Newsmaker: Heather Bresch
In an era of escalating health-care costs, “Big Pharma” is a familiar bogeyman, portrayed as a faceless corporate entity greedily exploiting human suffering.
Rarely do its critics get the opportunity to personalise the monster with a face or a name, but in the past week, Heather Bresch, the chief executive of American company Mylan Pharmaceuticals, has supplied them with both.
Back in 2007, Pittsburgh-based Mylan went global when it bought the generics business of Merck, a major player in the pharmaceuticals market, for US$6.7 billion (Dh24.61bn). Generics are versions of branded drugs, which anyone can make once the patent, held by the company that invented them, has expired.
Among the 400 products Mylan inherited was EpiPen, an auto-injector used to administer a dose of adrenaline and carried by people with severe allergies who are at risk of anaphylactic shock, which can prove fatal.
As chief operating officer, Bresch was in charge of absorbing the new products into Mylan’s portfolio. Last year, she told Fortune magazine she was “particularly proud of the hidden gem” she had found. The EpiPen was “my baby”.
“Cash cow” would have been a better description. At the time of the takeover, the 25-year-old, near-monopoly, market-leading product was making less than $200 million a year. By 2014, it had become Mylan’s first $1bn seller, not through ingenious marketing or sales, but thanks to regular, ruthless price hiking.
This week it emerged Mylan had methodically jacked the price of EpiPen by 461 per cent, from $56.64 to the $317.82 it costs in the US today.
At the same time, according to documents with the United States Securities and Exchange Commission, the value of Bresch’s annual personal compensation package rose 671 per cent, topping $25m in 2014.
The subsequent outrage, which has led to calls for Bresch to explain herself to Congress, has been further stoked by revelations that there’s about $1 worth of adrenaline in an EpiPen, which costs $6 to $7 to make.
Democratic presidential nominee Hillary Clinton has weighed in, calling for a reduction in the price, saying: “It’s wrong when drug companies put profits ahead of patients.”
But EpiPen is only part of the problem. In June, an analyst with Wells Fargo had already raised concerns about Mylan’s general pricing strategy, noting the company had boosted the prices of 24 products by more than 20 per cent and seven others by more than 100 per cent. The price of Ursodiol, used to treat gallstones, had gone up by 542 per cent.
It has also now emerged that on August 9, just before the EpiPen scandal broke, causing Mylan’s stock price to stumble, Bresch sold more than 100,000 of her 928,518 shares, netting $5m.
None of this is illegal, and as a public company operating in a capitalist system, Mylan is legally obliged to make as much money as it can for its shareholders. But Big Pharma is frequently held to moral standards not applied to other industries.
Among those expressing outrage is Sarah Jessica Parker, best known for her portrayal of Carrie Bradshaw in Sex and The City. As the mother of a boy with an allergy to peanuts, she had acted as a spokesperson for Mylan.
On Instagram, she wrote that she was “disappointed, saddened and deeply concerned” to learn the company had systematically raised the price of EpiPen “to a point that renders the medication cost-prohibitive for countless people”, and that she had ended her relationship with the company as a result.
Bradshaw and Bresch have something in common – a love of designer clothes and high heels. When it was ranking Bresch No 22 on its Most Powerful Women list, Fortune couldn’t resist remarking on her “black leather laser-cut sheath dress and her signature five-inch stilettos”.
Bresch has climbed from basement to boardroom, smashing her way through the glass ceiling in an industry traditionally dominated by men, becoming the only woman ever to run a Fortune 500 pharmaceutical company.
Not that this is a rags-to-riches story. Bresch was born Heather Manchin on June 27, 1969, into a wealthy, influential West Virginia political family. In 1992, as a newly married 22-year-old graduate teaching aerobics for a living, Bresch was looking for more rewarding work. Her father, Joe Manchin, a powerful local politician who is now a US Senator, had a word with a friend.
