America’s Allergic Reaction to Mylan CEO Heather Bresch’s Insatiable Greed
Frederick Daso
MBA Candidate at Harvard Business School | Senior Investor & Head of Platform at GC Venture Fellows
If there is a cure for price gouging emergency medication, let it not be delivered in the form of an EpiPen.
The maker of these allergy reversing, life-saving devices, Mylan, is in hot water after ratcheting up the price from $94 in 2007 to $608 today. Many are wondering how this exorbitant price increase can be justified to the users of this product.
Mylan’s CEO, Heather Bresch, offered little rationale in her attempts to quell the outrage surrounding EpiPen’s current cost. Bresch has tried to push the blame on everyone else within the healthcare industry, saying “wholesalers, retailers, and pharmacy benefit managers” are also in part responsible for the rise in the sale price of the emergency allergy medication.
If only her claims merited our belief. The more likely story behind the outrageous pricing of the EpiPen is tied to Mrs. Bresch’s compensation as the CEO of Mylan. In the same time period that the cost of the treatment soared (2007 to now), Mrs. Heather Bresch’s salary increased by nearly 600%, from $2,453,456 to $18,931 068. Her fellow executives’ compensation displays a similar trajectory as well.
In 2015, President Rajiv Malik's base pay increased 11.1 percent to $1 million, and Chief Commercial Officer Anthony Mauro saw his jump 13.6 percent to $625,000. – BEN POPKEN, CNBC NEWS
How are so few rewarded so much at the expense of so many?
If only her desire to create affordable allergy injections wasn’t dwarfed by her insatiable, blatant greed.
Now, we are left with two questions: One, do pharmaceutical companies have an inherent social responsibility to produce affordable medicinal products and services? Two, should the federal government step in to prevent price gouging of medical products within the pharmaceutical industry to protect consumers and ensure access to life-enhancing care?
Regarding the first question, a strong case can be made for pharmaceutical companies having a sense of goodwill to provide affordable medical products. We live in a country where many cannot afford the cost of comprehensive health insurance, let alone expensive allergy medication. There are about 33 million Americans who go uninsured every year due to rising healthcare costs, and in extreme cases, up to 45,000 Americans will die annually from preventable causes of death due to a lack of health insurance. If pharmaceutical companies were to make a greater effort to consciously sell their life-preserving products with affordability as a central concern, more Americans would be able to live more rich and prosperous lives without much additional cost.
How are so few rewarded so much at the expense of so many?
Considering the second question, the federal government has not intervened in regulating the pharmaceutical markets. There’s good reasons for lack of involvement, such as allowing capitalistic markets to operate in a laissez-faire fashion (without interference from the government), companies can be in pure competition with one another, resulting in lower prices for the consumer as a whole, etc. However, firms within the pharmaceutical industry can engage in price gouging practices like in our current case, or even worse, become monopolies or duopolies that would stifle and further competition from arising in said industry, which would be to the detriment of the customer. Our government needs to put consumers first when it comes to purchasing emergency life-saving treatments such as EpiPen.
No one should die of an allergic reaction because they could not fork over $608.
If only there was an EpiPen for curing greed – maybe Heather Bresch’s conscience could be saved.
#StudentVoices
Product Specialist - Manufacturing at BlackHawk Manufacturing Group
8 年What happens when the public allows, enables, encourages and in some cases idolize gross wealth. At some point of riches you become economically detrimental. For what? Bragging rights?
VP, Northeast Regional Sales Leader | NMLS #455476 | Mutual of Omaha Mortgage NMLS#1025894
8 年I completely agree with Mrs. Mary Van der Linden.
Senior Media Business Development and Communications Strategist
8 年Too many have too little. This uncontrollable greed is the death knell of capitalism as we know it.
I don't really want to defend Mylan however, just like the entire pharma industry they are a for profit corporation. Of course the pharma industry faces a much larger moral question, and obligation, than most other corporations. EpiPen pricing has clearly past the tipping point of public acceptability. The expressed outrage is justifiable and good. Mylan's CEO Heather Bresch deserves to take the criticism. As CEO the buck stops at her desk. That said, Mylan is not the only company involved in setting the price. Your insurance company, employer (if a self-insured company) and providers play a role in price negotiation. Why the large price increase? I don't know. Personal greed? That may be part of it but the personal gain is probably more tied to the obligation to maximize return to the investors. (By the way, check your 401K holdings) Obamacare? Probably to some extent as an unintended consequence. My personal speculation is it was about a business strategy for introduction of their generic version. Once introduced many consumers will move to the lower cost generic. In order to preserve overall revenues the EpiPen brand would need to first rise to a price high enough to "justify" a generic price around 50% less than the EpiPen. I know none of this is any consolation to all who rely the EpiPen. Now, here is a really cold question... If the EpiPen saved your life, or that of a loved one, was the $600 a good investment? (Before you stone me... I am not unsympathetic. My Wife and I are caregivers for our oldest daughter who is disabled from an anoxic brain injury. She is on intrathecal Baclofen treatment to control her spasticity which in turn enables her to sit in a wheelchair. Without it she would most likely have a bed ridden life of pain and uncontrolled muscle contractions. The cost of treatment is over $20,000 per year. Thank God for insurance!) The answers do not lie in more government control of the healthcare system nor government price fixing and regulation. They've already demonstrated the lack of talent and abilities to run or fix anything. The VA is a case in point. It's "problems" are nothing new, it has been seriously screwed up since WWI (based on my Grandfather's personal experiences). I do believe the answers lie in the free market. It lies with corporations to find leaders that have the moral compass and intestinal fortitude to do the morally right thing. It lies with investors willing to accept a lower return in favor of a morally sound decision. It lies with us to call attention to "bad behavior" and when possible express our dissatisfaction with our wallet. The healthcare system does need positive change. It is riddled with inefficiencies, fraud, waste and stifling regulations but, that is completely different rant that I will skip for now.