing and Valeant and
Mylan and Gilead, and seeing a really disturbing pattern where
Congress provides a variety of mechanisms to invest in
innovation and pharmaceutical companies so that we get the
right public health treatments and medicines and that we also
have innovations. And we give you patent protections. We give
you R&D money. And what we get in return is now a monopoly
using your generic aspect in a way that we did not intend and
have a hearing where we're not going to get any relief. You've
made it clear that you're following the rules, you're
completely justified, and the amount of money that you are both
spending on salaries and bonuses and infrastructure and
acquisitions is all justified while you're making a billion
dollars on a drug that most people can't afford, with a patient
assistance program that most drug companies created in the
1990s so that as drug prices went up, policymakers would
hesitate before dealing with price legislation that would make
it fair to consumers. Because the problem is, if you're a
consumer and you have to have it because it's lifesaving, it's
already unfair, because we're going to have to do whatever we
need.
And, quite frankly, my constituents aren't so happy about a
prescription drug assistance program. Nobody wants to give you
their tax returns or their Social Security number or tell you
over the phone what their income is or provide you those income
statements. And I don't know what you pay for those staff to
provide those--to do that evaluation. The reality is: Just
don't do it. Make the drugs affordable. And you create an
environment where you have preferences and you make sure that
it's on a preventative drug list. So I think, instead of having
any more conversations--I mean, I don't think that we've gotten
very many of our questions answered, because, in fact, Mr.
Chairman, it is true it is very complicated. We've created an
environment where they don't have to be transparent, so they
aren't.
Let me give you an example where what we thought, what we
intended in terms of policymaking with generics and competition
worked. In 10 years, when we decided that, as a public health
issue, we should have, to your point, have defibrillators in
all public places, because we want to save people's lives. We
know that vehicle creates an opportunity where laypersons can
help administer that level of care and prevent a person from
dying from a heart attack. And in 10 years, by having six
companies effectively compete, we've dropped those prices of
defibrillators by about two-thirds.
Unfortunately, that's an anomaly. Today, we are seeing
price increases in therapeutic equivalents, in generics. We're
seeing longer patent protections. We negotiated longer patent
protections in 21st Century Cures. So I would suggest that,
today, while we have bipartisan now support and real interest
in protecting our consumers, that maybe it's time that this
committee lead the effort. Let's join up with Ways and Means,
and Energy and Commerce, and here's some ideas: I think it's
time to consider allowing FDA to look at price increases and
then ask them to include that when they prioritize generic
applications.
I propose that maybe we need a price protection program for
public health drugs, and that we need to decide a public
formulary. There's no formulary for the EpiPen. You've got it.
A formulary works when there's competition. There are different
drugs on that formulary for high blood pressure or insulin. You
don't need a formulary; you're it. And you're it, except that,
in Canada and all over Europe, your drug is much cheaper. So I
think we should import those drugs right back.
We paid you to figure out the device, the application, the
drug. Now we're protecting you with a generic. We're allowing
you to do patient assistance programs under the guise of trying
to make sure that it's affordable. We create rebates and very
complicated. You pay them; they pay you back. I say: Let's
demystify it. Let's make sure that Congress puts in a real
patient protection program to prevent companies like yours from
taking advantage of every policy aspect that was intended to
make affordable health care.
And, quite frankly, as long as I'm on this rant, I'm tired
of paying prescription drug companies and drug manufacturers
and device companies to treak these issues. If we put the same
kind of money that we're allowing you to keep to deal with
curing allergies, we wouldn't be having this conversation about
EpiPen, would we? So I say we shift it, instead of trying to,
you know, pull out information where I agree; I think you've
been far less than transparent. And I think we ought to do
transparency legislation. I think there's a whole host of ideas
where we could lead instead of being dragged down this path
where we're upset for our constituents when none of these
prices on their own at these company's hands will shift. They
certainly haven't.
Pharmaceutical companies and insurance companies and PBMs
where you tried to shift to PBMs, they are all making
incredible profits in an environment where that profit-making
environment has all been at the hands of policymakers trying to
create a competitive, innovative, private sector, high-quality
investment to protect Americans.
And, instead, we've created that access around the world,
and we've left Americans holding, if you will, the financial
bag. And I for one am tired of that. So I don't need any
answers because I won't get any that are fair from you or your
company, but I am expecting Congress now to take a much
different leadership role.
And I thank my colleagues on this committee and the
leadership by the ranking member and the chairman, because
maybe, because of your greed and the other companies, maybe you
finally put Congress into a position where, bipartisan, we will
have the courage to finally do what's right for our
constituents. I have that courage. I believe my colleagues do
too.
I yield back.
Chairman Chaffetz. I thank the gentlewoman.
We'll now recognize the gentleman from Wisconsin, Mr.
Grothman.
