Digging Deeper on the EpiPen Crisis

Your first inclination when hearing the story about Mylan and its EpiPen is to categorize it. Put it in a place alongside similar tales. That’s normal. It’s what the human brain does to make sense of incoming stimuli. The EpiPen saga seems like an easy one to handle. We who follow news of brands, particularly in the pharmaceutical space, have seen it before.

It’s a simple tale of excessive greed, similar to Martin Shkreli’s Turing Pharmaceuticals and the Canadian pharma brand Valeant Pharmaceuticals, right? You know the basic outline: Mylan increased by 400% the price of the EpiPen, a simple-looking device that dispenses epinephrine in the correct dose. Without the drug present, severe allergies can result in a patient’s airway closing, often a fatal outcome.

The cost for a two-pack has risen to about $600 (patients generally want two pens, one as a backup). While the price has edged up over the years, rather than overnight—the most recent price rise was in May—the pain it brings to the user’s pocketbook is noticed more in this era of high-deductible health-insurance plans. As Charley Grant wrote in The Wall Street Journal, under such scenarios “patients are covered for major health events but get hit with continuing costs for things like medication.”

The EpiPen story hits the press on a Monday and Capitol Hill—despite lawmakers being on summer vacation—is quick to react with statements of outrage. It’s a good word. It’s a variation of one that Democratic presidential hopeful Hillary Clinton uses to describe the EpiPen’s price: “outrageous.” Mylan’s stock price falls on the news. [At the end of last week it had dropped 11%.]

Then the journalistic digging begins. Turns out Mylan and its CEO were at the forefront of a successful legislative and lobbying effort that resulted in a bill calling for schools to stock EpiPen. It seems like a good idea: school-age children who need EpiPens should have access to them. Another discovery: Mylan CEO Heather Bresch, who earns a cool $19 million annually, up nearly 700% since 2007, calls Sen. Joe Manchin, Democrat of West Virginia, dad. Other things surface, too, a tax inversion and scandal about Bresch’s MBA.

Several days pass, but the brand refuses to respond publically to congressional critics. Mylan says, though, it’s responded to each legislator privately. The brand relents Thursday, Aug. 25, with Bresch appearing on television. She does well by at least one account. Mylan promises to help consumers with out-of-pocket costs, although the company refuses to change the device’s list price. That Mylan has little significant competition in this market means it’s unlikely to do so. The following week, on Aug. 30, several senators react to Mylan’s promises on co-pays. They’re not enough, the lawmakers say in a letter. The conclusion: like Turing and Valeant, Mylan is a simple example of corporate greed run amok.

Not so fast. As in the films of Alfred Hitchcock, things are not always what they seem at first glance.

A Deeper Dive

We know of few PR pros better placed to provide context to the Mylan story than Gil Bashe, managing partner, global health, Finn Partners. Indeed, as soon as we start talking with Bashe he tells us while the EpiPen and the resulting story seem simple and straightforward, neither is. “The pen is a complex instrument,” says Bashe, who notes the device and the drug it dispenses, epinephrine, are FDA regulated. He argues the EpiPen case is “a multi-faceted and complex” story. It’s not just the EpiPen at stake, Bashe argues, it’s a “fairly significant public health issue.”

There’s much that’s not being reported, he argues, or is getting lost in the outcry. For example, the company, Mylan, which developed, makes and is selling the EpiPen is a generic manufacturer. “The concept of generics for Americans is that such products should cost far less than those of name brands…many times that’s not the case,” he says. In the case of EpiPen, as noted above, there’s little effective competition, which allows Mylan to charge a high price.

Another wrinkle, of course, is the legislators’ role in developing the market, where law mandated schools stock EpiPens. That’s been discussed in the press, but this next fact has barely surfaced, Bashe says: 40% of children who need EpiPens are covered under the Children’s Health Insurance Program (CHIP), whose funds care for uninsured children. “So this conversation’s not just about Mylan and the EpiPen, it’s about your dollars and my dollars…it’s about taxpayer dollars,” Bashe says.

Reputation or Corporate Responsibility?

The EpiPen incident also involves questions about “the role of the health manufacturer to provide products at a competitive cost even when there isn’t heavy competition.” Other questions, he argues, include those concerning access to care, the implications for public health and public policy. After these considerations, of course, is what led PR News to this story: questions of public perception and brand reputation. “It’s a confluence of unfortunate events.”

While Bashe has widened our view of this story, it still seems to boil down to a headache for the pharma industry generally and for those, like Bashe, representing brands in the sector. He disagrees.

The clients he and Finn Partners represent, he says, understand that “at the core of everything they do is the intersection with the patient…they believe the patient deserves access to information so that their therapy can be understood” and these companies have a strong belief in patient access to care, he adds. “We’ve been approached by companies in these [difficult pricing] situations and while we believe that everyone is entitled to communications representation, [it’s] not necessarily” us who will represent them.

OK, so this is Bashe’s diplomatic way of saying Mylan is a rogue brand? No. Bashe feels 95% of executives in the health sector want to do the right thing. Sometimes, though, their companies forget they are “part of a healthcare ecosystem.” Much more on that below.

In addition, “Mylan, to its credit, provides many useful therapies…it’s a quality provider of generic medicine, but that’s not the question here…the question being raised is sensitivity around our health system and its resources and creating an environment of access to care…Mylan always has acted thoughtfully and we would expect it to stay true to its past performance and provide some sense of direction to how the patient has some access to affordable care.” Bashe, who does not represent Mylan, says he has no inside information about the brand’s actions.

A Series of Ecosystems

A key to Bashe’s analysis is how he sees the healthcare market, or at least the part that he and Finn interact with. It’s made of five interrelated ecosystems: product innovation, the payer, the provider system, patient advocacy and policy. The reason the EpiPen story makes news, he says, is because the story touches all five ecosystems. Each of the ecosystems has different business objectives, although they share a common ground “where they converge around the patient…when they share certain principles, you and I benefit.” These principles, he believes, include access to care and clear communications.

What we are seeing now, Bashe argues, is “a set pattern. It’s not a question of health companies with products. It’s health companies with products that don’t understand that they coexist in an ecosystem that centers ultimately at an intersection with the patient.”

So a company increases the price of a product and it fails to consider the reactions of the other ecosystems. “The [pricing] decision is made in isolation…without the understanding that there are ecosystems within the health environment.”

In addition, it’s “an inside-out decision…‘We exist, so we’ll make a decision about the price,’ rather than, ‘we coexist and therefore we will consider the price.’”

While Bashe admits stories about brands like Mylan, Turing and Valeant are “not the best reflection of an industry whose aim is to help patients live longer, healthier lives. I think we’re seeing now, and maybe it’s good, a pattern of poor decision making by organizations that think they operate below the radar screen.”

For Bashe, it’s clear things are not working, but again, it’s not price alone. “What’s not working is…how the price fits into the overall market dynamic.”

The Next Steps

What is the path forward? “We’ve got to get these ecosystems to understand that while their business objectives are different, at the end of the day their paths will intersect around the patient.” From a PR standpoint “this is a great case of reputation consideration, where people thought there was a singular path and that they were the only ones to walk on that path.”

From a purely healthcare perspective, Bashe thinks the FDA and the Centers for Medicare and Medicaid Services need to champion the efforts of other companies seeking, so far unsuccessfully, to bring EpiPen-like devices to market. “Effective, safe competition in medicine is good,” he says.

The larger questions, he believes, are critical. They’re systemic questions. “Can our health sectors be mindful of other medical delivery elements?  Can they recognize that old models of cooperation or competition are outdated in innovation-driven businesses?”

Follow Seth: @skarenstein