from the with-great-power-comes-great-responsibility dept.
Dr. Lowe, from In the Pipeline, writes about the company responsible for EpiPen, with quotes taken from The New York Times:
To understand Mylan’s culture, consider a series of conversations that began inside the company in 2014.
In (2014) meetings, the executives began warning Mylan’s top leaders that the price increases seemed like unethical profiteering at the expense of sick children and adults, according to people who participated in the conversations. Over the next 16 months, those internal warnings were repeatedly aired. At one gathering, executives shared their concerns with Mylan’s chairman, Robert Coury.
Mr. Coury replied that he was untroubled. He raised both his middle fingers and explained, using colorful language, that anyone criticizing Mylan, including its employees, ought to go copulate with themselves. Critics in Congress and on Wall Street, he said, should do the same. And regulators at the Food and Drug Administration? They, too, deserved a round of anatomically challenging self-fulfillment.
[...] As the article says, the company has decided that all the criticism is just the cost of doing business, and that their business is selling EpiPens at the highest cost they can. Bad press, upset parents, calls for them to change – none of that means much.
[...] Another thing that happens when you operate this way is that other government agencies get motivated to take a closer look at you. Last fall, Mylan paid $465 million to settle a misclassification problem that led to them getting higher rebates than they should have on EpiPens distributed through Medicare. But now it appears that there’s another $1.27 billion involved, according the the Health and Human Services Office of the Inspector General.
[...] As it happens, some of the company’s investors are trying to replace the board members, and just this morning, ISS (Institutional Shareholder Services) came down on their side. They’re recommending that shareholders vote against ten directors and against ratifying the compensation plans for the top executives. That’s a pretty big deal, since ISS handles the proxy voting for a lot of big investors and funds, and if given the go-ahead can vote things en masse. This, you can be sure, is a cause for concern in the upper suites, and it should be.
http://blogs.sciencemag.org/pipeline/archives/2017/06/12/mylan-begins-harvesting-the-crop-its-sown
https://www.nytimes.com/2017/06/04/business/angry-about-epipen-prices-executive-dont-care-much.html?_r=1
http://www.fiercepharma.com/pharma/mylan-investors-rally-votes-against-chairman-coury-and-his-97m-pay-package
Previous Coverage of Mylan and their Practices:
https://soylentnews.org/article.pl?sid=16/10/06/021244
https://soylentnews.org/article.pl?sid=16/08/23/0136202
Related Stories
EpiPen's price has ballooned about 400% since 2008, rising from about a $100 list price to $500 today. The EpiPen is one of the most important life-saving medical innovations for people with severe food allergies—which affect as many as 15 million Americans and 1 in 13 children in the United States. But its price has exploded over the last decade despite few upgrades to the product itself. The product's lack of competitors is likely a significant driver of the costs. [...] [The] EpiPen enjoys a near-monopoly on the market with annual sales of more than $1.3 billion and nearly 90% U.S. market share.
If you're going to overcharge the U.S. government, you don't want to get caught:
Mylan NV for years overcharged the U.S. Medicaid health program to buy its EpiPen shot, the government said Wednesday, despite being told that it needed to give bigger discounts under the law. From 2011 to 2015, the joint state-federal program for the poor spent about $797 million on EpiPens, the Centers for Medicare and Medicaid Services, or CMS, said in a letter Wednesday. That included rebates of about 13 percent, but the U.S. should have been getting a larger discount of at least 23.1 percent.
While the agency didn't say exactly how much Mylan had overcharged, the amount could be substantial. Under law, companies are required to give [Medicaid] back any price increases they take on brand drugs above the rate of inflation, in addition to the 23.1 percent discount. Mylan, after acquiring the drug in 2007, has raised the price of EpiPen by about sixfold, to over $600 for a package of two. The government has in the past "expressly told Mylan that the product is incorrectly classified," CMS said in the letter, which came in response to an inquiry by Congress. "This incorrect classification has financial consequences for the amount that federal and state governments spend because it reduces the amount of quarterly rebates Mylan owes for EpiPen."
Previously:
EpiPen's Price Increased 400% since 2008
AllergyStop: $50 EpiPen is Production-Ready but...
