AnEpiPen Allergic Reaction to Transparency Abstract From 2011 to 2015, increased the price of EpiPen by 227%. In the wake of a price gouging crisis, Mylan, a pharmaceutical company, took many missteps in their communication strategy and implementation. The spokesperson selected to represent Mylan, Heather Bresch, may be the CEO, but proved to do more harm than good throughout the crisis. Despite many mistakes, Mylan continued to use Bresch as a face for the company and did not make any communication changes. From social media firestorms to Congressional hearings, Mylan and Mrs. Bresch failed to put consumer interests above corporate financial goals. This case is an example of how poor strategic communications management can lead to negative brand image and continuation of controversy. Table of Contents Overview 1 Operations and Locations 1 Mission Statement 2 Mylan’s History 2 Mylan Under Investigation 3 Heather Bresch 3 The Crisis 4 Legal Repercussions of the Crisis 5 Timeline 6-7 Public Response 8 General Public 8 Regulators 8 EpiPen Users 9 Healthcare Professionals 9 Traditional Media 10 Social Media 10 Impact on Financial and Business Performance 11 Conclusion 12 References 13 #Mylan Overview In August 2016, Bernie Sanders tweeted a NBC investigative news story about Mylan pharmaceuticals and the increasing prices of their epinephrine auto-injector device, EpiPen. Quickly, the issue gained vast attention from the public and lawmakers. The EpiPen is a lifesaving device millions of people depend on for emergency allergic reaction treatment. The device is also required by most state laws to be present in schools; laws that were lobbied and funded by Mylan. The auto-injector device itself only costs $10 to produce, but by 2016, EpiPens were being sold for $600 for a pack of two. Mylan scrambled to defend the price hikes through their spokesperson and CEO, Heather Bresch. However, Bresch struggled to persuade the public and lawmakers that the price increase was necessary as she shifted the blame to the failing healthcare system. Bresch continued to defend herself and Mylan and admitted the prices did increase, but never apologized to the public. Mylan continued to face criticism as New York Attorney Eric Schneiderman announced he was investigating Mylan for breaking antitrust laws. The U.S. Justice Department also pressed charges for violating the False Claims Act and the Securities and Exchange Commission began to investigate the company. Operations and Locations Mylan is an American global generic and specialty pharmaceuticals company registered in Netherlands with principal executive offices in Hatfield, Hertfordshire. The company’s global headquarters are established in Canonsburg, Pennsylvania. Mylan has one of the broadest and most diverse portfolios, with more than 7,500 marketed products that include prescription generic and brand-name medicines and consumer healthcare products. Mylan offers products in more than 165 countries and territories. Depending on the markets, their products are distributed through retail channels, by healthcare professionals or in institutional settings. The company has a strong track record of developing new products, particularly complex and difficult-to-formulate medicines. Their approximately 50 plants around the world manufacture tens of billions of doses of medicine annually and each site adheres to stringent quality standards, regardless of location.

1 #EpiPen Mission Statement Mylan is a global healthcare company focused on making high quality medicines available to everyone who needs them for a better world. Their health care services help patients to access products and adhere to medication regimens to help promote better health outcomes. Mylan has a unique entrepreneurial spirit and strong work ethic. Mylan is committed to setting new standards in healthcare. Working around the world to provide 7 billion people access to high quality medicine, they: Innovate to satisfy unmet needs; Make reliability and service excellence a habit; Do what’s right, not what’s easy; Impact the future through passionate global leadership. Mylan’s History Mylan was founded as a drug distributor in 1961 by Milan Puskar and Don Panoz. In 1966, Mylan began manufacturing penicillin G tablets as well as antibiotics, analgesics, antihistamines, tranquilizers, vitamins, and other dietary supplements. In 1969, Panoz left Mylan and Puskar quit the company in 1973, as it grew and experienced financial difficulties. The board then hired Roy McKnight as board chairman, who convinced Puskar to return in 1976. In 1980, Mylan chose to market their products under their own “Mylan-labeled” brand. Throughout the years, Mylan acquired and joined forces with many companies such as Bertek Inc, UDL, King Pharmaceuticals, Abbott Laboratories, and Matrix Laboratories. However, one of the biggest deals that Mylan ever had was with Merck KGaA. In May 2007, Mylan and Merck KGaA agreed that Mylan would acquire Merck’s generics arm for $6.6B. From this transaction, the company tripled its size and acquired the rights to market the EpiPen. At that time, annual sales were around $200 million and the EpiPen had about 90% of the market. In 2012, under the control of the new CEO, Heather Bresch, Mylan launched a program called EpiPen4Schools to sell EpiPens in bulk with discounts to schools. Nevertheless, in order to participate in the program schools had to agree not to buy epinephrine auto-injectors from any other company for a year.

