Why Do We Pay The Highest Prices For Drugs In The World?
And why is Bernie blocking Obama's nominee for FDA head? Obama's done a lot of good things as president and there's a tendency for progressives to be favorable towards him. But it behooves us to remember he's a politician-- from Chicago-- and that he's done a lot of bad things as well and to be wary of what he's up to now. Bernie's 100% right to block Obama's FDA nominee-- and 100% is more than 99%.
This morning in a letter to his supporters, southwest Michigan congressional candidate Paul Clements, a progressive who supported Bernie in the primary, asked "What does a 10% cost increase mean to you? For many seniors a 10% increase in the cost of medication can mean the difference between this medicine or that one, between taking the whole pill, or half. Or it can mean the difference between food and medicine. Right now our laws put corporate profit above seniors' needs. A new independent analysis published yesterday says the cost of hundreds of medications in the Medicare Part D program rose by 10% since 2014. Even more, the cost of simply enrolling in Part D rose 13% over last year alone. We need to let the government negotiate drug prices. In Congress I will be a leading proponent for it, and Congressman Upton has led efforts banning such negotiations. That's why I'm running, because simple, practical changes to our laws can make life changing differences to millions of Americans." (You can support Clements' bid to defeat anti-health care reactionary Fred Upton here. His opponent, Fred Upton, is among the biggest bribe takers from Mylan and Big Pharma in general, and makes sure their agenda sails through his committee and through Congress.)
A few days ago, Lee Rogers broke the story about how Joe Manchin's greed-driven, avaricious daughter-- who, like her father, has a clear record of being a cheat and a lowlife-- right here at DWT. Yesterday Lee reminded me that aside from the Manchin daughter giving herself a 671% pay increase to celebrate all the people who would die when she raised the price of EpiPen-- from $2,453,456 nine years ago to $18,931,068 today-- she also illegally used inside information to trade over 100,000 shares in early August, anticipating her company's stock collapsing when news broke about Mylan's plan to murder their customers. The average price she got was around $50/share, bringing the greedy little monster $5,010,000.00, leaving her with another 828,318 shares valued at $41,415,900.00. The share price has been crashing ever since Rogers wrote his piece about how she raised the price of EpiPen to $635. (from $57).
And this is how the stock was performing as I was writing this post:
Were the Manchin daughter to sell her 100,200 shares at $43 instead of the $50 she sold it at when only she knew what was about to happen, she would have netted $4,308,600, nearly a million dollars less than she was able to bank. I have a vague recollection from my days working inside corporate America that insider trading is highly illegal and that all senior level executives are warned about the dangers, but from what I've been able to discern, she hasn't been fired or arrested yet-- or even questioned.
The Manchin daughter is a former lobbyist for the company and when she took over as CEO, the amount Mylan spent on lobbying soared astronomically. She contributes to political campaigns-- a legalistic term for bribery-- through the Generic Pharmaceutical Association, which spent $175,448 bribing members of Congress last cycle. The crooked Members who took the biggest bribes in 2014 were notoriously corrupt Republicans Mitch McConnell (KY), Joe Pitts (PA), Fred Upton (MI) and Lamar Alexander (TN) and so far this cycle Manchin's daughter has made sure the crooked members who got greased we're Chuck Schumer (D-NY), Tim Scott (R-SC), hometown boy David McKinley (R-WV), Keith Rothfus (R-PA), Fred Upton (MI) again... and she made sure Pelosi's corrupt DCCC chairman Ben Ray Lujan got a taste as well. And what did she want for her bribes? Mylan successfully pushed through legislation to encourage use of the EpiPen in schools nationwide, as well as about $4 million in lobbying for the School Access to Emergency Epinephrine Act.
Michael Hiltzik pointed out for L.A. Times readers that little Heather, Manchin's horrid daughter, has condoned a tax-dodging scheme for her company as well, as had Rogers when he first broke the story on Monday. "[T]here’s another reason," wrote Hiltzik, "to detest this remarkably amoral corporation: It’s also a tax dodger. Mylan is one of the leading exploiters of the technique known as inversion, in which a U.S. company cuts its tax bill by acquiring a foreign firm and moving its tax domicile to the acquired company’s homeland." Heather's not making America great again.
Mylan’s 2014 deal involved its buying a generics manufacturer from Abbott Laboratories and reincorporating in the Netherlands, the subsidiary’s home. As in all inversions, nothing else changed: Mylan’s operational headquarters remained in Pennsylvania, and its main workforce didn’t relocate. At one point, Mylan even appealed to U.S. antitrust officials to help it block a takeover bid from an Israeli company. But the deal did allow the firm to cut its U.S. tax bill.
President Obama has labeled inversions “unpatriotic” and “one of the most insidious loopholes out there.” The Treasury Department has tightened tax rules several times to discourage them, and public disapproval has spiked a deal here and there.
Mylan’s inversion helped give this variety of loophole its noxious reputation, in part because defense of its deal was so transparently self-serving. Its CEO, Heather Bresch, daughter of U.S. Sen. Joe Manchin (D-W.Va.), wrung her hands over the anguish she suffered in deciding to skip out on the company’s obligations as a U.S. corporation. She told the New York Times, “You can’t maintain competitiveness by staying at a competitive disadvantage. I mean you just can’t.” Credulously, the Times regurgitated that she made the decision “reluctantly, and she genuinely seems to mean it.”