Mr. Grothman. I'm out of breath. I just got here.
Okay. First of all, for you, Mr. Throckmorton, and maybe
somebody's asked this question. If they've asked it, just say,
``Go to the next question.''
Have we figured out why the market is not working and why
other companies are not marketing these things and undercutting
Mylan?
Dr. Throckmorton. There is another product that's being
marketed. Why it's not marketed more broadly, why these
increases in prices I think is the question you are asking.
Isn't it?
Mr. Grothman. Right, right. Is the other product at a lower
cost?
Dr. Throckmorton. I'm told that that product is lower
price, yes.
Mr. Grothman. Okay. Maybe we don't want Ms. Bresch to pitch
the competition. But you do have competition. You've only got
94 or 96 percent of the market, right?
Ms. Bresch. That's our current market share, but there's
been products in and out of this marketplace over the years.
And as----
Mr. Grothman. Are there products in the marketplace today?
Ms. Bresch. Pardon me?
Mr. Grothman. Are there products in the marketplace today?
Ms. Bresch. Yes, yes.
Mr. Grothman. And are they lower priced than your product?
Ms. Bresch. There's an Adrenaclick authorized generic, and
I'm not sure of its exact price, but I believe it's in the $450
range.
Mr. Grothman. Okay. Is there anywhere--I'll ask Mr.
Throckmorton, because I don't mean to ask you to pitch your
competition. Is there any reason why there--there are generics
available--why people aren't producing this stuff for
substantially less?
Dr. Throckmorton. There are no generics in the way that I
think you are speaking of them. The generics that are available
are so-called authorized generics, which are branded name
products that have chosen to remove their name from their
label. Otherwise, they are----
Mr. Grothman. So that's not what this is.
Dr. Throckmorton. Our interest, I would say the broader
interest that we have is in encouraging real competition, which
means multiple manufacturers creating many different versions
of epinephrine auto-injectors, including true generics,
generics approved under the Abbreviated New Drug Application.
Mr. Grothman. So so-called competition for EpiPen, you
would really argue, is not as good or is not the same thing?
Dr. Throckmorton. If you were looking just simply at the
numbers of manufacturers in the area, there are two
manufacturers currently making epinephrine auto-injectors for
prescription in the U.S. There's a third product that's
approved that was voluntarily withdrawn last fall because of
some manufacturing issues. If they address those manufacturing
issues, they would be able to come back onto the market also.
Mr. Grothman. And do you expect them to, given, I presume,
there's a high markup here?
Dr. Throckmorton. We are offering any assistance that we
can to them to do exactly that.
Mr. Grothman. Now, my next question for Ms. Bresch, kind of
a more difficult question, and I'm not suggesting any
governmental problem, but I read a book a little while ago by
Charles Murray. I don't know if you're familiar with him, a
famous author. He talked about the moral decline of America.
And a lot of that moral decline, he focused on what I'll call
the underclass and a lifestyle is not something that many
people in my age group had when we were growing up, but he
focused a little bit on the upper class. And one of the things
he focused on, which I think maybe collectively isn't a huge
amount of money--maybe it adds, you know, a penny to each
prescription drug you have, but I think it's bad for the fabric
of society. Now, I realize it's legal, and I'm not just
targeting you, because it's common across the board.
It came up earlier that, you know, you're making whatever,
$19 million or $20 million a year. And that's fine. Maybe
that's a half cent off of every prescription you guys make. But
the point Murray made is there was a time in this country where
chief executives got along making a lot less. And they
apparently make a lot less in sizable companies around the
globe. And I think the point he made was this is a sign of
greed. And while, you know, it may be a relatively small amount
for every person in the country, it probably tears a little bit
at the moral fabric as people who work for companies and make
relatively small amounts of money look at the chief executive
making more money than anybody could possibly imagine.
Do you ever feel guilty or have pangs of guilt making such
a large sum of money, not as somebody who founded the company
but as an employee who really doesn't have a lot of risk
yourself?
Ms. Bresch. Look, I am blessed and fortunate. I've been
working at this company for 25 years and representing 40,000
employees. So what--Mylan has continued to provide access to
multiple medications here in the U.S., over 600 products.
Mr. Grothman. I know, and I'm sure there are many employees
who work for you who do wonderful things, valuable scientists
who are saving people's lives. I'm just saying, as you walk
around the cubicles and see all the people making $40,000 or
$50,000 or $60,000 a year, do you ever feel guilty that you and
the board of directors and such have arranged to have you make
$20 million a year?
Ms. Bresch. I am--I love that Mylan is trying to make a
difference every day in what we do and how much product and how
much access we are bringing and the savings to this country
alone, which, over the last decade, have been $180 billion.
