Mylan Response on EpiPen Doesn’t Satisfy Senate Chairman

(Bloomberg) -- U.S. Senate Judiciary Chairman Chuck Grassley said the seven-page response by drugmaker Mylan NV to his questions about significant EpiPen price hikes is incomplete and not sufficient.

“I appreciate the information provided but it’s an incomplete response and wouldn’t satisfy my constituents who are upset about the EpiPen price increases,” Grassley, an Iowa Republican, said Friday in a statement. “It doesn’t provide the full picture that I requested, and it doesn’t answer all of my questions.”

Mylan sent Grassley the letter on Sept. 8. The company declined to comment beyond referring to the letter.

Grassley said Mylan didn’t say much about how it decided to raise prices or describe any product features or value that the company says helped justify the price hikes. The auto-injector to treat allergic reactions cost $57 a shot when Mylan purchased it in 2007, but a series of price increases has raised the cost to more than $600 for a pair of EpiPens.

“The company says a large number of patients have benefited from patient assistance programs but the outrage Congress is hearing seems to indicate that a lot of people aren’t seeing those benefits,” he said. “It may be that the newly announced expanded patient assistance program will make a difference, but that’s to be determined.”

Congressional Criticism

Grassley’s response is the latest rub against the drugmaker, which has a legal address in the Netherlands and is run from Canonsburg, Pennsylvania. It has faced strong criticism from lawmakers and Democratic presidential nominee Hillary Clinton for increasing the price of the auto-injector. Congressional hearings remain a possibility, and on Thursday two senators announced they were launching an inquiry into the company’s conduct.

In its unsigned letter, Mylan didn’t directly answer Grassley’s question about how it set EpiPen’s price. It said pricing for drugs is “a complex and difficult endeavor” and the result of market conditions, the cost of goods’ negotiations with distributors, and a company’s goal to increase revenue for research and patient assistance. Mylan -- predominantly a maker of generic drugs -- said price increases have produced $4 billion for research and development since 2008. Mylan spent $672 million on R&D last year, according to the company’s earnings statement.

Generic Version

“We have been asked: ‘Why are you not lowering the list price of EpiPen?’” the company wrote. “The short answer is this: Mylan assessed available options under the existing pharmacy billing models to achieve the goal of delivering cost savings for patients with high out-of-pocket expenses and concluded that offering a generic version of EpiPen Auto-Injector would yield significantly greater and more sustainable cost savings for patients than a reduction” in the list price of the branded version would.

The drugmaker said that after acquiring the drug, it discovered public awareness of allergic reactions and administering the EpiPen was low. Its response was to invest $1 billion to improve education and access, and it redesigned the product in 2009. Since then, prescriptions have doubled to 4 million. 

Mylan also pointed to its collaboration with patient advocacy groups and school districts, where 700,000 free EpiPens valued at more than $80 million have been distributed in the U.S. That program is now being investigated by New York Attorney General Eric Schneiderman.

Patients’ Payments

The company told Grassley that 85 percent of patients don’t pay the company’s list price, instead paying less than $100 out of pocket, with most paying just $50. Still, “cost should not be a barrier to access,” Mylan said. The company cited its recent decisions to increase a program benefit to $300 from $100 and introduce a generic version of the auto-injector. The company predicted 85 percent of prescriptions will shift to the generic.

Its marketing budget was $98 million last year and $43 million for the first half of 2016, the company said in response to a question.

Grassley noted he also wants to know how much taxpayers are paying for EpiPens through Medicaid, Medicare and other government-funded programs.

“I’m interested in whether the state of Iowa overpaid for the product, the way Minnesota might have. I also continue to look forward to a written response from the Food and Drug Administration on whether competition to the EpiPen is in the pipeline there.”

Grassley said he will continue to ask questions and work on bills aimed at bringing more generic competition to the market, but he didn’t commit to a hearing on EpiPen pricing. Other committees also are looking into the issue on both sides of the Capitol, including the Senate Special Committee on Aging chaired by Susan Collins of Maine and the Permanent Subcommittee on Investigations chaired by Senator Rob Portman of Ohio, which said Thursday that it’s opening a preliminary inquiry into Mylan’s conduct.

The company’s price hikes have generated widespread condemnation from both sides of the aisle, although Senator Joe Manchin of West Virginia has praised his daughter, Mylan Chief Executive Officer Heather Bresch, as “generous.”

To contact the reporters on this story: Steven T. Dennis in Washington at sdennis17@bloomberg.net, Jared S. Hopkins in New York at jhopkins38@bloomberg.net. To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, Drew Armstrong at darmstrong17@bloomberg.net, Stephen West