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Mylan's Mom Prefers EpiPens

10/8/2016

10 Comments

 
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by David Hagenbuch, founder of Mindful Marketing & author of Honorable Influence
If you were asked to name someone who believes in you and who will do anything to help you, there’s a good chance you’d say, “My mom.”  Mothers may be our most faithful supporters, but how much help should they give us?  That’s a fair question for any mom, but it’s especially relevant for Gayle Manchin, mother of embattled Mylan CEO Heather Bresch.
 
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.”
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10 Comments
Sam Kalagi
10/21/2016 11:06:01 pm

Crony Capitalism!!! In my opinion, this whole interchange with Gayle Manchin and Heather Bresche should've resulted in both their imprisonments for using American society and tax-payer dollars as a means to line their own pockets with dollar bills. This selfishness found within big business and politics is exactly why America is almost 20 trillion dollars in debt. Exactly why the IRS Commissioner is currently being put under congressional hearings for impeachment.

So, Eleven states drafted requirement laws, other states recommend them and Obama signs a bill...the year right after Bresche becomes EpiPen CEO?! Sure... this does "help" society in some ways, but was this really the best, most efficient, and most beneficial way to bring it about for all of America!? Obviously not, because EpiPen gets to make 500% more gross profit, and America's expenses have just risen at least 500% more in the Epinephrine Auto-Injectors department. This may be considered single-minded marketing, but in some ways I'd consider this as extremely selfish single-minded marketing that deserves a score lower than 0.

Reply
Veronica Gomez
10/22/2016 03:01:44 pm

Manchin and Bresche saw a big money partnership that could come from their organizations aiding each other and they went for it. They cut corners, they were selfish, they clawed their way to the top and they did not care who they had to step on to get there - by my standards, that is not good business and it gives business a bad reputation. They did, however, give Marketing Professors a prime example of single-minded marketing.

In grade school, as a student with both severe asthma and a severe allergy to shellfish, I am in complete support of Obama signing the "EpiPen Law." I can still remember how terrified I was when I had my first asthma attack in third grade and my first allergic reaction in high school, they were not good experiences. Third grade for me was in 2005 so things were a bit different, but said law being in place would have made a huge difference for me instead of having the school nurse have me breathe into a paper bag. This law is a good law and although Manchin and Bresche went about this partnership in an extremely corrupt way, I believe a lot of good has come from it.

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Jonathan Matsuda
10/23/2016 02:45:48 am

The Manchin Bresch relationship was an intriguing story of how a mother and daughter were able to feed off each other to dominate a medical industry. This use of power and authority is definitely unethical and could even be illegal. The price of an EpiPen has increased 450% with minimal changes to its formula. This is unheard of. EpiPen is taking advantage of the public and even worse, families who have low income but need allergy medicine. Secretary Clinton says that it is “the latest troubling example of a company taking advantage of its consumers” Yes, I think the use of EpiPen in a school setting is a very smart idea, but not at the cost of the corruption and power that Manchin and Bresch were able to gain. There are other ways to gain power and influence in an industry but this is not a way to do it. I understand that EpiPen is now under investigation by the Federal Trade Commission. It will be interesting to see what they find and if Manchin and Bresch do get punished for their actions. Overall, a prime example of single-minded marketing and its impact on a market from a competitor’s and consumer’s standpoint.

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Robert
10/24/2016 03:49:59 pm

I agree that this is an extremely unethical practice. Typically I'm all for advantageous business partnerships, and if it helps the bottom line of the company's involved, good for them. However this Manchin and Bresch relationship crossed the line when it came at the expense of people that it claimed to help. What's worse is that this isn't just an uneeded doodad, this is a product that saves lives and provides peace of mine to families all over the world. It has gutted the trust and respect and looked at the people it supposedly helped as a means to an end.

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Jonathan Matsuda
10/24/2016 11:33:39 pm

Thanks for the insightful comment Robert. I totally agree with what you said about this whole situation. It definitely makes me question other medical supplies and medicine. Have we been deceived into buying medicine that will help us? Are medical companies main goal to gain profit or to help those in need? After reading this article, we can see that EpiPen's true motivation was to gain a profit rather than helping those with medical issues. This is a problem in itself. I believe that Bresch was on the right track for finding advantageous partnerships, she just executed it wrongly. Because of this, I think this deserves punishment or at least an investigation. It is truly wrong and unethical in every way.

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Jeremy Millar
10/24/2016 04:06:55 pm

This is an incredibly powerful display of greed and widely unethical practices. I agree with Robert, above, who said that advantageous business partnerships are a wonderful thing. I think this is totally true. I am all for business partnerships that benefit both businesses and are ultimately good overall, but I cannot support this one. This was a terrible display of power from both women that only aimed at making more money. What a shame.

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Ben Saucy
10/24/2016 07:49:44 pm

This is an interesting read. I don't doubt that one business working with another is hard work and very delicate work. After all, we are dealing with flawed human beings who have so many emotions and different buttons that can easily be pushed without people even being aware. This does not change in the market place. Things are going to come up. Hard conversations will need to be made. But I liked when the blog said that as long as the two parties are focused on the end goal, and are willing to work together without getting selfish and trying to profit more than the other, then the end results can be great. Although from how the blog sounded, it can be very difficult to do without people getting greedy.

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Jason Roberts
10/25/2016 01:32:25 am

There can be no doubt as to whether this whole situation is unethical. No company should be able to benefit from a family member in a position of power as much as the EpiPen company has. I do think that this story should be popularized in a manner that will be able to shame the company's shady dealings. However, I also think that there might be some would-be social justice warriors who might rush to try to ban these sorts of things. And to do this, I think would be a mistake, as laws like this are likely to hurt more than they help.
That said, yes, I believe this is more of an ethical issue than a legal issue.

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Adi
10/25/2016 01:51:14 am

I believe that in this situation there is an unfair advantage to the company as they are benefiting from power of the position of a family member. The stakes must be the same for all but, however I do believe that networking is good but the product must also be unique and better than others. here we see that there is competition in the market as, there are companies who sell the same product. Legally there is nothing wrong done over here but I believe that the real question is if this act is ethical or not and I think that it is unethical.

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Sarah Choi
10/25/2016 02:07:17 am

Manchin and Bresch's mother-daughter relationship is one of a corrupt business familial relationship. This goes to show how corrupt the business world could be as well as the world of politics. It saddens me to see how the EpiPen business has grown this much at the cost of financial crisis for some families. It also shocks me to see how such a single-minded business can thrive so much.

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