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The real EpiPen scandal we should be talking about

EpiPen
Lucas Trieb | AFP | Getty Images

Tune in to CNBC's "Closing Bell" on Friday, Aug. 26 at 3:30pm ET. David Martin will be on to discuss the real EpiPen scandal we should be talking about.

Mylan Pharmaceuticals deserves the attention it is getting. Heather Bresch, Mylan's CEO has every reason in the world to have the smug press photos. After all, she's used the mortality of millions who suffer from sudden and acute allergic reactions and heart problems to line her own pockets and those of her investors (while squirreling cash outside the U.S. for tax evasion-like purposes).

Together with Wendy Cameron (Cam Land LLC and Trustee at The Washington Hospital from 2009-2011), The Honorable (retired judge) Robert J. Cindrich (Cindrich Consulting), Robert J. Coury, JoEllen Lyons Dillon (the Chief Legal Officer for the 3-D printing ExOne Company), Neil Dimick (retired EVP at AmerisourceBergen), Melina Higgins (former partner of Goldman Sachs), Douglas J. Leech (Founding Principal of DLJ Advisors), Rajiv Malik, Dr. Joseph C. Maroon (Neurosurgeon at University of Pittsburgh Medical Center), Mark W. Parrish (CEO of Trident USA Health Services), Rodney L. Piatt (Horizon Properties Group LLC), and Randall L. Vanderveen, PhD, R.Ph. (University of Southern California's School of Pharmacy) – Mylan's esteemed board of real estate developers, bankers, lawyers, medical educators, and corporate executives – her leadership has steered the company into the maelstrom of public controversy around the insanely expensive EpiPen®.

Bresch's compensation rose 671 percent in 8 years. Media outlets should be doing their stories on the people I listed above, members of Mylan's board of directors, who were willing to endorse a business strategy as ethical as arms dealers in Lord of War.

Let's cut to the chase. Bresch is at best guilty of hyperbole and at worst lying when she was quoted on CNBC saying that, "No one's more frustrated than me. My frustration is, the list price is $608." In 2011, the same product sold for $164. In 2007, it was available for $57.

Does she really want the public to believe that she's frustrated that the Food & Drug Administration has been propping up her company's monopoly on a technology and drug that's been in the public domain since the 1950s? Does she love to know that her firm is pocketing $1 billion for a technology that was acquired from Merck in 2007? Does the public know that the FDA and Congress have willfully succumbed to the pressure of corporate America by ignoring their own rights to the technology?!

Let's take a little journey down memory lane so that Iowa Senator Chuck Grassley, Presidential Candidate Hillary Clinton and Mylan's contemplable board can get on the same page!

When George Calkins and Stanley Sarnoff invented the EpiPen forbearer in 1973, they acknowledged that their ideas were improvements upon work commissioned for the U.S. and U.K. military emergency medicine needs in the 1960s! That the U.S. Patent Office granted their patent in 1973 was, at the time, a bit of a stretch as it was more about a mechanical design improvement – not a real invention. This technology, used in the military and in EMS kits around the world was the basis for their company.

As the U.S. government was a principal buyer of anaphylaxis injector pens and funded a considerable amount of the technical improvements thereto, the U.S. government has march-in rights to use the technology at a reasonable commercial royalty rate it can set!

The U.S. government's EpiPens don't cost $608 per unit. Meridian Medical Technologies – the Department of Defense's supplier of the actual EpiPen (owned by Pfizer) – sell the same technology dispensing numerous anaphylaxis drugs to the U.S. government for under $50 a unit.

Epinephrine, the drug in the EpiPen has been off patent for decades. It's the dispenser — the actual injection pen — that's covered by a patent (U.S. Patent 7,794,432) that Meridian received and then licensed to Mylan (and others).

And let's face it, Congress knows about this. The FDA knows this. And the reason why Mylan gets away with this – just like they get away with incorporating out of the U.S. using the dubious inversion strategy for tax efficiency – is because powers that be love to provide liquidity to their benefactors!

The U.S. Patent Office and the U.S. Food and Drug Administration have given Mylan license to extract excessive benefit from public that needs treatment options. Pfizer's Meridian Medical is cruising along under the radar with a very clear statement on their website stating that their technology is "Available only for use by United States military personnel." And Sarah Jessica Parker is keeping the Hollywood face on the whole racket unaware that what she's encouraging parents and school districts to do is really to enrich a dubious corporation while preying on real public fear.

Cut the crap. This is another example of media hype around a faux well-spring of public activism around price gouging. But let's get real. If we don't want our kids to die from a bee-sting or a peanut, we should demand accountability where it's really due – the Patent Office that granted an unjustified and unpatentable monopoly, the FDA which props up the illusion, and a board of directors at Mylan who don't take the time to inform themselves of their own company's misdeeds.

Commentary by David Martin, the founder of M-Cam, a global firm that advises companies and investors on corporate finance, asset allocation and valuing intellectual property. Follow him on Twitter @monkeyking67.

This commentary originally ran on InvertedAlchemy.com.

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