WHEN: Today, Friday, March 3rd
WHERE: CNBC's "Power Lunch"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Mylan CEO Heather Bresch on CNBC's "Power Lunch" (M-F, 1PM-3PM ET) today, Friday, March 3rd. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000598236 and http://video.cnbc.com/gallery/?video=3000598235.
All references must be sourced to CNBC.
SULLIVAN: MICHELLE, THANK YOU. IT CERTAINLY HAS BEEN A BIG WEEK IT'S BEEN A BIG YEAR FOR PHARMACEUTICALS. ON TUESDAY BEFORE A JOINT SESSION OF CONGRESS, THE PRESIDENT PROMISED TO BRING DOWN DRUG PRICES IMMEDIATELY. THE FOLLOWING DAY PHARMA GIANT MYLAN REPORTED A BLOWOUT QUARTER, STOCKS SURGED. IT UPPED ITS PROFIT OF REVENUE OUTLOOK THAT YEAR THE SAME DAY, 20 MORE STATES JOINED IN A SWEEPING LAWSUIT AGAINST MYLAN AND OTHER GENERIC DRUG MAKERS, ACCUSING THEM OF COLLUDING ON DRUG PRICES. ALL THIS FOLLOWS I GUESS YOU WOULD CALL IT A TOMULTUOUS SUMMER FOR MYLAN STOCK TOOK A BIG HIT BACK IN AUGUST WHEN THE COMPANY RAISED THE PRICE OF EPI-PEN . HEATHER BRESCH THE CEO OF MYLAN JOINS US EXCLUSIVELY. I WOULD SAY IT'S BEEN A FAIRLY EVENTFUL 12 MONTHS.
BRESCH: I WOULD AGREE WITH YOU.
SULLIVAN: RARE UNDERSTATEMENT. LAST TIME WE SPOKE IS IT FAIR TO SAY THERE WAS FIRESTORM AROUND YOUR COMPANY AND YOU ABOUT EPI-PEN. A LOT HAS HAPPENED YOU HAVE BEEN BEFORE CONGRESS WHERE DO WE STAND WITH EPI-PEN PRICING RIGHT NOW AND TRANTRANSPARENCY IN THE INDUSTRY?
BRESCH: SO AS YOU SAID A LOT HAS HAPPENED SINCE AUGUST AND I WOULD SAY A COUPLE OF VERY IMPORTANT THINGS HAVE HAPPENED I BELIEVE OUR CONVERSATION LAUNCHED A VERY IMPORTANT NATIONAL CONVERSATION AROUND HEALTH CARE AND THE SUPPLY CHAIN AND HOW PHARMACEUTICAL PRICING WORKS. I SEE THAT CONVERSATION CONTINUING TO BROAD AND EXPAND, TO BE MUCH MORE INCLUSIVE ABOUT HOW IT WORKS. AND I THINK THAT'S THE FIRST STEP IN TRYING TO GET TO A SOLUTION. I THINK, IMPORTANTLY, ON EPI-PEN, WE FIXED EPI-PEN, WE INTRODUCED A GENERIC, $300, WE CUT THE PRICE IN HALF. THERE WAS A LOT OF CONVERSATION ABOUT THE COMPETITIVE DYNAMICS OF EPI-PEN. A COMPETITOR AUVI-Q CAME BACK ON TO THE MARKET AT $4,500. SO, YOU KNOW, WE TOOK ACTION WITH EPI-PEN. IT'S HALF THE PRICE. WE'RE MAKING SURE EVERYONE WHO NEEDS ONE HAS ONE. BUT, IMPORTANTLY, IT SHOWED THAT THE SYSTEM IS BROKEN.
SULLIVAN: AUVI-Q THE COMPETITOR THAT'S OUT IT'S $4500 BUT THEY'RE TRYING A BIZARRE, INTERESTING, WHATEVER YOU WANT TO CALL IT, PRICING STRATEGY. GIVING IT OUT FREE FOR SOME PEOPLE BUT ITS $4,500 TO THE INSURANCE COMPANIES. WHAT DO YOU MAKE OF THAT PRICING STRATEGY? HOW MIGHT THAT IMPACT EPI-PEN PRICING?
BRESCH: ALL I CAN SAY IS THAT THEIR LIST PRICE IS $4,500. WHATEVER STRATEGY THEY'RE TRYING TO PUT IN PLACE, ALL I CAN SPEAK TO IS THAT IT SHOWS IT INCENTIVIZES HIGHER LIST PRICES, BECAUSE EVERYONE IS TAKING PERCENTAGES OFF THAT LIST PRICE AND THE LIST PRICE IS ABSORBING WHATEVER IS HAPPENING THROUGH THE ENTIRE SUPPLY CHAIN.
