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Mylan (MYL) Draws Flak for Over Pricing EpiPen, Stock Down

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Controversies concerning massive hikes in drug prices have surfaced yet again and this time, generic drug maker, Mylan N.V.MYL is under scrutiny. The company's shares declined 6.2% after U.S. senators raised questions over inflated prices of its epinephrine auto-injector, EpiPen, which is approved for the treatment of severe allergic reactions.

EpiPen's Price Up 400%?

In a letter dated Aug 22, 2016, U.S. Senator Charles E. Grassley of Iowa, the Chairman of the Judiciary Committee, asked the Chief Executive Officer (CEO) of Mylan, Ms. Heather Bresch, for details of the huge price hike of the product in the recent years, after concerns were voiced by Iowan citizens. He also stated that since the pens expire after about a year, the cost is recurring.

Mylan had purchased EpiPen from Merck KGaA MKGAF in 2007, following which the product's cost has escalated over 400%. In his letter, Senator Grassley included a series of questions related to the analyses that were conducted to determine the price of the product, among other issues.

Meanwhile, U.S. Senator Amy Klobuchar of Minnesota, the Ranking Member of the Antitrust Subcommittee of the Senate Judiciary Committee, has urged the Federal Trade Commission (FTC) to investigate Mylan for a likely antitrust violation regarding the dramatic price hike of EpiPen. Citing news reports, she said that despite stable manufacturing costs, Mylan has increased the price of a pack of two EpiPens from $100 in 2008 to the present level of $500, with some customers reportedly paying $600 or more.

Going into specifics, the FTC was requested to investigate into issues like whether Mylan is involved in activities like using incentives or exclusionary contracts with insurers, distributors, or pharmacies to deny an alternative product access to the market. Senator Klobuchar noted that while Sanofi SNY had to recall Auvi-Q from the market last October, another company failed to receive approval for its generic version of EpiPen earlier this year, coincidentally allowing Mylan to gain a large market share. She also pointed out that Adrenaclick, in spite of being a cheaper alternative, manages to garner only minimal sales.

Senator Klobuchar has implored the agency to look into the matter and come up with public policies addressing the concerns of patients within 90 days.

MYLAN NV Price

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Mylan's Take

Mylan issued a press release, stating that families and individuals are increasingly enrolling in high deductible health plans, leading to a continued rise in deductible amounts. The ongoing shift in the healthcare landscape has presented new challenges for consumers, which is ultimately resulting in them bearing the majority of the cost. Besides highlighting EpiPen's features, the company also underscored its commitment to provide access to treatment for patients living with potentially life-threatening allergies.

Latest Pricing Controversies

The healthcare industry has always been in the spotlight for high drug prices. The issue recently gained attention with Hillary Clinton's "price gouging" tweet last September. Questions were directed particularly at companies following a business model that involves limited investment in research and development and focus on taking over other companies and selling their drugs at higher prices.

Mylan is a Zacks Rank #3 (Hold) stock. Investors interested in the health care sector may consider ANI Pharmaceuticals, Inc. ANIP , which sports a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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