AnEpiPen Allergic Reaction to Transparency Abstract From 2011 to 2015, Mylan 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, Joe Manchin. 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 West Virginia 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.