Alfonse D'Amato

Shameful executives and pure corporate greed

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Let me get this straight. If a kid has an allergic reaction, his or her parents have to pay an exorbitant price for an EpiPen, something that will save the life of their child, yet a junkie who overdoses receives Narcan for free?

This isn’t a riddle. In fact, Mylan, the maker of the lifesaving EpiPen, has monopolized the market of auto-injectors, which are utilized when someone is having an allergic reaction. This domination has allowed the drug maker to dramatically increase the price of its device from about $94 in 2007 to $609 this year.

There is no competition in the market for this lifesaving device. Mylan has been the subject of intense scrutiny for drastically hiking the price of the EpiPen, and lawmakers are accusing the company of price-gouging and putting those who suffer from severe allergies at risk.

The price hike is just the latest in a series of maneuvers by Mylan and the company’s top executives to significantly enhance their wealth and the company’s stock at the expense of those who need the EpiPen to survive. According to a report by NBC News, the company’s CEO, Heather Bresch, increased her pay by 671 percent, from over $2.4 million in 2007, the year of the EpiPen acquisition, to a total compensation package of just under $19 million in 2015.

It is simply shameful to think that the company’s leaders are more concerned about lining their pockets than making this lifesaving device, which can save kids from anaphylactic shock, affordable. I’m all for businesses and corporations accelerating growth and earning a profit, but this is a public health crisis!

The government has an obligation to protect the public, and right now it is failing to do so. Medicaid covers many of the children who are prescribed EpiPens. Through Medicare and Medicaid, the federal government buys so much of the product. Wouldn’t you think it has the right to negotiate prices?

I applaud lawmakers such as Sen. Charles Grassley, who have listened to the public’s cry for help and have requested information from Bresch about the EpiPen’s price increase, but we must do more. The real crime here is that the American taxpayers are picking up the tab for individuals to receive the device, yet Mylan isn’t paying its fair share of taxes.

Let me explain. In 2014, Mylan acquired Abbott Laboratories’ generic-drug business, allowing the company to move its headquarters to the Netherlands from Pennsylvania. Aside from taking American jobs away, the move also significantly lowered the company’s tax obligations. In the Netherlands, the corporate tax rate is just 20 percent, compared with the U.S. rate of 35 percent.

During the merger, the Mylan board approved a one-time bonus for more than 100 employees. The details of the deal reveal that Mylan accelerated $32.5 million in executive compensation, and then reimbursed those executives the $20.5 million in taxes they were responsible for after the merger.

In order for this to work fiscally, the company doubled its adjusted per-share earnings over a five-year period ending in 2018. Now you know why the EpiPen costs $609.

Mylan has countered these allegations by announcing that it will soon be making a generic option that will be available to the public for a price of two for $300. Is that really the solution? The company will make a fortune even on the generic!

I’ve never seen such outlandish corporate greed and shameful actions by executives.

Overall, the lax regulatory oversight of the pharmaceutical industry opens the door for companies such as Mylan to drastically increase prices with no real consequences. It’s time for lawmakers to make sure that public health isn’t being compromised by corporate greed.

The federal government must start by making inversion, the tax-cutting process, less profitable. Our corporate tax rate must become competitive with those of foreign countries, or the U.S. will continue to lose revenue and jobs.

The FDA should be granted permission to buy foreign imports of essential drugs such as the EpiPen in order to create healthy competition among pharmaceutical companies.

The reality is that this type of price-gouging takes place frequently throughout the pharmaceutical industry. Shaming one company isn’t going to end the problem of unstable drug pricing.

Al D’Amato, a former U.S. senator from New York, is the founder of Park Strategies LLC, a public policy and business development firm. Comments about this column? ADAmato@liherald.com.