Martin Shkreli continues to run business from prison, report says
Martin Shkreli reportedly runs his pharmaceutical company from prison on a contraband smartphone. Shkreli continues to run the remains of the drug company that once earned him the title of most hated man in America, according to a story in the Wall Street Journal. He was convicted of securities fraud and conspiracy in 2017. He has served 16 months of a seven-year sentence in federal prison.
Shkreli is reportedly running Phoenixus AG, formerly known as Turing Pharmaceuticals. In 2015, when Shkreli was the CEO, Turing raised the price of the lifesaving drug Daraprim used by AIDS patients from $13.50 a pill to $750 a pill. The price hike sparked a public outcry.
The Journal says that Shkreli anticipates the company will grow more successful while he's in prison. He believes the company, of which he owns 40%, could be worth $3.7 billion by the time he gets out of prison.
On one recent phone call, Shkreli fired Phoenixus CEO Kevin Mulleady, the Journal reported. Shkreli reportedly later changed his mind, agreeing to suspend Mulleady rather than fire him.
Cartoon villain performance art.
Previously: Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Related: Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
Mylan Overcharged U.S. Government on EpiPens
EpiPen Maker is Facing Shareholder Backlash
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
Infamous ex-pharmaceutical executive Martin Shkreli is yet again in trouble with the Federal Trade Commission, which announced today that the convicted fraudster has failed to cooperate with the commission's investigation into whether he violated his lifetime ban from the pharmaceutical industry by starting a company last year called "Druglike, Inc."
[...]
At the center of the dispute is whether Shkreli's co-founding of Druglike runs afoul of his lifetime ban from the pharmaceutical industry, which was in response to Shkreli's infamous move to raise the price of the cheap, life-saving anti-parasitic drug, Daraprim, from $17.50 a pill to $750 a pill in 2015.
[...]
The FTC also noted in its court filing that Shkreli has so far failed to pay any of the $64.6 million in disgorgement he was ordered to pay alongside his lifetime ban.
Previously:
Martin Shkreli Launches Blockchain-Based Drug Discovery Platform
Martin Shkreli Accused of Running Business From Prison With a Smuggled Smartphone
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Related:
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
EpiPen Maker is Facing Shareholder Backlash
Mylan Overcharged U.S. Government on EpiPens
Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
In an effort to avoid being held in contempt of court, former pharmaceutical executive and convicted fraudster Martin Shkreli made an eyebrow-raising argument to a federal judge Friday, stating that his company Druglike, which he previously described as a "drug discovery software platform," was not engaged in drug discovery. As such, he argued he is not in violation of his sweeping lifetime ban from the pharmaceutical industry.
Last month, the Federal Trade Commission and seven states urged a federal judge in New York to hold Shkreli in contempt for allegedly failing to cooperate with an investigation into whether he violated the ban. The FTC said Shkreli failed to turn over requested documents related to Druglike and sit for an interview on the matter.
In the filing Friday, Shkreli claims that he responded to the FTC's requests "promptly and in good faith."
Previously:
FTC: Shkreli May Have Violated Lifetime Pharma Ban, Should be Held in Contempt
Martin Shkreli Launches Blockchain-Based Drug Discovery Platform
Shkreli Released From Prison to Halfway House After Serving <5 of 7 Years
Martin Shkreli Accused of Running Business From Prison With a Smuggled Smartphone
Sobbing Martin Shkreli Sentenced to 7 Years in Prison for Defrauding Investors
Martin Shkreli's $5 Million Bail Revoked for Facebook Post Seeking Hillary Clinton's Hair
Martin Shkreli Lists Unreleased Wu-Tang Clan Album on eBay
Martin Shkreli Convicted of Securities Fraud Charges, Optimistic About Sentencing
Martin Shkreli Points Fingers at Other Pharmaceutical Companies
Related:
"Pure and Deadly Greed": Lawmakers Slam Pfizer's 400% Price Hike on COVID Shots
U.S. Hospitals Band Together to Form Civica Rx, a Non-Profit Pharmaceutical Company
FDA Has Named Names of Pharma Companies Blocking Cheaper Generics [Updated]
EpiPen Maker is Facing Shareholder Backlash
Mylan Overcharged U.S. Government on EpiPens
Drug Firm Offers $1 Version of $750 Turing Pharmaceuticals Pill
(Score: 3, Insightful) by Mykl on Wednesday June 14 2017, @07:36AM (6 children)
Good to see that shareholders are finally taking a longer-term view on business, and are actually being prepared to challenge the leadership of some of these companies. Frankly, there need to be a few high profile (career) executions in order to send the message to the rest of the industry.