Mr. Grothman. Probably more the scientists who work for you
than you. But you understand what I'm saying? Maybe you don't
understand. And maybe you are very good and maybe you're worth
it. I think one of the things that frustrates a lot of
Americans is there are a lot of people who even run their
companies into the ground and make tens of millions of dollars.
But I'm just going to ask you to comment again. Do you
think it's good for the moral fabric of society and the idea of
we want people to believe in the free economy system when, in a
business, some people make $20 million a year?
Ms. Bresch. I think to your point, the free market system
and delivering--being a well-run company and delivering great
shareholder value is part of that free market system.
Mr. Grothman. I'm sure they're getting good value. You see
what I'm saying? Maybe you don't understand what I'm saying.
There are a lot of people out there--we're going into election
season here. There are a lot of people out there who think the
system is, in part, broke, and in part, it's broke because
they're working their butt off and doing very valuable things,
and maybe they're even told to take cuts in pay, and they see a
chief executive making a huge amount of money, way more
proportionately, even adjusting for inflation, than chief
executives made 50 years ago and, as I understand it, more than
they make in other Western countries. And I think it grates at
some people. I think it causes distrust in our system.
I'm not suggesting we take away your freedom to make that
amount of money. I'm just saying, in all walks of life, there
are people that have the capability of making more and
voluntarily say, ``I don't need that amount of money.'' And I
just wondered if you had any comments on the system that we
have in America where so many chief executives, not just you,
seem to be making far more money than I think anybody would
even know what to do with. And that's my only question.
Ms. Bresch. And I--other than commenting that, yeah, the
free market system and--is--I hope that there are companies
that are definitely giving back, giving back and creating
access and providing--providing many things. And, like I said,
I go back to Mylan and what we have been able to create and
with 80 billion doses capacity and building up to lower those
healthcare costs. So----
Mr. Grothman. I'll take it you're not answering the
question because a little bit deep inside, you are embarrassed
at what you're making.
Chairman Chaffetz. Thank you.
I will now recognize myself for 5 minutes.
Your last comment about reducing the price I find offensive
and inaccurate, but let me go first. Is EpiPen, is it a brand
drug, or is it a generic drug?
Ms. Bresch. EpiPen is a brand drug.
Chairman Chaffetz. Does that mean it's an innovator drug?
Ms. Bresch. You mean based on CMS classification. It's a
noninnovator drug.
Chairman Chaffetz. Wait, wait, wait. Noninnovator drugs are
really generics, correct?
Ms. Bresch. The definition, CMS has a statutory definition
for innovator and noninnovator drugs.
Chairman Chaffetz. So you think it's a branded product, but
it's a noninnovator drug for the purpose of CMS?
Ms. Bresch. Yes, that's how it's classified.
Chairman Chaffetz. And you're familiar that Mylan had to
settle a $118 million settlement with the Department of Justice
back in 2009, right? Yes?
Ms. Bresch. I'm not familiar. I'm trying to--what
settlement?
Chairman Chaffetz. With the Department of Justice to
resolve allegations that Mylan had underpaid the rebate
obligations in the Medicaid prescription drug rebate program
with respect to several other Mylan products, not EpiPen. But
you're familiar with that?
Ms. Bresch. I'm not recalling the settlement that you are
speaking of.
Chairman Chaffetz. This is the Justice Department. I'll ask
unanimous consent to enter this into the record, dated Monday,
October 19, 2009, Justice News, ``Four Pharmaceutical Companies
Pay $124 Million for Submissions of False Claims to Medicaid.''
Without objection, so ordered.
Chairman Chaffetz. Have you or anybody at Mylan spoken with
CMS?
Ms. Bresch. Yes, there has been conversations with CMS.
Chairman Chaffetz. Have you had any of those conversations
with CMS about EpiPen or the generic EpiPen?
Ms. Bresch. I have not.
Chairman Chaffetz. Have you spoken with anybody at Health
and Human Services about EpiPen?
Ms. Bresch. I have not.
Chairman Chaffetz. Nobody?
Ms. Bresch. No.
Chairman Chaffetz. Has anybody at your company been in
negotiations or discussions with CMS regarding EpiPen?
Ms. Bresch. Yes. People at the company have talked. Staff
has talked back and forth.
Chairman Chaffetz. Who at your company has done that?
Ms. Bresch. I think there's been several people, I mean,
several people within the company that have had conversations.
Chairman Chaffetz. Can you get us the names of those
people?
Ms. Bresch. I'm sure we could tell you--yes, I'm sure we--
--
Chairman Chaffetz. Within that 10 days?
Ms. Bresch. I'm sure that we can do that.
Chairman Chaffetz. We would also like the names of the
people at CMS they've been in discussions with. Can you give us
the names of the CMS people that your staff has been working
with?
Ms. Bresch. I'm sure we can. Like I said, I've not had any
of----
Chairman Chaffetz. Is 10 days reasonable?