Milan Puskar, owner of local drugs company Mylan, gave his friend’s daughter a job typing labels in the company’s basement. “I don’t deny that I got my first job at Mylan because of my dad,” Bresch said in a 2012 interview. She took the job to humour her father, but soon warmed to the company and industry. For the next 10 years, she told West Virginia Living magazine: “I worked hard and I learnt the industry inside and out”.
In the process, she surged up the ranks. As the company’s head of government relations, she became a formidable opponent of the branded pharmaceutical industry, playing a major part in legislation designed to bring cheaper generic drugs to consumers.
In all the fuss over EpiPen, it has also been forgotten that Bresch worked with partners in India to introduce cheaper generic treatments for HIV/Aids in the developing world. In 2011, she was named one of Esquire’s Patriots of the Year for her lobbying to protect American jobs and patients from counterfeit overseas drugs. In 2012, she won plaudits for making EpiPen freely available to schools throughout the US.
But Bresch seems to have squandered all that PR capital. By rights, she should be a potent icon for career women, rather than someone reviled. The head of a global company with 40,000 employees, operating in more than 165 territories, she has somehow also managed to find time for her husband, Jeff, a lawyer, and their four children.
Now that juggling act has to incorporate corporate and reputational damage limitation on a grand scale. Bresch, stung into action by public opinion and investor jitters, has scrambled to make amends.
Last week, Mylan announced it was widening access to a company savings card scheme, effectively cutting the price of the EpiPen by 50 per cent for some patients, and raising the income threshold at which families become eligible for its patient assistance programme.
Four days later came the news that Mylan would be selling a generic version of the EpiPen for $300 for a two-pack carton, which is half the price of the branded version.
It was, Bresch conceded in a statement, “an extraordinary commercial response”. The company, she said, understood “the deep frustration and concerns associated with the cost of EpiPen to the patient, and have always shared the public’s desire to ensure that this important product be accessible to anyone who needs it.”
She sought, wholly unsuccessfully, to make the case that somehow the whole mess was somebody else’s fault – a consequence of “the complexity and opaqueness of today’s branded-pharmaceutical supply chain and the increased shifting of costs to patients”.
An open letter to Bresch published by health magazine Stat concluded that she was “playing a disingenuous game … defusing outrage is never easy, but you failed to do the one thing that could have made a difference – lower the price.”
Her claim on CNBC this week that “we have fought night and day to bring products into the marketplace at affordable prices” met with widespread derision. The EpiPen controversy, Vanity Fair concluded on Monday, had turned her “into a corporate villain worthy of Martin Shkreli”.
Shkreli, another Big Pharma boss, achieved infamy by hiking the price of an Aids drug from $13 to $750 per tablet, in the process earning the sobriquet “most hated man in America”.
Bresch’s attempts at wide-eyed innocence haven’t had many backers. But despite calls for her scalp, the EpiPen scandal is unlikely to be her downfall. She has survived controversy before. In 2007, when she was promoted to chief operating officer, a Mylan press release (still on the company’s website) said she had “earned an MBA … from West Virginia University”. She hadn’t. She dropped out of the course, and an investigation by a local newspaper found that staff at the university had retrospectively awarded her the MBA, inventing credits she hadn’t earned. Heads rolled at the university, but Bresch, immunised by Mylan’s increasing profits, sailed on unharmed.
Even if she does lose her job, you suspect her knack of generating revenue will help her to find another prominent role. Since she became Mylan’s chief executive in 2012, its sales have almost doubled, from $6.1bn to $11.5bn.
Last year, in an article headlined “Why Wall Street loves to hate Mylan’s CEO”, Fortune highlighted “the business-world boys’ club’s tendency to underrate Bresch – to see an attractive, fashionable woman executive and assume those are her best qualities”.
But as one corporate lawyer told Fortune: “What they just really don’t understand is that it’s got nothing to do with … with male versus female … She’s the most knowledgeable person in the room on the subject matter.”
For now at least, that makes the woman Forbes this year rated as the 95th most powerful in the world the face of the bogeyman known as Big Pharma.
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