SULLIVAN: YOU BLAME THE PBMs, PHARMACY BENEFIT MANAGERS WHO NOBODY EVER HEARD OF BEFORE A YEAR AGO UNLESS YOU WERE IN THE HEALTHCARE BUSINESS. HOW MUCH ARE THE INSURANCE COMPANIES ALSO TO BLAME? AS YOU SAID IT USED TO BE, EVEN A FEW YEARS AGO, DEDUCTIBLES WERE PRETTY LOW. SULLIVAN FAMILY AT $500. YOU COULD COVER THE REST. A LOT OF OUR VIEWERS PROBABLY HAVE DEDUCTIBLES IN THE THOUSANDS OF DOLLARS NOW. WHEN THEY GO TO BUY EPI-PEN, WAIT A MINUTE, I HAVE TO PAY $600 OUT OF POCKET? WELL, YOUR DEDUCTIBLE IS UP. HOW MUCHES HAS THE CHANGE IN INSURANCE DEDUCTIBLES IMPACTED PRICING AND TRANSPARENCY ON PRICING?
BRESCH: THOSE ARE YOUR WORDS, NOT MINE. I DIDN'T BLAME PBMs. EVERYONE IS BRINGING VALUE IN THE CHAIN. WHAT I SAID IS THAT NO ONE -- THERE IS NO TRANSPARENCY AS TO WHO IS PART OF THE SUPPLY CHAIN AND HOW IT WORKS. TO YOUR POINT, THOUGH, IMPORTANTLY, I BELIEVE BENEFIT DESIGN IS ABSOLUTELY DRIVING THE PROBLEM THAT THE PATIENT AT THE PHARMACY COUNTER IS HAVING.
SULLIVAN: WHAT THE VIEWERS HAVE TO PAY OUT OF POCKET.
BRESCH: RIGHT AND I WOULD SAY THE VIEWERS WATCHING THIS THAT HAVE A $5,000, $6,000 DEDUCTIBLE, THEY LOOK UNINSURED UNTIL THEY HIT $5,001.
SULLIVAN: CASH BUYERS, EFFECTIVELY. AND THEY WEREN'T FIVE YEARS AGO
BRESCH: RIGHT. WE WERE DOWN TO 1% TO 2% OF THIS COUNTRY BEING CASH PAYING. WE NOW HAVE 50% OF AMERICANS THAT LOOK LIKE A CASH-PAYING CUSTOMER UNTIL THEY HIT THEIR DEDUCTIBLE. THEY WALK IN, LOOK UNINSURED, BEING EXPOSED TO THIS LIST PRICE. WE'VE ASKED CONSUMERS TO GET ENGAGED WITHOUT GIVING THEM ANY INFORMATION OR THE TOOLS NECESSARY. SO, TRANSPARENCY IS ONE PIECE OF IT. MAKING PHARMACEUTICALS WORK LIKE A MARKET IS THE OTHER. OVER THE COUNTER. YOU WALK INTO A PHARMACY, YOU CHOOSE THE BRAND, GENERIC. YOU CAN SHOP. WE'RE THE BEST SHOPPERS IN THE WORLD. FOR PRESCRIPTION DRUGS, WE GIVE YOU NO INFORMATION. WE'RE GIVING THE MOMS, CEOs OF HOUSEHOLDS ZERO INFORMATION AND THEY'RE MAKING HUGE DECISIONS ON SIGNIFICANT DOLLARS, TO YOUR POINT.
SULLIVAN: DO YOU THINK WITH THIS NEW ADMINISTRATION, WHICH HAS TRIED TO ROLLBACK EPA REGULATIONS, DO YOU THINK THIS ADMINISTRATION WILL ROLLBACK THE PROCESS AND MAYBE THE COST OF DRUG APPROVAL FROM THE FDA? ARE YOU OPTIMISTIC AT ALL?
BRESCH: SO I THINK YOU HAVE TO LOOK AT THESE AS TWO DIFFERENT THINGS. I AM OPTIMISTIC WITH THIS ADMINISTRATION. BUT I DON'T WANT TO MISGUIDE ANYONE. MORE FDA APPROVALS IS NOT GOING TO CHANGE THE DYNAMIC FOR THAT PATIENT AT THE PHARMACY COUNTER.
SULLIVAN: HOW ABOUT FASTER, CHEAPER?