2 #EpiCEO Mylan Under Investigation Mylan has experienced several legal issues and communication crises throughout the years. In 1998, Mylan came under investigation from the Federal Trade Commission after it raised the prices of its products, tripling them in the case of lorazepam. In 2009, the company faced another legal complication with Pittsburgh Post-Gazette, when Mylan filed two lawsuits against the Pittsburgh Post-Gazette, after the newspaper ran an article that was critical of the quality control procedures used at one of the company’s plantation. The company had earlier quality control issues involving the FDA. Additionally, the same year, Mylan and its subsidiary, UDL, agreed to pay a $118M to settle a suit filed under the False Claims Act in which Mylan/UDL and two other companies were accused of underpaying states under the Medicaid Drug Rebate Program. The program required drug companies to give rebates to states under Medicaid and the rebates were higher for new drugs than for generics. According to the suit, the companies sold new drugs but paid rebates as if they were generics. Heather Bresch Heather Bresch is an American business executive and she is the daughter of U.S. Senator, . She has served as the Chief Executive Officer of Mylan since 2012. Before that, she served in several executive roles at Mylan, such as Senior Vice President of Corporate Strategic Development, Head of North American Operations, and Chief Integration and Operating Officer. Bresch was the first female CEO of a large pharmaceutical business and in 2014 she was in the top 50 “Most Powerful Women” list. Nevertheless, Bresch has a troublesome background, since in 2007 she was accused of inflating her resume by claiming an unearned MBA degree from University. According to the press, the president of WVU at the time was Michael Garrison, who was a family friend and a former business associate of Bresch for Mylan. The university subsequently awarded her an EMBA despite her having completed only 26 of the required 48 credits. In addition, her father was governor of the state of West Virginia at the time, something that sparked the controversy even more.

3 #Epigate The Crisis After Mylan acquired the right to market and distribute the EpiPen line of epinephrine auto-injector devices in 2007, Bresch saw an opportunity to increase sales through marketing and advocacy. Thus, the company launched a marketing campaign to increase awareness of the dangers of anaphylaxis for people with severe allergies. This campaign led the brand “EpiPen” to become as identified with its product as “Kleenex” is with facial tissue. Mylan also successfully lobbied the FDA to broaden the label to include risk of anaphylaxis and in parallel, successfully lobbied Congress to generate legislation making EpiPens available in schools and in public places like defibrillators. By the first half of 2015, Mylan had an 85% market share of such devices in the US and in the same year sales reached around $1.5B and accounted for 40% of Mylan’s profit, due to Mylan’s continual rise of Epipens prices. Starting in 2009, the wholesale price of two Epipens was about $100. By July of 2013 the price was raised to $265. In May of 2015, the price went up to $461 and by May of 2016 the price reached $609. The last price increase sparked widespread outrage and in response to all the criticism, Mylan increased financial assistance available for some patients to purchase EpiPens, a gesture that was called a “classic public relations move” by Harvard Medical School professor Aaron Kesselheim. The up to $300 saving cards could only be used by a small number of people who needed the drug and no one on Medicaid.

