Heather Bresch has a lot of explaining to do. She is the CEO of Mylan, the embattled drug company behind the recent 400% price hike for the EpiPen – a pharmaceutical drug used by many schools to save children from deadly allergic reactions.
Recently Hillary Clinton, as well as other politicians, spoke out about the recent price hike for the EpiPen which sent it to a towering price of $600 for two-auto injections from a price of $57 just 9 years ago. The EpiPen is stocked by schools in case the children under their care experience an intense allergic reaction that may prove fatal if left untreated.
Interestingly enough, it was Mrs. Bresch, whose father is a U.S. Senator, who pushed to have EpiPens as a standard feature in public school clinics. This apparent collusive act is only greater compounded by the fact that her company has recently fled America to engage in a tax inversion scheme. Thus, not only did she use the arms of government to influence the market, but then had her company flee to escape taxes. At a time when the Democratic Party seeks to take a strong stance against companies fleeing to avoid taxes, Mrs. Bresch’s ties to her senator father obviously raises some eye brows.
Libertarians are always claiming that mispricing in the private sector is due to government interference. We are seeing the very thing playing out in real life and the culprit is none other than someone with ties to the party that is always claiming that capitalism is inherently unfair.
Indeed, it can be said that capitalism is unfair when the government grants special privileges to certain companies. In a normal free market, competition would bring the price down of any good through the creation of substitute products. The only way for a good to maintain inelastic pricing is for it to have an exclusive right provided by the government. Mylan has accomplished this through their lobbying to get the government to grant them a unique favored privilege within U.S. schools. Mylan spent upwards of $4 million between 2012 and 2013 to lobby the U.S. government for incorporating EpiPens into legislation. It was also the top sponsor for a group called Food Allergy Research & Education whose lobbying efforts were based on a bill that encouraged schools to use EpiPens.
This is not the first time a pharmaceutical company has sought to profit from the use of an exclusive drug. Martin Shkreli of Turing Pharmaceutical was at Capitol Hill in February discussing his role in increasing the price of Daraprim – a pharmaceutical drug used to treat AIDS. This prompts the question, will the government seek to bring Mrs. Bresch in for questioning as well? Mylan stock has already taken a hit due to the buzz that has been created regarding its pricing of the EpiPen. As of now, there has been no word on the justification for the rising prices of EpiPens or the questionable practices that has been exhibited by Mylan. We look forward to seeing how this story develops. Stay tuned.
Gary St. Fleur
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