Two weeks ago, Mindful Matters described how Mylan Pharmaceuticals had allowed the price of a life-saving twin-pack of EpiPens to increase by 500% over seven years, from $100 to $600. Besides enraging many EpiPen users, the price rise caught the attention of Congress. However, unlike Wells Fargo CEO John Stumpf’s in his visits to Capitol Hill, Bresch made no apology. Instead, she stood her ground, defending her company’s actions.
In speaking with others about the EpiPen price increase, one thing that remained unclear to many of us was how Mylan was able to command such a high price for its product when there were at least two other viable options on the market: Amedra Pharmaceuticals’ “Adrenaclick,” and a generic epinephrine auto-injector. Why didn’t people just forget EpiPens and go with one of the alternatives?
This is where Bresch’s mother, Gayle Manchin, enters and the story becomes more salacious. You see, Manchin is no ordinary mom; she’s the wife of Joe Manchin, former West Virginia Governor and current U.S. Senator. More relevant to Mylan, Joe Manchin appointed Gayle Manchin to the West Virginia State Board of Education in 2007, where she served until 2015, the last two years as the Board’s president.
Beyond her state-level role, Manchin also served on the National Association of State School Boards of Education (NASBE), which bills itself as “the only national organization giving voice and adding value to the nation’s state boards of education.” Among its goals, NASBE aims to be “a leader in public policy,” “the authoritative source of information” for its members, and “a bellwether on emerging issues.” Manchin even served as President of NASBE in 2012.
What do these roles of Manchin have to do with Mylan? According to USA Today, after Machin took the helm of NASBE in 2012, she initiated an “unprecedented effort that encouraged states to require schools to purchase medical devices that fight life-threatening allergic reactions.” In December of 2012, NASBE launched a “epinephrine policy initiative” aimed at helping state boards of education “develop student health policies regarding anaphylaxis and epinephrine auto-injector access and use,” which included how schools might avoid potential legal liability.
NASBE’s support of Mylan’s business was far from a one-way street. USA Today reports that Mylan made a $15,000 contribution to NASBE in April of 2012 and later gave $25,000 more to pay for an epinephrine discussion guide. “In October 2012, Mylan sponsored a morning of health presentations at the association’s annual conference” that included a panel discussion of food allergies. A key participant was Ruchi, Gupta, a Chicago-area physician and allergy specialist. Mylan reportedly has paid Gupta more than $400,000 for research she’s done, in addition to over $17,000 for speaking fees and other expenses.
In addition, Mylan began making inroads into schools through the launch of its “EpiPen4Schools” program, which aimed to give the company exclusive product access to tens of thousands of educational institutions. This program later became the focus of an investigation by the New York attorney general.
Interestingly, all of these EpiPen-related school activities occurred only after Manchin became president of NASBE, in 2012, the same year that her daughter Bresch became CEO of Mylan, even though the association had seen food allergies as a growing problem since 2000.
In the end, the NASBE-Mylan marriage resulted in eleven states drafting laws that required epinephrine auto-injectors. Meanwhile, almost every other state recommended that their schools stock them, particularly after President Obama signed the 2013 “EpiPen Law,” which gave preferential funding to schools that agreed “to plan for severe asthma attacks and allergic reactions.” In addition, from January 1, 2012 to December 1, 2013, Mylan’s stock price more than doubled, increasing from 20.75 to 43.40 per share.
So, what’s bad about one organization helping another make life-saving medical devices available in schools? Likewise, what’s wrong with a mother supporting her daughter’s success? Both are noble acts under normal circumstances, but the NASBE-Mylan marriage presented an entirely different dynamic, given that the heads of both entities were related. That familial bond created an incentive for Bresch and Manchin to offer preferential treatment to the other’s organization, which came at the expense of those trying to compete without similar support.
At its core, the NASBE’s and Mylan’s mutual support represented a classic conflict of interest: “A situation that has the potential to undermine the impartiality of a person because of the possibility of a clash between the person's self-interest and professional interest or public interest.” Manchin took action that was not necessarily in the best interest of NASBE because she wanted to help her daughter. Similarly, Bresch offered Mylan’s inordinate aid to NASBE, which compromised the association’s objectivity, because she wanted to support her mother and enjoy NASBE’s promotional push into schools.
Former NASBE Executive Director Brenda Welburn told USA Today that prior to Manchin/Bresch, the association was very strict about avoiding corporate influence: at most, companies could only sponsor conference meals. Welburn added that the sudden and significant reciprocal support between Mylan and NASBE “just looked so bad to me.” Therein lies a major reason why other epinephrine auto-injectors have struggled to gain a foothold, while Mylan’s EpiPen has dominated the market. The playing-field has been uneven. Misuse of power and position resulted in favorable treatment for some and unfairness for others.
As most of us understand, business isn’t just about what happens in broad view of all. Interpersonal relationships are often very important, and there’s not necessarily anything wrong with them, provided that they don’t form an unfair advantage for some at the expense of others. Unfortunately, Manchin and Bresch’s familial bond created a conflict of interest that has proven detrimental to many, including many EpiPen users. Consequently, this particular mother-daughter duo is guilty of “Single-Minded Marketing.”