The Intercept is reporting that Heather Bresch,the former president and CEO of the drugmaker Mylan, worked directly with the CEO of Pfizer to keep prices of the company’s EpiPen product artificially high, according to new documents released as part of an ongoing lawsuit.
Bresch also approved a scheme to force customers captured by the company’s monopoly to buy two EpiPens at once, regardless of medical need, according to the documents. The EpiPen is an auto-injectable device that injects epinephrine into the body and can save a person’s life if they are having a severe allergic reaction.
The documents were made public as part of a federal antitrust lawsuit that is still ongoing.
Judge Daniel Crabtree issued a summary judgment in June that sided partially with Mylan and partially with the plaintiffs, meaning the case will continue. Some of the documents underlying the plaintiffs’ case were unsealed by the judge late last week.
An email sent on behalf of Bresch, who is the daughter of Sen. Joe Manchin, D-WV, to her Pfizer counterpart, then-CEO Ian Read, is among the documents.
In the email, sent in January 2011, Bresch confirms a previous conversation with Read, in which she claims the two agreed that as part of a deal, Pfizer would divest from Adrenaclick, an EpiPen competitor.
By eliminating its main competitor, Mylan would be able to keep raising its prices.
A two-pack of the drug cost less than $100 in 2007, when Mylan bought the rights to market it from Merck (by purchasing its specialty pharmaceuticals subsidiary Dey).
As a result of the agreement with Merck, Mylan produced a portion of the EpiPen delivery system but not the medication, while also owning the brand name and the right to distribute the entire product. King Pharmaceuticals, which manufactured the drug exclusively for Mylan, was responsible for its creation.
In 2010, King announced that it would be acquired by Pfizer, which had been granted a license to sell Adrenaclick, an EpiPen competitor, the year before. Pfizer and Mylan reached an agreement in which the former withdrew its competitor from the market and partnered with Mylan on Epipen, effectively creating a monopoly. Within five years of signing the deal with Pfizer, Mylan had raised the price to over $600.
As the head of the National Association of State Boards of Education, Gayle Manchin, Bresch’s mother, lobbied states to require schools to stock epinephrine. Gayle Manchin was recently confirmed as co-chair of the federal Appalachian Regional Commission, a government agency charged with promoting economic development throughout the region’s 13 states.
The subject line of the email, which was sent on Bresch’s behalf by her assistant, is “Our discussion.”
I’m sending you this email as a reminder that you were to send me confirmation relative to our discussion regarding EpiPen. In that discussion, you indicated that you would be divesting your Adrenaclick product once the Pfizer/King deal closes. I understand your tender offer is closing today, so I would appreciate receiving your response as soon as possible.
Mylan has consistently stated that the way it sets the price of its EpiPens is correct. Bresch testified before Congress in 2016 about the price hikes, expressing some limited regret that some customers had paid the full list price, while noting that many others had paid less due to insurance and pharmacy benefit manager agreements.
“Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full price or more,” Bresch said. “We never intended this.”
According to market analyst reports at the time, Mylan was concerned that Pfizer would rush to market with its generic version, effectively eliminating Mylan from the market. According to EpiPen’s filings with the Securities and Exchange Commission, it controlled 91 percent of the global market and 96 percent of the US market in 2010, but Adrenaclick was rapidly gaining market share.
A Mylan-Pfizer partnership would benefit both companies: By selling Adrenaclick and continuing to allow Mylan to sell the EpiPen at inflated prices, Pfizer and Mylan would split the profits from the more expensive version, allowing Pfizer to earn more than if it sold the cheaper version at lower prices.
After securing the monopoly, Mylan announced its next move: a plan to phase out the single-pack EpiPen in the United States and require customers to buy two pens at once.
According to the internal correspondence, the monopoly had created space for the new scheme, and the new scheme generated extra revenue that Mylan split with Pfizer — thus entrenching the monopoly and fending off generics — and also set aside to dole out as rebates to third parties who might complain. The two schemes were distinct, but they complemented each other.
According to emails produced as part of the lawsuit, the idea to eliminate the single pack was discussed internally in late 2010 and early 2011. The idea was proposed by Mylan executive Bruce Foster as a way to “double revenue” and create a “strong potential generic defense.”
It was dubbed “Project X2” or “Project Times Two” by January 2011, and executives spent the next several months putting it into action.
At the outset of the project, the company’s executives cited a lack of medical justification as the reason for the change and later sought to generate one.
