Saturday, August 27, 2016

The Public Gets It on EpiPen Price Gouging

Mylan CEO Heather Bresch said in her CNBC interview on her company's EpiPen price increases:

"I understand better than anyone that facts are inconvenient to headlines."  
That's pathological level spin and complete horse hockey.  Bresch completely ducked the greed that underlies the story.

As for facts here are a few.  NBC News reported one mother's experience with EpiPen pricing:

In 2008, Bush said the price was $145.99. In 2010, it was $220.99, then jumped to $649.99. This year her pre-insurance costs were $1,118.08.
The fact is EpiPen's price rose by several orders of magnitude, as did her CEO pay.  NBC News reported:

Proxy filings show that from 2007 to 2015, Mylan CEO Heather Bresch's total compensation went from $2,453,456 to $18,931,068, a 671 percent increase. During the same period, the company raised EpiPen prices, with the average wholesale price going from $56.64 to $317.82, a 461 percent increase, according to data provided by Connecture.
Here's the concession President Obama, White House Health reformer Nancy-Ann DeParle and Senator Max Baucus wrung from big pharma in 2009:

The pharmaceutical industry maintained that proper use of medicines can be one of the most effective ways to achieve better health outcomes and reduce costs.

The Pharmaceutical Research and Manufacturers of America (PhRMA) said in a statement Monday that non-adherence to prescribed medicines has been estimated to cost $100 billion to $300 billion annually, including costs from avoidable hospitalizations and nursing home admissions.

Addressing this issue is part of a quality-focused way to lower healthcare cost growth, the trade group said.

"The coalition also recognizes the importance of encouraging medical innovation as a key element in both improving patient health and reducing the growth of overall health costs," PhRMA president and CEO Billy Tauzin, said in a statement.
The Obama team dangled a $2,500 annual savings in health care costs in 2009.  It didn't happen.

The average general deductible for workers with single coverage totaled $1,077 this year (2015), compared to only $303 in 2006. That deductible has climbed nearly seven times faster than wages, on average, over the past five years. 

CNBC's Brian Sullivan asked Mylan's CEO why are people paying more for pharmaceuticals and insurance is covering less.  Simple:  It was the design of PPACA, widely known as Obamacare, where employers and Uncle Sam would shift the growing burden of health care costs to the individual. Seven years ago I wrote the 30,000 foot view of PPACA showed:

People having to buy insurance, which over time will shift greater and greater responsibility to the individual.
 It's come to pass.  I offered in early 2014:

(Employers) continue their longstanding practice of shifting responsibility and costs to employees.  For the individual rising deductibles and co-pays are a larger hurdle for using healthcare services.
CNBC's Sullivan reference people going bankrupt under healthcare and prescription drug costs, a predictable occurrence under health reform.

It;s not optics the public is livid about, it's experience.  The average worker's pay hasn't gone up enough to keep up with the additional healthcare cost burden under PPACA.  Greed was the implied foundation for PPACA and EpiPen is a window into that world.
In 2015, Mylan's profits from the sale of EpiPens rose to $1.2 billion.
As for CEO Health Bresch's shifting Mylan's "headquarters" overseas for tax reasons and lying about an MBA that she didn't finish, those are things Americans have come to expect from the executive suite and board room.  We've learned the last fifteen years:

1   Image is everything.  
2.  There are few limits on strategies that boost CEO incentive pay at the expense of workers or consumers.
3.  CEOs have adopted the language of politics to avoid responsibility and divert people from the question/issue at hand.
For Heather Bresch it doesn't hurt that her father is former Governor of West Virginia and a current U.S. Senator.  I wonder if one of his people coached her prior to her CNBC interview.  It was D.C. level slop.

Update:  ZeroHedge noted the Government-Corporate Monstrosity's tentacles in the EpiPen fiasco.