Ms. Bresch. Sure.
Chairman Chaffetz. Because the concern here is that and the
question really is, why is Mylan classifying EpiPen as a
noninnovator drug?
Ms. Bresch. When we acquired the product, it had been
designated as a noninnovator drug. And there's been several
points throughout time that have confirmed that status.
Chairman Chaffetz. Do you believe that the generic that you
are planning to introduce--when, by the way, do you hope to
introduce the generic?
Ms. Bresch. Certainly before the end of the year. Over the
next----
Chairman Chaffetz. In the next 90 days or something?
Ms. Bresch. Couple of months, yes.
Chairman Chaffetz. Okay. And are you going to work to
classify that as a noninnovator drug or an innovator drug?
Ms. Bresch. I'm not sure what that classification--we
haven't submitted that document. We haven't submitted yet,
because we haven't launched the product.
Chairman Chaffetz. Okay. I need to spend a few minutes
going through this, this chart that's right next to you. And I
also need the help with you--and it's going to take a few
minutes; I appreciate the indulgence of the committee--to
understand some of the definitions. Mr. Carter pointed out
there's a revenue line here that seems to be missing, correct?
Let me go first to the Mylan revenue, 274. Define that for me.
Is that the average revenue per--what is that? 274, define
that.
Ms. Bresch. The average revenue that Mylan receives for a
2-Pak of EpiPens.
Chairman Chaffetz. So, in your letter to me and Mr.
Cummings of September 15, page 2, at the very top of the
paragraph--I'll read here--you write: ``Approximately 85
percent of consumers who are prescribed an EpiPen auto-injector
pay less than $200 for a two-unit pack and a majority pay less
than $50.''
Is that accurate?
Ms. Bresch. I actually thought it was lower than the 200. I
actually thought the majority of patients pay less than 100,
and then many pay less than 50.
Chairman Chaffetz. Well, they're both in the majority,
right? Eighty-five percent of consumers who are prescribed an
EpiPen auto-injector pay less than $100 for a two-unit pack and
a majority pay less than $50.
Ms. Bresch. Yes.
Chairman Chaffetz. So, of those that purchase the EpiPen,
how many do it as a prescription? Do you have to have a
prescription?
Ms. Bresch. Yes, you have to have a prescription.
Chairman Chaffetz. So 100 percent of that universe?
Ms. Bresch. Yes.
Chairman Chaffetz. So, if your average revenue to Mylan,
your Mylan revenue is $274 and the majority of people are
paying less than $50, the minority is paying what to get it?
Ms. Bresch. Well, it could range from--it could be
anything, because all the plans--if you're uninsured or if
you're--it would range, because every plan is different.
Chairman Chaffetz. So what's the highest number? Is 608
low?
Ms. Bresch. It could--because we don't set the price
that's--that when the patient walks up to the pharmacy
counter----
Chairman Chaffetz. I'm talking about your revenue.
Ms. Bresch. Our revenue is the 274 per pen, on average.
Chairman Chaffetz. Okay. So that's the average number.
Ms. Bresch. Right.
Chairman Chaffetz. And you just told me that the majority
pay less than 50 bucks. So I'm trying to figure out with the
remainder, what are they paying?
Ms. Bresch. But the cost to the patient is different than
what we're receiving.
Chairman Chaffetz. Yes.
Ms. Bresch. And I think that--and when----
Chairman Chaffetz. But you just told me--look, you told me
that you sell 4 million 2-Paks, right? Eight million
individual, 4 million 2-Paks.
Ms. Bresch. Correct.
Chairman Chaffetz. If you multiply 4 million 2-Paks times
the $274, you miraculously get to roughly $1.1 billion.
Ms. Bresch. Correct.
Chairman Chaffetz. So how is it that the majority,
according to what you wrote us, pay less than $50 if the
majority of 4 million people, just more than 2 million people,
are paying less than 50 bucks, how do you get to an average of
$274?
Ms. Bresch. Because the patient--what the patient is paying
is not--is not coming back to Mylan. And when we were speaking
earlier of the people, the middlemen in the system, so that's
either the pharmacy benefit managers, retailers, wholesalers,
insurers, is where--because I'm not--I'm not interfacing
directly, from a price perspective or a pay perspective, to the
patient.
Chairman Chaffetz. But you are representing to us that 85
percent of consumers are paying less than 100 bucks and that a
majority are paying less than $50. The reason you're having
this hearing is not because the public thinks they're getting a
good deal. Look, I got a $600 product, and I only had to pay
$48. That's not why you're here. They're telling us they are
having to pay much greater numbers.
Ms. Bresch. And it's that growing minority that I spoke of
earlier that is being faced now with the wholesale acquisition
cost or more at the counter.
Chairman Chaffetz. How do you define ``profit''? What is
profit to you?