Ivona Kopanja, an associate project manager in Mylan’s marketing and sales operations division, wrote to two other employees in March 2011: “Senior management is having a meeting with Heather April 1 and wanted to provide her with an update on Project X2. I know that you were working on creating a ‘medical’ rationale for Project X2? I’m pulling a slide deck together that will be used. Would you be able to forward me the information I should include for the rationale (and the way it should be worded)?”
According to an email from COO Lloyd Sanders to Bresch in May, the company’s medical professionals expressed concerns that the plan did not align with medical guidance. According to an email from Sanders that was not released publicly but quoted by the judge in the recent opinion, after Bresch “learned that the co-pay that’most’ patients pay is the same for a single as it is for a two-pack, she became VERY motivated to pull the singles.”
Customers would suck it up and buy two pens if it was a life or death situation, according to the company’s market research. A number of quotes from caregivers, physicians, and others are included in marketing materials disclosed as part of the lawsuit.
According to the emails, Mylan began pitching Pfizer on the project in May, claiming that if done correctly, it could become a billion-dollar brand. Bresch continued to promote the concept throughout June, and the two companies met in July. “The team met with Pfizer,” wrote Sanders, “they are completely on board.”
According to an email released as part of the judge’s recent order, Mylan executives told Pfizer that the scheme would likely succeed because EpiPen revenue was “‘below the radar’ for most managed care organizations,” according to an email released as part of the judge’s recent order. The judge’s order also quotes from Bresch’s deposition, in which she said Mylan didn’t “persuade … Pfizer on anything,” and called the latter company a “partner in the product.”
The EpiPen single pack was phased out in the United States in August 2011, as executives feared public backlash. According to an email quoted in the order, Mylan concluded that there was no “need to call/write FDA,” as “it’s not necessary and will raise more questions than we have answers.”
Pfizer announced, on August 20, 2011, it was discontinuing its EpiPen competitor. A note from a Needham & Company analyst announcing the news observed that Adrenaclick “recently hit a peak share of 10 percent of the epinephrine market,” cutting into EpiPen’s dominance from a year earlier, when all competitors had been at just 4 percent.
Pfizer executives forwarded the note with the subject line “One Less Risk to Worry About; EpiPen Wannbe [sic] from Greenstone Discontinued,” referring to the division of Pfizer that owned Adrenaclick. The email was sent around by Joanne Van Deusen, director of business operations for Pfizer, according to correspondence unsealed as part of the suit.
Greenstone’s vice president of generic business alliances, James Cannon, directed an assistant to forward the note to “Dennis.” Dennis O’Brien received it from the assistant.
O’Brien had previously served as president of King Pharmaceuticals Canada and was now serving as president of Meridian Medical Technologies, the Pfizer division that collaborated with Mylan to develop the EpiPen. After that, O’Brien informed Tom Handel, Meridian’s senior vice president of commercial pharmaceuticals.
The Mylan prices were raised by October. “Harry, Ron, Joe, Mike, and I are recommending a price increase now for EpiPen. The original plan was to increase in Dec or Jan assuming there was no backlash from Project X2 at payers. Project X2 implementation has been w/o ANY issues. Last price increase was May 2011. No push back on that either,” Sanders, the COO, wrote to Bresch. “The incremental sales … would be $5.5M – $6.0M and it all drops to the bottom line.” The price surged steadily in the years that followed.
Pfizer has settled a class-action suit for price fixing and will pay $345 million over the company’s EpiPen market practices, despite denying wrongdoing. Bresch has faced scrutiny in the past for the company’s pricing of the lifesaving drug, and a lawsuit against Mylan, which also denies wrongdoing, is still pending.
Bresch began the process of stepping down in 2019 after Mylan officially merged with Pfizer’s Upjohn unit to form Viatris, and she received a $37.6 million exit package. In December 2020, she will leave Mylan.
Bresch was promoted to chief operating officer of Mylan in October 2007, a move that sparked a scandal when the Pittsburgh Post-Gazette reported that her claim to a master’s degree in business administration from West Virginia University was false.
Bresch’s father, Manchin, was the governor of West Virginia at the time, and the school quickly corrected the paper, stating that she had earned the degree.
Bresch had been far short of a degree, and university administrators had fabricated grades to get her over the line, leading to multiple resignations from the university’s senior leadership. In 2012, Manchin was elected to the Senate.