Executive Bonuses May Be Root Of EpiPen’s Hefty Price Hikes
Under a special, one-time stock grant created in 2014, top executives — including Chief Executive Heather Bresch — will be rewarded if the company’s earnings and stock price meet certain goals by the end of 2018. Meanwhile, a loophole allowed the company to use generic prices in its rebates to Medicaid.
The New York Times:
EpiPen Price Increases Could Mean More Riches For Executives
Heather Bresch, chief executive at Mylan, the pharmaceutical giant that has been vilified for price increases on its EpiPen allergy treatment, maintains that her company has attained a sort of capitalist nirvana — it does good for others while doing well for itself. But the argument that Mylan has achieved a balance benefiting all of its stakeholders simply doesn’t hold up when viewed through the prism of the company’s recent proxy filings. Those materials detail the company’s executive pay and show, for example, that Mylan’s top brass received a windfall when it incorporated overseas in 2014 to cut its tax bill sharply. (Morgenson, 9/1)
The Wall Street Journal:
EpiPen Maker Mylan Tied Executive Pay To Aggressive Profit Targets
The drugmaker at the center of a firestorm over hefty price increases on the lifesaving EpiPen put a special incentive plan in place more than two years ago that rewards executives if they hit aggressive profit targets. In early 2014, the board of Mylan NV approved a one-time award for more than 100 employees that hinged on more than doubling the company’s adjusted per-share earnings over a five-year period ending in 2018, Mylan’s regulatory filings show. Meeting that goal would require 16% compound annual earnings growth—a tall order for a company that generated almost 90% of its revenue from the generally mature generic-drug business. (Maremont, 9/1)
Politico Pro:
EpiPen Paid Generic Drug Prices To Medicaid, While Profiting From Brand-Drug Protections
A loophole in how CMS defined an “innovator” drug was a big win for Mylan's EpiPen. Under Medicaid, the life-saving anti-allergy injection was considered a generic or "non-innovator" medicine, which meant the company paid lower rebates to the government. Yet at the same time, it got all the market monopoly and patent protection of an FDA-approved brand-name drug. (Karlin-Smith, 9/1)