BRESCH: THE GENERIC SIDE HAS ALWAYS BEEN VERY COMPETITIVE. THAT SUPPLY AND DEMAND HAS WORKED ON THE GENERICS WITH RETAIL PHARMACY. THE PROBLEM IS THAT THAT PATIENT DOESN'T FEEL THE DIFFERENCE. WHAT I WOULD SAY ABOUT THIS ADMINISTRATION, WHAT I AM OPTIMISTIC ABOUT, TO YOUR POINT, TO HIS SPEECH ON TUESDAY NIGHT, HE REFERENCED ARTIFICIALLY HIGH PRICES AND WE NEED TO DO SOMETHING ABOUT IT. I THINK THIS ADMINISTRATION IS SOLUTION ORIENTED ADMINISTRATION AND THIS IS A HUGE PROBLEM. AS HE SAID, IT'S COMPLICATED. SO, IT'S GOING TO HAVE TO TAKE BOLD ACTION TO BE ABLE TO REALLY LOOK AT THIS HOLISTICALLY.
SULLIVAN: AND I THINK WHAT'S INTERESTING THERE'S A GRAPHIC ON THE SCREEN RIGHT NOW. IF YOU'RE LISTENING ON THE RADIO I'LL EXPLAIN BASICALLY YOU STOCK IS UP 22% SINCE PRESIDENT TRUMP WAS ELECTED. I THINK A LOT OF VIEWERS AND YOUR INVESTORS ARE PROBABLY CONFUSED. WAIT A MINUTE. I'VE GOT A PRESIDENT WHO SAYS HE'S GOING TO BRING DOWN DRUG PRICES YET YOUR STOCK PRICE HAS DONE WELL, ONE OF THE BEST PERFORMING STOCKS OUT THERE, ESPECIALLY IN YOUR SPACE. HOW DO YOU SQUARE THOSE TWO?
BRESCH: BECAUSE WE ARE PRIMARILY A GENERIC COMPANY. WE HAVE OVER 630 PRODUCTS HERE IN THE UNITED STATES. LAST YEAR, WE SOLD 22 BILLION DOSES. ONE OUT OF EVERY 13 SCRIPTS IN THE UNITED STATES IS FILLED WITH A MYLAN MEDICINE, MORE THAN THE SEVEN LARGEST PHARMACEUTICAL COMPANIES COMBINED. YOU LOOK AT WE ARE PART OF THE SOLUTION. GENERICS ARE PART OF THE SOLUTION AND MYLAN'S ROLE WITHIN THE UNITED STATES AS WELL AS THE GLOBAL HEALTH CARE IS A HUGE PART OF BRINGING HEALTH CARE DOWN.
SULLIVAN: YOU DON'T FEEL UNDER THREAT AS MUCH AS MAYBE SOME OF THE BRANDED PHARMACEUTICAL COMPANIES SHOULD?
BRESCH: 90% OF PRESCRIPTIONS DISPENSED ARE GENERIC SO WE ARE ABSOLUTELY. WHERE WE NEED TO FIX IT IS THAT PATIENT EXPERIENCE AT THE PHARMACY COUNTER. THAT'S WHERE THE SYSTEM NEEDS TO CHANGE. TO YOUR POINT, MYLAN, WEDNESDAY WE WERE ABLE TO HAVE AN INVESTOR DAY AND REALLY AN OPPORTUNITY -- OVER THE LAST THREE YEARS OUR COMPANY HAS ALMOST DOUBLED. LOOK AT THE GLOBAL FOOTPRINT WE HAVE TODAY OVER 165 COUNTRIES. 50% OF OUR REVENUES ARE OUTSIDE THE UNITED STATES. AND INSIDE THE UNITED STATES, WE HAVE AN EXTREMELY DIVERSIFIED AND DIFFERENTIATED PORTFOLIO. WE DON'T HAVE ONE PRODUCT THAT MAKES UP MORE THAN 5% OF REVENUE.
SULLIVAN: WHAT DO YOU THINK IS GOING ON THEN WITH YOUR COMPETITORS? I MEAN YOU FAR OUT PERFORM THEM. TEVAS GOT ISSUES PERRIGO HAS ISSUES ENDO PHARMACEUTICALS IS THE WORST PERFORMING STOCK IN THE S&P 500 OVER THE PAST YEAR BY A LOT. SO IF THE SCENARIO IS SO GOOD FOR GENERICS, WHAT'S WRONG WITH THEM?
