Breakingviews: EpiPen probe may give Mylan allergic reaction

Published Wed, Aug 24 20163:18 PM EDT

Breakingviews

Robert Cyran

An EpiPen probe may give Mylan an allergic reaction. Three U.S. senators are taking the $24 billion drug firm to task for jacking up the cost of its anaphylaxis treatment more than fivefold since 2008. On Wednesday, Democratic presidential candidate Hillary Clinton weighed in. An investigation could hit Mylan where it hurts. The company's marketing machine has made the American public well aware of the dangers of anaphylaxis while creating a deep association between the condition and EpiPen as a solution. So patients ask for them by name and doctors prescribe them. The device accounts for over 90 percent of the auto-injector market. Rivals have done a poor job trying to break Mylan's lock on the business: The offering from its closest competitor is harder to use, Sanofi pulled its device from the market and regulators forced Teva to delay the launch of its version. EpiPen probably provides 20 percent or more of the company's profit, analysts reckon. It has also provided a big chunk of its growth. About half of the company's $189 million increase in second-quarter revenue from the same period last year probably came from selling more EpiPens at higher prices. More from Breakingviews : Tesla's big ambitions leave investors standing Lawmaker criticism may be theatrical, but can be effective. Senator Richard Blumenthal was a co-sponsor of legislation that encouraged public schools to carry emergency treatments for anaphylaxis. He is now calling for the company to lower prices. Mylan may hope its political sway can shield it from some political fallout. Chief Executive Heather Bresch is the daughter of West Virginia Senator Joe Manchin. And the company can point out that few customers pay the list price. But scrutiny may encourage once-friendly legislators to adopt less favorable policies — for example, encouraging regulators to approve generic drugs and medical devices more quickly. The bigger danger is the company is forced to go easy on price increases on EpiPen and its other drugs. Mylan has plowed substantial sums in recent years into acquisitions and producing biologic drugs. Investors already have doubts about this strategy, pegging the stock at less than eight times estimated 2017 earnings, compared to 15 times at rival Allergan . Political controversy may send this multiple even lower. For more independent commentary and analysis from Reuters Breakingviews, visit breakingviews.com

Source: EpiPen

An EpiPen probe may give Mylan an allergic reaction.

Three U.S. senators are taking the $24 billion drug firm to task for jacking up the cost of its anaphylaxis treatment more than fivefold since 2008. On Wednesday, Democratic presidential candidate Hillary Clinton weighed in. An investigation could hit Mylan where it hurts.