Ms. Bresch. So the $50-per-pen profit is for the direct
EpiPen-related cost. We didn't--there's no company allocation
or anything like that off of that.
Chairman Chaffetz. Well, but that's not what you wrote me.
You wrote this letter less than a week ago. Here's what you
said: ``Among other things, this profit is used to fund
research and development and to maintain and improve our
facilities across Mylan, in which we invest $1.2 billion this
year alone or more than $3 million every day.'' That's not the
definition of profit.
Ms. Bresch. No. I think what we were saying in there is
that's how we reinvest the profit that we make. But I thought
you were asking me how the $50----
Chairman Chaffetz. When there are five executives over 5
years that take out $300 million, where in your P&L does that
show up? Does it show up in your profit line? Does it show up
in EBITDA? Where does it show up?
Ms. Bresch. Well, it's not coming out of--the $50 number
I'm showing you per pen is taking no company allocation to that
whatsoever.
Chairman Chaffetz. But that's what you just wrote to me.
You said, ``This profit is used for our''--we're supposed to
believe that your $50 profit is funding R&D and facilities and
all that, because that's exactly--I just read to you verbatim
what you wrote to me.
Ms. Bresch. And we absolutely take our profits and reinvest
in our business. I mean, to your point, we're--this year alone,
750 million in R&D we're spending across bringing hundreds of
products to the market.
Chairman Chaffetz. When you take the $300 million that the
five executives got, where on your P&L does that show up?
Ms. Bresch. And I'm saying it's not--we didn't take any of
that out of this $50. When we're showing you this $50 profit--
--
Chairman Chaffetz. I'm not talking about the $50, the whole
thing. Come on, you amortized your fixed expenses and your
operating expenses over everything, correct?
Ms. Bresch. Correct. But----
Chairman Chaffetz. Where does that show up in that
spreadsheet? Tell me where that number is.
Ms. Bresch. It's not. It's not on here. $50 would be lower
if we were taking those company allocations, like running the
business, out of this. This is straight just EpiPen.
Chairman Chaffetz. I've gone way past. I'm going to come
back to this, because your numbers are so askew. It just--it
really is troublesome.
Let me recognize the ranking member, Mr. Cummings.
Mr. Cummings. Thank you very much. You know, when Mr.
Shkreli appeared before us, he took the Fifth. And to be frank
with you, you might as well have taken the Fifth too, with the
kind of information that we've gotten here today, because I
don't think that we--I tell you: This reminds me of a game when
it's like hiding the ball. And it's like a shell game, and we
can't--you know, you seem--it seems like we can never figure
out where the ball is.
And as I said from the very beginning, I was concerned that
we would be here in a rope-a-dope situation. It's worse. It is
worse. In the rope-a-dope situation, the boxer sort of holds on
and tries to get through, and then, at the end, he comes back
and he wins.
In this situation, not only are you holding on and trying
to win, but in the end, you are placing us in a position where
we're not making very much progress here at all. I'm saying
I've listened to--I've been here 99 percent of this hearing,
and I've practiced law for many years, and I'll tell you: I
don't know what your lawyers are telling you, but I don't think
that you have been frank with us. And I could understand it a
little bit better if you didn't know what this hearing was all
about. And I don't say those words lightly.
Let me ask you a few questions to see if we might be able
to move forward here a little bit. You know, your numbers just
don't add up. And I think that's what's happened. I mean, if I
could sum up this hearing, it would be ``the numbers don't add
up.'' And it is extremely difficult to believe that you are
making only $50 in profit when you just increased the price by
more than $100 per pen.
Do you have any internal company documents that track the
total profits you have made off of EpiPen from 2007, when you
acquired it, until today? Do you have any of those documents?
Ms. Bresch. Well, we certainly could--I, sitting here
today, don't have the cumulative number, but I totally
understand and had--I know if I had only read everything that's
been out there around the price, I can totally understand how
perplexing it is and the system. And I would hope that, while I
don't have answers how to fix all of it, I think that I
couldn't agree more: the transparency of the 608 down is needed
across the board, because patients have no visibility,
pharmacists--nobody's got a visibility of the value or where--
what's being paid for what. And I think----
Mr. Cummings. Can we hold on for that one little thing you
just said? You talk about the value of the medication, right?
You know, you can take that--I mean, when you talk about the
value of a medication, I guess you're saying, well, if you have
a certain medication, it will keep you out of the hospital. A
certain medication will save your life. I mean, where does that
end? In other words, how do you put value on life? Are you
following what I'm saying? I could go on and on and on. So is
that the measurement?
Ms. Bresch. No. That's why I was saying----
Mr. Cummings. I mean, but you've said it 50 million times
in this hearing. And it sounds like you're saying: ``Because
I'm able to save somebody from possibly going to the hospital
or whatever, that's supposed to be incorporated into the value,
and that's partly why we are able to charge these prices.'' And
are you telling us that you are doing us a favor, that you're
doing our constituents a favor by raising these prices?