BRESCH: SO, LOOK, I THINK THAT IF YOU'VE GOT A NICHE PORTFOLIO OR JUST OPERATING IN ONE COUNTRY, LIKE THE UNITED STATES, YOUR ABILITY TO ABSORB THE VOLATILITY IS MUCH LESS. MYLAN, OUR FOUNDATION IS SO DEEP SO STRONG OVER 55 YEARS OF PROVIDING ACCESS TO MEDICINE, WE'VE BEEN BUILT TO NOT ONLY HAVE HUGE VOLUME, CAPACITY TO MAKE -- 60 BILLION DOSES ACROSS THE GLOBE WE SOLD LAST YEAR. THAT ABILITY TO SUPPLY, THE CAPACITY, THE HIGH-QUALITY MEDICINE NEEDED AND MAKE IT ACCESSIBLE TO PEOPLE IS WHAT I THINK IS RESONATING. AND NOT ONLY DO WE HAVE A DIFFERENTIATED AND DIVERSIFIED PLATFORM, WE'RE ACROSS GENERIC BRANDS AS WELL AS OVER-THE OVER-THE-COUNTER MEDICINE. WE'RE ABLE TO BRING AN OFFERING TO THE MARKET, TO EVERY LOCAL MARKET WE OPERATE IN, IN A VERY, VERY DIFFERENT WAY. IT'S COMPELLING. PEOPLE ARE STARTING TO UNDERSTAND, ALL GENERIC COMPANIES AREN'T CREATED EQUALLY ALL PHARMACEUTICAL COMPANIES AREN'T CREATED EQUALLY. WE BELIEVE MYLAN HAS A UNIQUE GLOBAL PLATFORM THAT RIGHT NOW IS BEING ABLE TO SHINE.
SULLIVAN: WHAT TAX RATE? A LOT OF TALK ABOUT CORPORATE TAX RATE YOU GUYS INVERTED TOOK SOME HEAT FOR IT. YOUR FATHER'S A SENATOR. WHAT TAX RATE WOULD MAKE YOU COME BACK TO AMERICA? IS THERE ANY TAX RATE WHERE MYLAN WOULD SAY LET'S MOVE THE TAX HEADQUARTERS BACK TO PITTSBURGH?
BRESCH: AS YOU KNOW, WE WERE OUT THERE, FIGHTING FOR TAX REFORM YEARS AGO. WE WERE THE LAST PERSON IN OUR INDUSTRY THAT WAS U.S. BASED. WE SAID IT'S NOT A LEVEL PLAYING FIELD. WE CAN'T COMPETE. WE ACTUALLY PERVERSELY – THE ONLY WAY WE CAN GROW IN THE U.S. IS TO INVERT. SO WE DID.
SULLIVAN: HOW ABOUT ISRAEL, IRELAND --
BRESCH: EVERYBODY IS OUTSIDE THE UNITED STATES. WE LOOKED AT THAT OPPORTUNITY TO BE ABLE TO BE COMPETITIVE. HERE IS WHAT I WOULD TELL YOU. WE DIDN'T LOSE SIGHT OF THE ROLE WE PLAY IN THE UNITED STATES. 80% OF THE DOSES WE SELL IN THE UNITED STATES, WE MAKE IN THE UNITED STATES WE'VE GOT ONE OF THE LARGEST FACILITIES IN WEST VIRGINIA. WE HAVE GROWN SINCE WE INVERTED HERE IN THE UNITED STATES. WE WENT FROM 4,000 EMPLOYEES TO 7,000 EMPLOYEES. WHAT I CAN TELL YOU IS WE'RE CONTINUING TO DO OUR PART HERE IN THE UNITED STATES.
SULLIVAN: HEATHER BRESCH, CEO OF MYLAN, THANK YOU FOR JOINING US.
About CNBC:
With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, and CNBC World, CNBC is the recognized world leader in business news and provides real-time financial market coverage and business information to approximately 381 million homes worldwide, including more than 94 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 15 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 7:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC at night features a mix of new reality programming, CNBC's highly successful series produced exclusively for CNBC and a number of distinctive in-house documentaries.
CNBC also has a vast portfolio of digital products which deliver real-time financial market news and information across a variety of platforms including: CNBC.com; CNBC PRO, the premium, integrated desktop/mobile service that provides live access to CNBC programming, exclusive video content and global market data and analysis; a suite of CNBC mobile products including the CNBC Apps for iOS, Android and Windows devices; and additional products such as the CNBC App for the Apple Watch and Apple TV.
Members of the media can receive more information about CNBC and its programming on the NBCUniversal Media Village Web site at http://www.nbcumv.com/programming/cnbc.
For more information about NBCUniversal, please visit http://www.NBCUniversal.com.