Biotech and Pharma

EpiPen Outrage: New pressure on Mylan as CEO Heather Bresch prepares to testify

Mylan CEO Heather Bresch prepares to testify

If Mylan CEO Heather Bresch was hoping for a quiet day Tuesday as she prepared to face a congressional committee, she was out of luck.

Bresch, under fire for price hikes that have left the cost of Mylan's lifesaving EpiPen device topping $600, got several separate doses of unwelcome news a day before her scheduled appearance on Capitol Hill.

They include renewed pressure from the West Virginia attorney general on Mylan; a news story that Bresch's mother had led an "unprecedented effort" to push states to require their schools to buy products such as EpiPens; a Senate committee's request that federal health regulators probe rebate practices for EpiPens, and an analysis that shows that Medicare Part D spending on EpiPens grew by 1,151 percent since 2007 even as the number of Part D users of the devices grew by much less.

The developments are just the latest possible hits to Mylan, which since August has drawn intense fire from consumers and elected officials for hiking the price of EpiPens more than 500 percent in recent years.

Bresch is set to testify Wednesday before the House Oversight and Government Reform Committee, whose hearing was prompted by the outpouring of outrage over EpiPen prices.

In premarket trading Wednesday, Mylan's stock was down 0.46 percent.

STAT, a health-care news site, reported Tuesday afternoon that an advanced copy of Bresch's testimony includes the statement, "Looking back, 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 [list price] or more."

"We never intended this," Bresch's statement says, according to STAT.

The auto-injector EpiPen devices are used to treat a potentially fatal allergic reaction known as anaphylaxis by giving users a dose of the drug epinephrine. While a two-pack of EpiPens retails for more than $600, doctors often urge people with allergies or their parents to buy multiple sets of auto-injectors for their homes, schools, offices or cars. Experts say the devices likely cost less than $30 to make.

Before the STAT report, West Virginia Attorney General Patrick Morrisey's office said he asked a court to enforce a subpoena against Mylan as part of his ongoing probe "into the skyrocketing price of its EpiPen."

The office said Mylan initially agreed to cooperate with the probe, "but since has failed to respond to the majority of the subpoena."

"The Attorney General's subpoena also inquires about rebates Mylan paid to participate in the state's Medicaid program," Morrissey's office said. "Specifically, it cites public reports suggesting Mylan paid rebate amounts typically associated with 'non-innovator' drugs, even though brand-name drugs like the EpiPen generally pay higher, 'innovator' drug rebates."

"The petition suggests such conduct, if proven, could subject Mylan to a potential Medicaid fraud action under state law," the office said.

A Mylan spokeswoman told CNBC: "Mylan has received an inquiry and request for information from the West Virginia Attorney General relating to EpiPen Auto-Injector. Mylan has been cooperating and continues to cooperate by providing information in response to the AG's inquiry."

Mylan operates a manufacturing plant near Morgantown, West Virginia.

Bresch's father is Democratic U.S. Sen. Joe Manchin, who previously served as West Virginia's governor. Attorney General Morrisey is a Republican.

West Virginia Attorney General targets Mylan

Manchin's wife Gayle, Bresch's mother, became head of the National Association of State Boards of Education in 2012. USA Today reported Tuesday that in December 2012, that association launched an "epinephrine policy initiative" aimed at helping "state boards of education as they develop student health policies regarding anaphylaxis and epinephrine auto-injector access and use," according to a press release cited by the newspaper.

"It was the first time the group had addressed food allergies as policy despite its own admission that it had been a growing issue since about 2000," the paper reported.

"The association's move helped pave the way for Mylan Specialty, maker of EpiPens, to develop a near monopoly in school nurses' offices," USA Today said. "Eleven states drafted laws requiring epinephrine auto-injectors. Nearly every other state recommended schools stock them after what the White House called the 'EpiPen Law' in 2013 gave funding preference to those that did."

A Mylan spokeswoman told CNBC, "We have ... demanded a retraction by USA Today."

"The USA Today story is factually inaccurate in its core premise, as well as in numerous other assertions," she said.

"It's also important to note that the article incorrectly states, 'Then, as now, EpiPen was about the only auto-injector for the drug epinephrine,' " the spokeswoman said. In fact, she added, "There have been a number of epinephrine auto-injectors (EAIs) that have come on the market over the years, including Adrenaclick, Twinject and Auvi-Q. The FDA's online drug database includes a listing of all approved EAIs. Also, Mylan did not author any anaphylaxis guidelines for NASBE or any other entity."

"We stand by our story," USA Today reporter Jayne O'Donnell told CNBC.

Later Tuesday, Joe Manchin's Senate colleagues, Orrin Hatch, R-Utah, and Charles Grassle, R-Iowa, and other members of the Finance Committee, wrote the inspector general of the U.S. Health and Human Services Department to ask for a review of questions about controls that are supposed to ensure that drugmakers pay appropriate rebates to the government-run Medicaid health coverage program.

The request relates to concerns raised that the classification of EpiPens as a generic for Medicaid rebate purposes means that protections against inflation that are applicable to brand-name drugs would not insulate Medicaid from Mylan's price hikes.

Mylan's spokeswoman said the company "has previously stated that the EpiPen Auto-Injector meets the definition of 'non-innovator' drug in the Medicaid rebate law."

"EpiPen Auto-Injector has been classified as a non-innovator since long before Mylan acquired the product. Mylan's classification of EpiPen Auto-Injector as a non-innovator drug is consistent with longstanding written guidance from the federal government," the spokeswoman said.

The Kaiser Family Foundation released an analysis that examined spending by the federal Medicare Part D prescription drug benefit coverage program on EpiPens since 2007.

As of that year, EpiPens were selling for $94 at retail, but Medicare Part D paid less than that: $71. Spending for EpiPens for enrollees in Part D that year were $7 million, according to Kaiser.

But by 2014, in the midst of ongoing steep price hikes by Mylan, Medicare spent $87.9 million for EpiPens, at an average price of $344.

That represents an increase in overall EpiPen spending of 1,151 percent, Kaiser noted.

However, the number of EpiPen users in Part D had grown by just 164 percent — from 80,000 users in 2007 to 211,000 in 2014, Kaiser's analysis found.

At the same time, average out-of-pocket spending by Part D enrollees on EpiPens almost doubled, from $30 to $56, among those enrollees who did not receive low-income subsidies from the program.

Kaiser noted that because its analysis is based on data that is only available up to 2014, "our estimates do not reflect additional EpiPen price increases that have occurred since then." Since 2014, EpiPen's price has risen by almost 75 percent.

Mylan's spokeswoman said, "As noted by the authors themselves, the analysis in the recent report issued by the Kaiser Family Foundation does not account for rebates issued to the Medicare Part D plans."

"As aligned with standard industry practice, we pay rebates to allow for patient access to EpiPen Auto-Injector at the lowest possible cost to patients," the spokeswoman said. "Between 2010 and 2015, our rebates to Medicare Part D plans increased by 440 percent, which would significantly reduce the increase hypothesized by the report. Given their significance, any analysis that does not take these specific rebates into account is fundamentally flawed."

Mylan also said that the analysis assumes that each patient receive a single 2-pack of EpiPens, not taking into account instances in which a patient would have gotten multiple packs.

The spokeswoman said that the pending launch of a generic version of EpiPen will cut the wholesale acquisition cost in half, to $300, which "will directly benefit Medicare Part D patients."