Ms. Bresch. I think hopefully what you'll see with the
generic coming to the market is a----
Mr. Cummings. I'm talking about right now. Right now. Right
now. I've got--the other night I was at a PTA meeting in my
district, and I had a mother who has three children, and all of
them use EpiPen. She has to have one set at home, and she has
one at the school. And she stood there in tears, because she's
only making maybe $50,000 a year or less, and she's trying to
figure out how she's going to afford this.
And as I listen to you more and more and you talk about--I
think I wouldn't be so--I think I might be a little bit more
trustful if I hadn't heard some of this before, if I hadn't
read some of it before from people like Shkreli, who called us
imbeciles.
But now--but when you present to me that you've got these
assistance programs, as I see the assistance programs--and by
the way, everybody comes in with the same story. There must be
some playbook that you all use. And they say: ``Oh, we've got
an assistance program. We're going to help some people.'' And
the next thing you know they then use that to justify not
bringing the prices down.
Do you understand that?
Ms. Bresch. I do. And I----
Mr. Cummings. And that's exactly what you've come in here
to do--you've done. You've done it. That's what you're doing.
Are you going to go down on the price? Are you going to come
back down on the price at all? Put aside the generic stuff.
What about coming down on the price?
Ms. Bresch. We believe that the generic was much more
meaningful to make sure we're reaching those patients, so
that--across all the access points. And one thing I would say--
and I know you've had other companies in here, and I know
orphan drugs. There has been conversations across this. I would
say, just as an example, Mylan's had an orphan drug product
called Cystagon on the market for years, years and years. And
at--it treats a very small number of patients, cystinosis, less
than--I believe it's now 500. It's a very, very rare disorder.
And that price has stayed around $1,200 to $2,000 annually to
provide the medicine needed every day, where a company came on
the market 3 years ago at $300,000 to treat that same patient
population with just a more convenient dose.
So I understand that there are the things that you've seen
and companies that you've spoken to, but I would hope that you
would be able to look at Mylan and the role that we've played
with generics, the role that I play if I talk about our
Cystagon experience, or trying to make sure that the access
point for people who are both carrying it but in schools and in
other public places, so that there is an EpiPen there or an
epinephrine auto-injector there for anyone who needs it
whenever----
Mr. Cummings. You know, we appreciate all of that, but do
you all, does Mylan have a slogan of ``Seeing is Believing''?
Ms. Bresch. Yes.
Mr. Cummings. You do?
Ms. Bresch. Yes.
Mr. Cummings. ``Seeing is Believing.'' That's what we want
to do. We want to see the records. We want to see the records.
You are refusing to say how much profit your company makes. You
are repeating industry talking points with no substance
whatsoever. You are trying to claim that your massive price
increases are actually a good thing for American families. Our
committee requested documents from Mylan, but so far, you
failed to produce everything we've asked for. As you just said,
Mylan's slogan is ``Seeing is Believing.''
So, in summary, Ms. Bresch, will you agree today--I know
the chairman has asked you to produce some documents within the
next 10 days and some information in the next 10 days. Will you
agree today to produce all the documents the committee has
requested so we can confirm what's going on here?
Ms. Bresch. We will certainly produce everything that we
can.
Mr. Cummings. What does that mean? I don't know what that
means. We've given you--we've asked for specific documents.
Ms. Bresch. And I know we've been responsive, and I know
that we're still--I mean, this has been real time. I understand
that we've produced thousands of documents, a couple thousand
documents. And I know that there's more--there's more that we
have to produce. And I'm saying that I'm sure we will produce
everything that we possibly can to give you the visibility and
the transparency to the numbers that I'm showing you here
today.
Mr. Cummings. And so that we will be clear, we want your
agreements and your contracts with manufacturers and suppliers,
distributors, PBMs, and any of your other partners in the
distribution channel for EpiPen.
Will you produce those?
Ms. Bresch. I can't speak to all of those contracts, from
the confidentiality agreements in some of those, the
competitive information in some of those. But that's why I've
got to rely on the lawyers who are producing these documents to
make sure we're staying compliant with some of the other
provisions in the contracts.
Mr. Cummings. So you will get us what you got. I know
you're all lawyered up back there, but you're going to make
sure that you consult with your lawyers to get us what you can?
Ms. Bresch. Yes.
Mr. Cummings. All right. Thank you.
Chairman Chaffetz. I now recognize the gentleman from
Georgia, Mr. Carter.
Mr. Carter. Thank you, Mr. Chairman.
I'll be very brief. I find the chart very interesting. Can
you hold it up a little more? I can't see the very bottom of
it. Okay. So we've got wholesale acquisition costs at $608,
rebates and allowances. This is what you give back to patients.