Social Media Reach

4 #EpiFraud Legal Reprocussions of The Crisis The most detrimental communication crisis for the company, though, was the one that took place in 2016 with EpiPen’s spokesperson, the company’s CEO, Bresch. In September 2016, the New York State Attorney General began an investigation into Mylan’s EpiPen4Schools program in New York to figure out if the program’s contracts violated antitrust laws. The West Virginia State Attorney General also opened an investigation into whether Mylan had given the state the correct discount under the Medicaid Drug Rebate Program and subpoenaed the company when it refused to provide the documentation the state requested. A month later, Bresch testified to Congress that Pfizer/King charged the company about $34.50 per one EpiPen device when Silicon Valley engineering consultancy had estimated that the cost was about $10 for a two-pack. At the same time, Mylan announced a settlement with the US Department of Justice over rebates paid by Mylan to states under the Medicaid Drug Rebate Program. Under that settlement, the company had to pay a $465 million payment and sign a corporate integrity agreement requiring the company to perform more ethically in the future. The settlement also resolved cases brought by states related to the rebates. In October 7, Mylan received another document request, this time from the Division of Enforcement at the Securities and Exchange Commission seeking documents concerning Mylan’s products sold and related to the Medicaid Drug Debate Program and any other relevant complaints. Mylan fully cooperated with this investigation.

5 #EpiPlease Timeline 2011: List price of EpiPen is $165. The patent protection had already expired and there were no competitors in the market.

2012: List price of EpiPen increases by 32%. There are still no competitors in the market. Consumers continue to purchase the product regularly as EpiPens expire each year. Heather Bresch is made CEO of Mylan.

2013: First competitor, Sanofi, enters the market at a similar price point. Mylan increases the price of the EpiPen a little to differentiate themselves as a premier brand. Later that year, Sanofi issues a recall and leaves the market, leaving Mylan the sole producer once again.

Summer, 2015: Consumers begin to notice the price spike and become unhappy with the brand. They take their conversation to social media, however it was not widespread.

June, 2016: Medical news outlets begin to report on the price spike. These articles reveal that consumers and emergency responders were resorting to using a syringe instead of the EpiPen in order to avoid the high prices.

July 20, 2016: MarketWatch reports on the price spike. Within two days, consumers had started a petition to ask Congress to look into the issue.

July 22-August 15, 2016: Petition gains traction and a small campaign (roughly 20 posts per day) is launched on social media to hopefully garner national attention.

August 16-August 22, 2016: Congress and the media begin to take notice of the price gouging. Bernie Sanders takes to Twitter to denounce Mylan and the pricing of the EpiPen. Large news stations start reporting on the issue and politicians ask Mylan to provide justification for the increase in price. Social media conversation increases as well, up to roughly 500 posts per day by August 22.

6 #EpiRebate Timeline August 23, 2016: Information is leaked about the “compensation package” being funded by these price increases for Heather Bresch. Social media posts grow from 500 per day to 10,000 within the two days after this information is released.

September 21, 2016: Senator Bernie Sanders tweets “There’s no reason an EpiPen, which costs Mylan just a few dollars to make, should cost families hundreds of dollars.” Heather Bresch responds with the claim that Mylan only makes $100 on each EpiPen two-pack.

September 27, 2016: Mylan increases the price of the EpiPen to $608.

October 7, 2016: Mylan agrees to $465 million settlement to the U.S. Department of Justice.

November 30, 2016: Heather Bresch refuses to testify at a Congressional hearing where the $465 million settlement Mylan agreed to pay the U.S. Department of Justice was to be reviewed.

December 1, 2016: Heather Bresch attends Forbes Healthcare Summit. She takes full responsibility for the price hikes but ensures that they were justified and calls for more transparency in the pricing of pharmaceuticals.

December, 2016: Mylan offers a generic option for $300.

February, 2017: Alternatives to EpiPen now control 28.9% market share (up from 5.3% in December, 2016).

April 3, 2017: Mylan is served with a class-action lawsuit that claims “the company engaged in an illegal scheme to dramatically increase the list price of its EpiPen anti-allergy device over the past decade.”

7 #EpiSenate Public Response General Public Before the scandal came into the spotlight, the general public had little knowledge of the steady increase in prices of the EpiPen. Many found out when public figures took to social media to fight the price gouging, however the parents movement alerted many friends and family members as to how urgent the issue truly was. Although they were not directly affected by the increase in price, the online support put pressure on Mylan to respond to the cries for help.