Should Mylan be believed? Let’s judge it by its marketing of the EpiPen. The spring-loaded syringe-like device is designed to deliver a measured dose of epinephrine, which instantly reverses the swelling, breathing problems and other manifestations of severe reactions to peanuts, bee stings and other allergens. The pens come in two-packs in order to provide a second dose if needed. Families with allergy-prone kids have to lay in a supply of several packs, say for home and school, and replace them once a year when they expire.
Since acquiring rights to the product in 2007 when a two-pack sold for about $100, Mylan has relentlessly raised its price, to more than $600 now. That can place the product out of reach of families whose insurance doesn’t fully cover the cost, forcing them to use expired pens or resort to hand-injections, which can be dangerous.
The price increase isn’t driven by Mylan’s costs. The manufacturing cost is essentially pennies per device, and the active ingredient, epinephrine, is a generic drug that has been in use for decades, so the company isn’t working down any research and development costs. Instead, it’s simply profiteering from market dynamics: Its main competitor, a product made by Sanofi, was taken off the market last year because of manufacturing defects. Another potential rival, from the generics company Teva, hasn’t yet won approval from the Food and Drug Administration.
Mylan’s price-gouging has enraged patients and doctors and created whitecaps on Capitol Hill. On Monday, Sen. Amy Klobuchar (D-Minn.), ranking member of the Senate antitrust subcommittee, asked the Federal Trade Commission to look into the matter. Sen. Chuck Grassley (R-Iowa), chairman of the Judiciary Committee, also has questioned the increases.
“There does not appear to be any justification for the continual price increases of EpiPen,” Klobuchar wrote the FTC. “Manufacturing costs for the product have been stable and Mylan does not need to recover the product’s research and development costs... Not only is this alarming price increase unjustified, it puts life-saving treatment out of reach to the consumers who need it most.”
Mylan rationalizes the EpiPen’s price as the fair cost of “a life-saving drug,” as Bresch told Wall Street analysts this month. Under the circumstances, she said, “I think that you can see it falls as not an expensive product.” She did acknowledge, however, that “as employers shift more cost to employees and make that everything has got to come out of pocket before you hit your deductible... you’re seeing a lot of noise around EpiPen.”
A lot of profit too. Mylan recorded $847 million in net income last year on sales of $9.4 billion. The EpiPen was a significant contributor, with sales of $1 billion.
The company has tried to have it both ways in relation to its inversion deal. Let’s examine Bresch’s assertion that the company found it just impossible to “maintain competitiveness” under U.S. tax rules. At a 2015 forum sponsored by Fortune Magazine, she griped that “there is an unlevel playing field in our country. We really penalize U.S.-based companies.”
Is that so? As we pointed out at the time of its inversion, over the previous two years, its sales had increased 12.7% and profits 16%; among its big competitors paying putatively lower taxes, British-based GlaxoSmithKline had gained only 3.14% in sales and 11.23% in profits. Israel-based Teva’s sales had risen 11%, and its profits declined 54%. Israel’s top corporate tax rate is 26.5%, the equivalent top U.S. federal rate is 35%.
But Mylan didn’t pay that top rate, of course. Almost no U.S. corporation does; CEOs use the statutory rate as a political boogeyman. Mylan’s effective tax rate had been only 16.2% in 2013, 20% in 2012 and 17.7% in 2011.
Bresch’s contention that Mylan was a “reluctant” inverter doesn’t hold much water. At that Fortune event, she reiterated the claim that Mylan hadn’t been seeking an inversion partner but had been willing to look into a deal “if the opportunity presented itself.” But she also seemed to say that its search for a partner was rather more proactive than that. “When we were inverting, we … looked at a lot of countries because we had the opportunity to really domicile where we wanted to, and the Netherlands was a... natural.”
Corporate mouthpieces and other defenders of inversions say there’s nothing wrong-- even something admirable-- in a company’s trying to do the best for its shareholders by cutting their tax bites. The argument is: “You don’t like it? Change the tax law.”
The problem with this position is that U.S. corporations have lots of advantages over foreign competitors that have to be paid for by taxes; inversions just amount to sticking the cost to someone else. Mylan itself proved this point last year, when it tried to fend off a takeover attempt by Teva by asking the U.S. government to declare it a U.S. company. That would have given U.S. antitrust officials the opportunity to block the takeover by a foreign company. Teva’s takeover attempt eventually broke down anyway.
Dena Grayson is running for an open congressional seat in central Florida. Her statement on Mylan is exactly the kind of strong position voters are looking from for leaders. Please wrap your head around what she's saying and then, if you agree, consider contributing to her campaign here.
"As a doctor and medical researcher, I know first-hand how much innovative new treatments can relieve suffering and save lives. And I know that it takes many years and extraordinary effort to discover and develop effective treatments for deadly diseases. But this isn’t scientific innovation by Manchin’s daughter at Mylan. It’s good ol' fashioned greed, plain and simple. Even worse, it's at the cost of the most vulnerable members of our society: sick kids. While Manchin’s avaricious daughter relaxes in her mansion, parents are forced to make a choice that no parent should ever have to make: whether to protect their child from dying from a fatal allergic attack, versus paying the rent. Yes, Mylan produces a tried and true medicine that saves lives, but it’s not innovative. It’s as though Mylan stumbled upon an cheap, old print of a Monet painting in their grandmother’s attic, and are now trying to pass it off as an original masterpiece. If Mylan is unable or unwilling to control their greed, then we will have to do it for them. Plain and simple."
|Blue America has billboards up all over Polk County right now|
Manchin's not very bright daughter-- and utterly devoid of a moral compass-- has cost Mylan's shareholders in the realm of $3 billion dollars, just so she could pocket a few million for herself. So far she's still neither fired nor arrested... but I bet no one's too happy about this: