By Henry Ehrlich
Years ago, I had to write a speech on ethics for the CEO of a global bank. One of the platitudes I heard over and over again during my research was, “Would you want your mother to read about this in the Wall St. Journal tomorrow?” Ostensibly, that would help govern certain iffy business decisions. Based on the behavior of that bank since, I wonder about how so many executives can grow up in homes where their mothers are illiterate.
However, I did think about the principled-mother standard when I listened to Heather Bresch testify in front of Congress the other day and learned that her mom, a career schoolteacher, had been active in the nationwide campaign to get EpiPens into more schools nationwide. Doing well by doing good is obviously a family affair.
This hearing was unsurprising. As I have said with only a smidgeon of smugness recently, I have been writing about Mylan’s business practices since 2012 and have long felt that it would some day come to this. After slow-rolling the casino since 2007, they finally made a raise too far and brought down fire and brimstone in Congress—although I don’t know which party was fire and which was brimstone. Both were righteous, with certain differences. One side protested its belief in the market system more than the other, but suddenly resorted to an uncharacteristic moralism as if they cared, and maybe they do since food allergies aren’t a class or race bound condition. The same side tried to hang as much blame on the FDA as they could for not approving more competitors, losing sight for the moment that getting submissions for a pharmaceutical is not exactly like soliciting bids for a garbage collection route. To wit, if you believe in free markets, you should realize that companies have the option not to get into a market, no matter how extortionate the prices of the dominant competitor are that might tempt them to join the fray. The cost of entry is high, higher, say, than the costs borne by swarming lawyers in the event that the product fails. Trawling for new entrants and fast-tracking the product is a disaster in waiting both medically and commercially.
Ms. Bresch did her best to portray her company as just a cog in a machine in which a daisy chain of intermediaries also take a cut. Mylan “only” gets $274 of the $600+ price. And there’s the rub. The system is built on everyone in the supply chain charging as much at they can along the line. The innovative new generic will “only” cost $300 for people in high-deductible
insurance plans, which will be just as profitable to Mylan but with fewer middle-persons. Rep. Elijah Cummings, (D-Md.) summed up her testimony as “rope-a-dope” — the Muhammad Ali boxing tactic of absorbing rounds of punishment by the stronger George Foreman and then knocking him out. According to Cummings, Mylan would take a pounding and then go back to business as usual.
The most interesting thing about the whole exercise was seeing the way various people danced around the central issue. Some did the tango, others a waltz, some a Texas line dance—sorry I don’t know the names of any current steps. But no one really approached the central issue, which is that the health care industry is about industry first and health care, patient care, second if at all.
For me, the Mylan case wasn’t even the major story of the week in this regard, it ran third. The bigger stories were in chronological order:
One was that the sugar industry paid Harvard researchers in 1967 to shift blame for cardiovascular disease from sugar to saturated fat the munificent sum of $50,000 in today’s money.
The other that Abbott Laboratories was enlisted by Purdue Pharma LP to turn its painkiller OxyContin into a blockbuster seller. The key to cracking one surgeon’s reserve for prescribing was boxes of doughnuts. Prescription drugs have brought a plague of addiction and despair to huge swathes of the American landscape. This influential surgeon had an addiction of his own to sugar and it unleashed the fury of drug addiction on hundreds of thousands.
Thus, two major public health fiascoes were sparked by two separate business decisions taken in different industries decades apart, in the case of opioids with a death toll of around 50,000 per annum and rising. (By coincidence the death rate from opioids like OxyContin is higher in Ms. Bresch’s native West Virginia than in any other state in the union.)
At least Mylan’s product is a net medical good. It performs a vital life-saving function and doesn’t seem to have any recreational potential. They deserve credit for supporting public awareness. But having made themselves indispensable to millions of families, they raise their prices the way New York landlords raise the rent in luxury buildings. It’s nice that they give away 700,000 EpiPens to schools, but for every one of those, they sell multiple sets to the families that need them year after year. Greed has always been with us.
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