And so that's minus $334?
Ms. Bresch. No, no. This rebates and allowances are all the
things that you were speaking of, the PBM, retail. That's all
the rebates and things that flow to all the----
Mr. Carter. So you're giving a rebate to a PBM?
Ms. Bresch. Yes.
Mr. Carter. You're giving a rebate to a PBM?
Ms. Bresch. Yes.
Mr. Carter. That's where that comes in there.
Ms. Bresch. It's part of it.
Mr. Carter. It's part of it.
Ms. Bresch. It's in there.
Mr. Carter. Okay. So you're giving a--what are allowances?
Ms. Bresch. That's--so all of the fees, there's wholesaler
fees, discounts, rebates. That's just capturing everything
that's between the 608 and the 274, which is what Mylan
receives.
Mr. Carter. Okay. Are you getting any rebates from PBMs?
Ms. Bresch. And that's what I said I didn't want to give
you an inaccurate number. There's----
Mr. Carter. Okay. I understand that, but that was not my
question. I didn't ask you for a number. I said, are you
getting rebates from a PBM?
Ms. Bresch. And across our business?
Mr. Carter. Yes or no, are you getting rebates from a PBM?
Ms. Bresch. But for EpiPen, we are paying rebates to the
PBM.
Mr. Carter. Are you getting rebates from a PBM?
Ms. Bresch. I don't--we're not getting EpiPen-specific
rebates from an EpiPen from being the manufacturer.
Mr. Carter. So you are not getting----
Ms. Bresch. I don't believe----
Mr. Carter. --rebates from a PBM?
Ms. Bresch. I don't believe so on--like, for instance, if
we're just talking about EpiPen.
Mr. Carter. You just told me earlier you were going to
produce documents that would give us your numbers.
Ms. Bresch. But--so we--what I don't want to confuse is
we're a manufacturer. We're also an employer. So we have a PBM
that is managing, say, all of employees in the U.S. So what I
didn't want to give you is an inaccurate number. If there was
rebates that come from the PBM as an employer versus the
manufacturing, we're paying the rebates for the products.
Mr. Carter. This is amazing. This is amazing. I have never
in my life seen such a shell game. I'm speechless, and that
doesn't happen very often.
Ms. Bresch. And that's why we have said and encouraged, to
your point, that transparency and where that's flowing and how
it works, so that you do know what the cost is.
Mr. Carter. Okay. Let me ask one more question, and then
I'll stop. Can you hold it up again?
Ms. Bresch. Sure.
Mr. Carter. You took an oath earlier today saying you would
tell the truth.
Ms. Bresch. Yes.
Mr. Carter. Is that the truth, $50 per pen?
Ms. Bresch. Yes.
Mr. Carter. That is the truth?
Ms. Bresch. Our profit is approximately $50 per pen.
Mr. Carter. Mr. Chairman, I yield.
Chairman Chaffetz. Thank you.
Just a few questions as we wrap up. On that chart again, I
would like to see a definition of ``rebates and allowances.''
I'd like to see a definition for each of those numbers. For
instance, cost of goods sold, what do you include and not
include in that number?
Ms. Bresch. That's everything that we're paying to our
partner for the cost of goods sold.
Chairman Chaffetz. So that's it? What else is in the cost
of goods sold?
Ms. Bresch. Because we are--we have a partner on the
product.
Chairman Chaffetz. Yes.
Ms. Bresch. So we pay a price to----
Chairman Chaffetz. Do you buy it as a finished product?
Ms. Bresch. Yes.
Chairman Chaffetz. So you don't manufacture it?
Ms. Bresch. No. We're partnered on the product.
Chairman Chaffetz. And so you pay them $69 per----
Ms. Bresch. Per 2-Pak.
Chairman Chaffetz. Per 2-Pak.
Ms. Bresch. For two EpiPens.
Chairman Chaffetz. For two EpiPens. So that's your turnkey
price?
Ms. Bresch. Yes.
Chairman Chaffetz. When you call ``direct EpiPen auto-
injector costs'' of $105, what is in that number?
Ms. Bresch. So sales, marketing, the disease awareness. So
everything that would be directed to EpiPen or around
anaphylaxis awareness. All the access programs. So that would
be all-inclusive of everything directly related to EpiPen.
Chairman Chaffetz. And the number for research and
development, your fixed costs, your variable costs at your
company, where does that number show up?
Ms. Bresch. So that's not on here. These are just direct
EpiPen-related costs. So, I mean, if you look at our--the
entire company, obviously, that was the point I was trying to
just say earlier, that this doesn't--this is looking at a
product on a standalone basis versus saying it takes a company
or human resources or other entities to sell the product. So
this doesn't take any of that into consideration. This is just
giving you an approximate profit on just from an EpiPen-related
perspective.