And to think, none of this might have been possible without Martin Shkreli...
(Score: 3, Interesting) by tfried on Wednesday June 14 2017, @09:58AM (1 child)
Of course we could also take a more cynical look at the issue:
A price-hike strategy is only going to work as long as there is no real competition. Once competitors will have cranked up their production, you'll once again have to compete on price and reputation. Wait - competing on reputation you say? Being the immoral bad guy is going to be a bit of a handicap, then, isn't it? So how do we fix that, let me think ... Right! We'll just side with the critics, help them succeed with their rebellion of the good against the evil, and we'll come out on top! Hooray for shareholder capitalism, the holy grail of opportunism.
(Score: 4, Insightful) by tfried on Wednesday June 14 2017, @01:29PM
Or in yet other words: I don't think it's a coincidence that shareholders are discovering their "moral values" just as EpiPen's market share is starting to dip.
(Score: 4, Funny) by Weasley on Wednesday June 14 2017, @04:16PM (1 child)
Nice try, Martin. We still hate you.
(Score: 2) by Azuma Hazuki on Wednesday June 14 2017, @05:46PM
LOL, yeah, all this means is Marty-boy will have a lot of company in hell.
I am "that girl" your mother warned you about...
(Score: 2) by ilsa on Wednesday June 14 2017, @06:40PM
Except they're not. The boards actions are putting a very serious and immediate dent in the company's financial well-being in addition to potentially disasterous medium and long term viability. Having to pay back almost $2bil to the gov't doesn't look good no matter which way you slice it, and their share price has been steadily dropping.
(Score: 2) by JoeMerchant on Wednesday June 14 2017, @09:56PM
Are you sure the shareholders aren't just demanding he lower his $98M salary and divide it out to them?
Україна досі не є частиною Росії Слава Україні🌻 https://news.stanford.edu/2023/02/17/will-russia-ukraine-war-end
(Score: 2, Insightful) by Anonymous Coward on Wednesday June 14 2017, @10:47AM (5 children)
If you are wondering what my point is, the owners of this business have the power to stop this and need to issue an ultimatum to both the board and management to stop this myopic crap that is harming the general public and their (the share holder's) business. In the game that truly matters, the long game, this is a death sentence. People are willing to spend some time maintaining their cars and houses due to the high cost of these items, yet neglect their businesses that they also spent thousands of dollars buying. See the problem here?
(Score: 0) by Anonymous Coward on Wednesday June 14 2017, @12:00PM
Parent poster here. Kaleo appears to be taking steps to ensure patients can easily afford them:
https://www.forbes.com/sites/matthewherper/2017/01/19/epipen-competitor-auvi-q-to-be-free-for-most-patients-but-cost-4500-for-insurers-in-rube-goldberg-scheme/#727880373fe6 [forbes.com]
(Score: 4, Insightful) by AthanasiusKircher on Wednesday June 14 2017, @02:04PM (3 children)
Because EpiPen is familiar. Because Auvi Q had a nationwide recall [fda.gov] due to dosage issues in the past. I'm NOT saying there's anything wrong with (the new) Auvi Q. But you're assuming consumers in the marketplace act rationally and gather facts before making purchases. They don't. They go with what they know, what their doctor suggests, what they trust -- particularly when dealing with the potential life of their children (which is a concern for many parents here).
