Elizabeth Loder: Should orange be the new black for price-gouging pharma execs?


One thing’s for sure: Heather Bresch, the CEO of Mylan Pharmaceuticals, looks good in orange. She’s the subject of a recent New York Times article that opens by declaring “America has a new pharmaceutical villain.” (Martin Shkreli, former CEO of Turing Pharmaceuticals who raised the price of an essential toxoplasmosis drug by 5000%, is the old villain, of course.) The piece describes the public outcry in the US over enormous price rises for the company’s life-saving EpiPen® product. It details the many company activities, overseen by Bresch, which made those increases possible. It’s a sordid, unedifying tale. Bresch is pictured alongside the Times article wearing a stylish orange dress. Judging by the tone of some of the article, it makes you wonder if instead she should be wearing an orange prison jumpsuit?

The indignation over EpiPen® pricing is just another episode in a long-running saga of pharmaceutical profiteering, greed, and price-gouging. Yet nothing much seems to happen to the companies or individuals involved. Yes, Martin Shkreli is facing securities fraud charges, but those are unrelated to the fact that his company bought an old, cheap HIV drug and jacked the price up to $750 a pill.

Mylan and Bresch did not break any laws either. Not by lobbying for laws requiring US schools to stock epinephrine, not by 400% price increases for the drug, not by enlisting high profile celebrities in an unbranded ad campaign, not by collecting a $19 million salary in 2015, not by claiming an MBA that had not been earned, nor by having insider connections—in the form of a father who is a US senator—that presumably made these things easier than they would have been for someone else.

Is all of this just the inescapable ugly side of the modern business of healthcare? Or is it a looming menace to public wellbeing? Even Bresch’s father seems to know the answer. Senator Manchin recently said “I am aware of the questions my colleagues and many parents are asking and frankly I share their concerns about the skyrocketing prices of prescription drugs.” It seems obvious that sudden, predatory price increases for essential medicines are a serious threat to public health.

In the US, this is a threat born of many things, including excessive executive compensation that rewards reckless short term gains over responsible long term strategies; unreasonable barriers to market entry for generic or biosimilar treatments; patent monopolies on drugs and devices; and reluctance to impose government price controls. We could, if we wished, begin to address those factors one by one.

There have been consequences for Martin Shkreli and for Mylan and Bresch, of course. They’ve been tried and convicted in the harsh court of public opinion. Coincident with the intense negative publicity about Mylan, actress Sarah Jessica Parker had a fit of conscience. She stepped down as a paid spokeswoman for Mylan’s campaign to raise awareness of anaphylaxis. Parker declared that she was “disappointed, saddened, and deeply concerned by Mylan’s actions.” Despite a sizeable donation by Mylan to the Clinton Foundation, presidential candidate Hillary Clinton, along with other politicians and the American Medical Association, criticized Mylan and urged the company to lower prices.

Bad publicity accomplishes little, however. Health economist Dana Goldman points out that we cannot “solve the problem of unstable drug pricing by shaming one company.” Goldman suggests a three-pronged approach involving government agencies. The Federal Trade Commission would create a list of indispensible generic drugs and devices, the Food and Drug Administration would scrutinize this list to identify products with “competition or supply issues” and have the power to solve crises by allowing foreign imports, and the Centers for Disease Control would be allowed to purchase such products on behalf of federal users. Goldman says a similar strategy has prevented vaccine shortages.

Should price controls and criminal sanctions be on the table as well? Congress could direct that government funded programs would pay only a certain percentage above production costs for treatments, and provide criminal penalties for companies that act in bad faith. In the past, prosecutors have tended to go after organizations rather than individuals, but that is changing. A recent US Department of Justice memo signals a new willingness to prosecute individuals for white-collar crimes. A deputy attorney general says this means top company officers, not junior scapegoats: “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.”

Would the prospect of jail persuade top drug company officials to rein in predatory pricing? If the US wants to avoid a constant cycle of shocking drug price hikes followed by ineffectual public outrage, it could be time to find out. If there is such a thing as a “recipe for a drug pricing controversy,” a recent article points out that many other drug makers have at least one “ingredient for a public uproar” in common with Mylan. Perhaps such uproars would become a thing of the past if pharmaceutical CEOs with “off the charts pricing power” were forced to think carefully about how they’d look in prison-issue orange.

Elizabeth Loder is the acting head of research, The BMJ.