Mylan (MYL) Stock: Can It Survive The Epipen Blues?


Mylan Inc. (NASDAQ:MYL)

On August 10th, the CEO of Mylan, Heather Bresch, assured that reliance on the Epipen was starting to ware down. This was the day the CEO was talking about earnings on the conference call. The CEO tried to downplay the whole necessity of the Epipen. Maybe it was to take attention away from it, and rightly so. That is because one week later after many analysts and investors had a chance to analyze the numbers, what they revealed was quite shocking.

Trade smarter and make more money with Tradespoon!

What exactly was so shocking to where the Mylan issue has become such a huge dilemma in the news lately? Well how about the fact that from 2008 to now, the Epipen has risen in price by 400%. That would make it hard for a standard adult to be able to afford the cost of having to use an Epipen. Even if you factor in the possibility about insurance companies that doesn’t help either. That’s because most insurers don’t even cover the cost of the Epipen anymore. You can see now why this problems has blown up greatly in the media.

It got so bad that one week later, Senator Chuck Grassley who is the Chairman of the U.S. Senate Judiciary Committee Chairman, asked the CEO of Mylan why is the price hiked by so much? This was a question in which the CEO could not respond to clearly. After all, Mylan acquired the Epipen drug in 2007. The Epipen is responsible for helping people at the time of an allergic reaction. Many think of an allergic reaction as being small, but there are times where an allergic reaction can be severe and life threatening. If that is the case, then the allergic reaction can lead to death.

That’s where the problem lies, because this treatment is not a product that is just wanted. It is a necessity for patients to avoid death. Yet Mylan has increased the price by 400% from 2007. The main question is why? It is not a newly developed drug, and the company doesn’t need to be reimbursed for development costs. Patients had been forced to drive to Canada to get the Epipen at 1/3 the total U.S. cost.

With such a huge backlash from the medical community, the senate and many others Mylan had to quickly get into a reactive position. It has been forced to squelch criticism by doing something drastic. This drastic measure was announced on Monday, where the pharmaceutical drug maker would launch a generic Epipen with a 50% discount. While a nice gesture on Mylan’s part, a 50% discount to a drug that has already risen by 400% is nothing. This move is an attempt to squash the harsh criticism, but I don’t believe it will work.

That’s not all its doing to alleviate pressure on itself. It is also stating that it will offer a $300 instant savings cards to patients that have to pay the full price for the drug out of pocket. As noted before all these gestures are nice, but in the end Mylan is still stopping short of performing one function that would end all the criticism. That function would be to outright cut the price of the drug. The company refuses to take this route when it know full well that it is the right thing to do.

Don’t waste your time! Click here to find winning trades in minutes!

It is not right that Mylan is putting profits in front of patients’ lives. Mylan’s CEO Bresch continues to blame the broken healthcare system for the reason of the cost being so high. That’s far from the truth, because if the company wants to they can cut the price in half or more tomorrow if it wanted to. But analysts wrote that Mylan would receive a big cut per prescription sold, and that would lead to lower revenue. Again, it all comes back to money on why Mylan won’t cut the cost of the Epipen. Mylan’s stock should continue to feel pressure from this as long as it refrains from cutting the cost of its Epipen treatment.

[Image Courtesy of Flickr]


Please enter your comment!
Please enter your name here