Regulators Senators Bernie Sanders and Amy Klobucher took to Twitter to shed light on the scandal. On September 21, 2016, Sanders tweeted very plainly “There’s no reason an EpiPen, which costs Mylan just a few dollars to make, should cost families hundreds of dollars.” This straightforward message pushed the issue into the limelight where others who were not directly affected could learn more about the crisis. Klobucher was also extremely active in calling for change on Twitter. Many of her followers who were affected by the price-gouging engaged with the senator by responding with their own personal stories of how their health and safety, or the health and safety of loved ones, had been negatively affected by the steep increase in price. Klobucher took it upon herself to keep her followers informed as new updates in the case surfaced. Senators Susan Collins and Claire McCaskill sent a letter to Mylan CEO shortly after this demanding justification of the price increase. After seeing these senators speak out so publicly about the scandal, many Twitter users took it upon themselves to call other politicians to action online.

8 #EpiFamily EpiPen Users Because a majority of EpiPen carriers are children and their parents, the parents spurred most of the conversation both on and offline. One parent, Mellini Kantayya, started an online petition to lower prices that earned over 80,000 signatures in just over a month. Those who signed the petition also wrote more than 121,000 letters to their Congressmen to call for change. Additionally, parents shared their “close call” stories and frustrations with Mylan on social media. Some even reported allowing their children to carry expired EpiPens and learning to inject epinephrine themselves with a syringe because they simply couldn’t afford to purchase the device. Parents formed support groups in order to help each other cope with the constant anxiety of not having access to EpiPens for their children. One Massachusetts mother, Toni Becht, completely drained her Health Savings Account to pay for auto-injectors for her son to go on a weekend trip with his school. She told the Charlotte Observer she “had no choice. Now we have to hope there will be no real serious illness or hospitalization the rest of the year,” as her family would have no way of paying for it.

Healthcare Professionals Doctors, school nurses, and EMT’s scrambled in response to the crisis as well. Schools were finding themselves unable to keep the mandated number of EpiPens in stock. EMT’s turned to injecting epinephrine using a syringe rather than purchasing EpiPens for their vehicles. This method is extremely difficult, especially in a vehicle speeding towards the hospital, and carries a high risk of contamination. Multiple states opted for additional training for their EMT’s on how to administer epinephrine via this method rather than spending the money on the single use auto- injectors.

9 #EpiPays Traditional Media The scandal was covered extensively by traditional media outlets such as the New York Times, CNN, Fox News, and NBC, with Heather Bresch’s poor public relations skills starring in many of the narratives. Bresch told the New York Times “I am a for-profit business. I am not hiding from that,” which led the author to draw the conclusion that Mylan operates solely to “maximize return for management and investors” (Fink, 2016). The New York Post reported that Mylan spent more than $2 million lobbying in Washington D.C. in 2015 alone. The author even implied that Mylan could possibly offer the EpiPen at a lower price point if so much of their revenue was not spent attempting to alter public policy in their favor. Bresch received a significant amount of backlash for her political connections (i.e. her parents) in the traditional media as well. Shortly after Bresch became the CEO of Mylan, the National Association of State Boards of Education, of which Bresch’s mother Gayle Manchin was president, addressed food allergies for the first time with their “epinephrine policy initiative.” (Ramsey, 2016)

Social Media Although the general public was slow to speak out about the gradual increase in price over the years, once the price reached the $600 range, politicians, parents, celebrities, school teachers, healthcare providers and even EMTs took to social media to share anecdotes about the life or death differences that access to the EpiPen makes. Sarah Jessica Parker, who had previously been a spokesperson for Mylan’s “Anaphylaxis for Reel” social media campaign, posted on Instagram that she was cutting all ties with the company as a direct result of the EpiPen price spike. Due to the high level of personal involvement, parents of children who carry EpiPens largely dominated the resulting online voice, sharing stories about times that their children’s lives were saved because an EpiPen was within reach and the high risks they faced without access to one of the auto-injectors. Once the scandal was really starting to receive attention online, posts about the EpiPen and Mylan ranged from about 2,000-10,000 per day.

