Pharmaceutical price gouging is a rare beast, in that its an utterly morally bankrupt activity taking place in full opinion of the public eye. Stimulated famous by the contemptuous Pharma-bro Martin Shkreli who infamously hiked the price of a drug used to treat a deadly parasitic infection by over 4, 000 percent it seems another company has been caught in the spotlight doing the same thing.
As has been extensively reported, Mylan Inc ., a manufacturer of life-saving EpiPens, recently raised the price of a two-pack of the anti-allergic devices from around $50 in 2007 to $608, triggering outrage across the US. The Ceo of Mylan, one Heather Bresch, was brought before Congress to testify why this price hike resulted, and she was caught lying under oath.
Under intense interrogation by House members, Bresch claimed that despite the charge increase, the company only builds $100 per two-pack, with the rest going to various middle men.
Thanks to the continued pressing of journalists at the Wall Street Journal, the company released a statement elucidate that they actually make a $160 profit , not $100. Their profit margin is hence 60 percent higher than they claimed it was, meaning that they somewhat pointlessly massaged the figures a bit.
As it turns out, the same reasons Mylan used the $100 figure is because they based their computations on a US tax rate of 37.5 percentage. As pointed out by the WSJ, this has nothing to do with reality. Mylan actually had a 7.4 percentage overall tax rate thanks to its wicked ways with several tax avoidance strategies, and there was no way this could be used to produce the $100 figure.
Clearly, the company and Bresch were writhing around for the purposes of the intense focus of the press, and they tried to wriggle out of their dilemma utilizing some old-fashioned, but actually poor, obfuscation. Making a healthy profit is all they are focused on , not the well-being of those that depend on EpiPens in their day-to-day lives.
As reported by ArsTechnica, Mylan made $671 million from EpiPen sales in the last year, which is a 900 percent increase from their 2008 profits. As a point of comparison, merely $ 1 of epinephrine is used in each individual auto-injection device, which itself expenses merely a few dollars to make.
Shkreli has predictably leapt to the defense of Mylan, blaming insurers for not encompassing the overall cost. He also assured that Mylan doesnt make that much money from EpiPens, but its now very clear that this is nonsense. In fact, Mylans earning margin on the EpiPen is 55 percentage, compared to its overall product profit margin of 20 percent.
Price gouging needs to be stamped out, aggressively and merely one of two US presidential candidates has vowed to act. Youll never guess which one.
[ H/ T: Wall Street Journal]