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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
(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.