10 #EpiPlunge Impact on Financial & Business Performance During the scandal, Mylan’s stock dropped to an all time low. Mylan shares fell a shocking 15% when the price hike came to light in early August. By September of 2016, the company’s share value was listed at -.21%. Investors were trading their stocks at 7.5 times the estimated value of the brand. Essentially, the scandal devastated the valuation of the global brand. Over the course of the investigation, it was revealed that Mylan executives pocketed over $300 million over the five years that EpiPen’s prices were dramatically inflated. This tells consumers that the price inflation was entirely to the benefit of the company executives because prior to the extreme price hike, EpiPen only represented 10% of Mylan’s profits. In addition to the decline of share prices, competitors to EpiPen started making moves. Prior to the public outrage at the prices, EpiPen held an alarming 90% of the market share for this particular product. Many believe that the price increase was in violation of both state and federal Antitrust laws. Despite producing a generic product that dropped the cost to $300, other producers decided to get in on the action. Teva Pharmaceutical Industries announced in September of 2016 that they hope to sell epinephrine injection devices by 2018. This is a major assault to EpiPen’s business model that allows them to make executive product category decisions because there is no competition. Mylan, however, has not continued to suffer largely for the EpiPen scandal due to their 2016 acquisition of Meda, a Swedish drugmaker. To make financial matters worse, the United States Supreme Court ruled in October of 2016 that EpiPen had been falsely classifying their name brand drug as generic in order to pay Medicaid a lower product rate. News and nonprofit organizations reported that Mylan charged the Medicaid program a 227% price increase from 2011 to 2015. While claiming that the brand had done nothing wrong or out of the usual for the industry, Mylan agreed to settle the case for $465 million dollars. In order to recover from this major financial blow, EpiPen dropped their company valuation to account for profit this deficit. Within hours of the reduced valuation, the company stock increased by 11%.

11 #EpiProbs Conclusion Mylan’s repeated mishandling of the EpiPen crisis demonstrates how poor crisis reponse protocol can ruin the reputation and wallet of corporations forever. While Mylan continues to make millions on other pharamcueticals, EpiPen has lost the trust of the consumer. The Senate, The FTC, and effected individuals are continuing to take the fight to Mylan for their unethical practices. Over a year later, EpiPen’s woes are still unending. Image Restoration Theory and Crisis Management techniques suggest that if Mylan had ever backed away from their defensive response and their unqualified CEO, there may have been some hope in salvaging the brand name in the eyes of the consumer. This case demonstrates the importance of a sincere and legitimate spokesperson to represent the brand to consumers, stakeholders, and regulators. Heather Bresch failed to acknowledge the hardship Mylan caused parents, children, schools, and summer camps. In fact, she stated on CNBC News that Mylan was going to be fine regardless of EpiPen issues because “One out of every 13 scripts in the United States is filled with Mylan medicine, more than the seven other larget pharmaceutical companies combined.” (Managan 2017). Telling consumers that Mylan was still in the medicine cabinet anyway did nothing to help the public feel better about the price guaging or illegal Medicaid fillings. EpiPen’s brand image will certainly never be the same.

12 References Benoit, W. L. (1997). Image Repair Discourse and Crisis Communication. Public Relations Review, 23(2), 177-186. Retrieved December 1, 2017, from http://www.sciencedirect.com/science/article/pii/S0363811197900230

Opinion | An Outcry Over the Price of EpiPen. (2016, September 02). Retrieved December 01, 2017, from https://www.nytimes.com/2016/09/03/ opinion/an-outcry-over-the-price-of-epipen.html

Popken, B. (2016, September 06). Industry Insiders Estimate EpiPen Costs No More Than $30. Retrieved December 08, 2017, from https://www.nbcnews.com/business/consumer/industry-insiders-estimate- epipen-costs-no-more-30-n642091

Ramsey, L. (2016, September 20). The EpiPen pricing scandal just got even more complicated for the CEO and her family at the heart of it. Retrieved December 08, 2017, from http://www.businessinsider.com/mylan-ceo-epipen- pricing-scandal-joe-manchin-heather-bresch-2016-9

Stoll, I. (2016, August 30). There’s more to the EpiPen price hike scandal than just greed. Retrieved December 08, 2017, from https://nypost.com/2016/08/29/theres- more-to-the-epipen-price-hike-scandal-than-just-greed/

Morgan, Dan (2017, March 3. Mylan CEO Heather Bresch says divirsification is boosting company after EpiPen controversy Retrieved December 07, 2017, from https://www.cnbc.com/2017/03/03/mylan- ceo-heather-bresch-discusses-epipen-controversy.html

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