If people were actually rational in this marketplace, a significantly larger percentage of people would just be buying syringes and ampules of epinephrine, where it's trivial to get something that's basically idiot-proof (with about as much training as you need to correctly use an EpiPen -- and yes, people do frequently screw up using EpiPens) for around $10. Yes, people unused to using syringes are reasonably concerned about filling one in a life-threatening situation, which is why medical professionals have tested studies of pre-filled syringes, which have a lifespan of at least 3 months. Don't get me wrong: I completely understand the need for an "autoinjector" for self-administration to small children and such, but the point is the market is not being driven by rationale people buying the best solution for the money.
LOL. The idea that all public stock companies are primarily concerned about "the long game" is pretty laughable.
I don't disagree with your assertion that stock investors SHOULD do research into companies, keep up with reports, etc. But in reality, the entire public stock option system helps to facilitate speculation and ignorance of just these things. Private owners of a company -- even one with a relatively large number of stakeholders -- have generally expressed at least some commitment to the company, so of course they're more likely to keep up with what's going on. But stockholders who sell their interest on a whim?
Add in the modern Wall Street myth of perpetual growth, which is basically impossible. People actually used to like companies that were "stable" -- they didn't need a market-beating rise in stock price every year. They paid dividends based on consistent profits, and all were happy. "Growth" was irrelevant. Some such stocks still exist, but they're not what most investors actually chase after today.
In such a marketplace, how do you attract investors? You show crazy returns and crazy profits, which can't be sustainable. But who cares? CEOs and other high-level executives frequently jump ship after a few years. Employee "loyalty" to most companies is a thing of the past, so workers are often not invested. And stockholders who can sell their shares with a simple flick of a finger on their phone certainly aren't.
The order of the day is "gather ye rosebuds while ye may," even if that means a completely unsustainable business plan. Obviously there are exceptions, but overall Wall Street is driven by a completely unrealistic perpetual growth mindset. It's basically endemic to the entire system now.
(Score: 0) by Anonymous Coward on Wednesday June 14 2017, @02:21PM
Two things occurred to me that most people are likely thinking by continuing to vote with their wallets for Mylan.
1. Syringes are for homeless drug addicts. I do not want my child to be a homeless drug addict. Therefore, I must not expose my child to syringes.
2. Nobody ever got fired for prescribing Mylan. (Or buying IBM, etc.)
Magical thinking abound.
(Score: 0) by Anonymous Coward on Wednesday June 14 2017, @03:28PM (1 child)
This is the parent AC. I agree with much of what you have to say with the insanity of the securities markets. That is the reason for my post title. Seeing share holders exercising their rights as owners of the company is a breath of fresh air.
The more things change, the more they stay the same. The problems with Wall Street are not new. In Security Analysis, Graham wrote about valuing mortgage backed securities. One of many issues in the 1920s was appraisers were over appraising properties, undermining the safety of mortgage backed securities (sounds eerily familiar). Unrealistic expectations of perpetual growth aren't new either. In 1934 and 1940 (Security Analysis), Graham wrote that some cases expecting a company to grow is unrealistic and it is in the best interest of share holders to pay dividends. Unfortunately, companies of old often opted to try to grow at the expense of share holders. Traders and speculators have been around since the inception of stock markets, the internet just makes it more accessible. In the short term, the market is a voting machine, but in the long term it is a weighing machine. Those who play the long game end up winning. Buffet and Lynch are my favorite examples.
Auvi Q isn't the only competitor. There is also AdrenaClick. If Mylan share holders don't shape up and replace the board of directors, my prediction for Mylan is what comes around goes around.
(Score: 2) by AthanasiusKircher on Wednesday June 14 2017, @03:42PM
Oh, I agree the Wall Street problems aren't new either. But I'd also say Wall Street's influence in society broadly has grown significantly. My grandparents didn't own stocks. They bought savings bonds. They had bank accounts that earned interest. They might, if they had some extra money for "investment," have invested in municipal bonds or something.
Now a lot more people are tied to this "perpetual growth" machine through various investment funds, including significant numbers of "ordinary people" who are often three steps more removed from the process, because they often invest in aggregate funds rather than individual companies. But their investments drive the system and enable it too.
So I don't disagree with you about history or that the "long game" is generally a better investment option. But volatility comes from somewhere -- and I don't think it's going away, because most people and most investors don't think that way.