Chairman Chaffetz. And not to pick so much on your own
personal compensation, none of that comes out of this number,
these numbers? You want us to believe that your profit is less
than $50?
Ms. Bresch. If you took company allocation and all that in,
yes.
Chairman Chaffetz. I don't know who the investors of this
company are, but, man, I'm telling you: this is some fishy
business, because these things do not add up. We would expect a
very professional presentation on your P&L, and these dumbed-
down versions here do not make sense without the definitions in
here. It just feels like you're not being candid and honest
with Congress, who is asking you for some very basic
information.
Ms. Bresch. And we----
Chairman Chaffetz. And your attorneys are over there
scrambling. They're all uncomfortable. But you know what? We
just want some basic information. You dug this hole for
yourself. You guys dug this hole for yourself. We asked for
some simple basic information. Don't tell me that you're
pulling all your R&D costs and all of your fixed expenses and
all your facilities and all of that out of your profit line.
Any responsible P&L, it would lay this out for us. You can
make this thing go away by being honest and candid, and we just
don't think you are. That's why we're on I don't know what
number hour here and we're asking you to provide more
information.
And don't come here and tell us that, you know, you're
doing the world a favor by increasing the price from $125 to
over $600 and everybody else is making money but poor old
Mylan. It just doesn't smell right. It doesn't pass the basic
sniff test.
Ms. Bresch. And, Chairman, I don't think we said we weren't
making money. I think all we were trying to set the record
straight as to the dollar amounts that have been out there
around the 608 price to show that what we actually receive is
the 274 and to walk down that. And we will happily provide the
definitions and that transparency to show you the $50.
Chairman Chaffetz. And I just don't buy the idea that the
majority of consumers are paying less than 50 bucks. I mean,
that's what you're telling us.
Ms. Bresch. Right. And that's what----
Chairman Chaffetz. Trust but verify. Seeing is believing,
the Mylan way. Show it to us. Show it to us.
Ms. Bresch. And that is what our data shows, and we will.
Chairman Chaffetz. I know. Well, we haven't seen it. So I
appreciate you providing that to us.
I have two quick FDA questions here.
Dr. Throckmorton, how many Abbreviated New Drug
Applications are pending before the FDA right now?
Dr. Throckmorton. 2,300 actions are currently before us.
Chairman Chaffetz. And how long is the average wait time
for an approval of a generic drug?
Dr. Throckmorton. I'd like to get that information and get
it back to you as soon as I can.
Chairman Chaffetz. Can you define what--in fairness, what I
asked Ms. Bresch, what's a reasonable time before we start
raising the red flag here?
Dr. Throckmorton. Can I----
Chairman Chaffetz. Ten days, is that----
Dr. Throckmorton. Ten days sounds like a common number, if
that would be good enough for you.
Chairman Chaffetz. We would appreciate that.
Mr. Cummings.
Mr. Cummings. Just briefly. Ms. Bresch, you mentioned that
you've got some confidentiality agreements. That doesn't apply
to us, Congress, you know that, right? Hello.
Ms. Bresch. No, I didn't know that if there's
confidentiality----
Mr. Cummings. Now you know. That doesn't apply to us. And
I'm sure your attorneys will work that through.
I just hope that--I just want to go back and briefly as I
close with what I said before. I've asked you every kind of
way, would the prices come down? And you've basically made it
clear--basically, you fall in the same category of Shkreli and
the Valeant people. They come to the hearing, they go through
the motions. At least you tried to answer some questions.
But in the end, our constituents still suffer. And I hope
that, when you fly back on your jet, you'll think about that
mother that I told you about or the people that Mr. Carter
talked about a few minutes ago trying to just take care of
their families. And, you know, I don't--I try to really look at
things from a very--in a way, a very balanced way. But I can
tell you that I've been on this committee for 20 years, and
very rarely have I seen a situation where it seems that we
could not get the answers that we were looking for to this
degree.
And what that does is it goes against credibility, and
that's a very, very difficult hurdle. And so that's why we
really do need to see the documents. And what we're trying to
do--you know, you can make all the money you want. I just don't
like the idea of it being done in a way that's not transparent,
and I don't like it being done on the backs of people who can
least afford it.
And you keep trying to convince us that Mylan is doing a
great favor, but Mylan's making money. Mylan's doing fine. But
to come in and to say some of the things that you've said, it
just makes me, you know, feel that maybe you don't think we're
that bright, and that's a sad commentary.
So thank you very much, and we'll look forward to receiving
your answers and documents.
Chairman Chaffetz. Yes, we'll be following up with both of
you within 10 days.
The committee stands adjourned.
[Whereupon, at 8:28 p.m., the committee was adjourned.]
APPENDIX
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Material Submitted for the Hearing Record
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