EpiPen maker targets direct sales

Mylan says prescriptions to eateries, theaters will cut price

Mylan NV made a fortune, and stirred controversy, while getting EpiPen allergy shots stocked in schools across America.

Now the drugmaker wants to sell EpiPens to restaurants, sports venues and potentially even Boy Scout troops — by setting up its own pharmacy to cut out middlemen and lobbying for new laws that could expand sales of its biggest product.

The plan, obtained by Bloomberg News through public records requests, would bypass small-town pharmacists and chains like CVS and Walgreens and let Mylan sell the drug directly to public places. The company is looking to revitalize EpiPen sales that began slumping last summer, when Congress questioned Mylan over EpiPen’s six-fold price increase since 2007.

“It’s extremely smart,” said Mark Baum, founder and chief executive officer of San Diegobased Imprimis Pharmaceuticals Inc., which supplies drugs directly to patients. “There’s no rationale for other middlemen getting in the way. That’s just driving up the cost to customers.”

Sales of EpiPens fell in the third quarter as the $600 price tag sparked a furor that included questioning of Chief Executive Officer Heather Bresch by a congressional committee. Since mid-August, shares have fallen about 20 percent. Last month, Mylan said it would cut less than 10 percent of its workforce.

Mylan declined requests for interviews with executives, but Bresch has made no secret of Mylan’s strategy to push for state laws to allow so-called entity prescriptions — drugs sold to places rather than people.

“We are continuing to open up new markets, new access with public entity legislation that would allow restaurants and hotels and really anywhere you are congregating, there should be access to an EpiPen,” Bresch said at a September 2015 conference.

In October, Mylan said it reached a $465 million settlement with the U.S. government over accusations it overcharged the Medicaid program by classifying EpiPens as generic instead of brand-name drugs in order to pay lower discounts.

Mylan’s new business plan could change an industry whose layers of middlemen, critics say, cost customers money. Direct sales would target the country’s more than 600,000 eating and drinking establishments, plus thousands more sports venues, amusement parks and movie theaters. More than 15 million Americans have food allergies, and a severe reaction sends a patient to the emergency room about every three minutes, according to the nonprofit Food Allergy Research & Education.

In 2015, EpiPens brought in $912 million with an operating profit of $498 million, Mylan said in a regulatory filing. If half of America’s restaurants bought an EpiPen two-pack each year at a full price of $608, Mylan would generate about $180 million more in annual sales. Last month, the company began selling an authorized generic two-pack for $300.

EpiPens, which deliver shots of epinephrine that can stop severe reactions to bee stings and food such as peanuts and shellfish, have been provided free to 67,000 U.S. schools, Mylan said. Schools can also buy additional EpiPens at a discount.

Laws in 48 states, including Arkansas, allow schools to stock and administer epinephrine injectors. Mylan spent about $4 million in 2012 and 2013 to help get federal legislation passed to encourage states to stock the devices in schools, according to lobbying disclosure forms filed with the U.S. House of Representatives.

Now the company is trying to replicate that campaign. Since 2013, Mylan has funneled thousands in campaign contributions to state lawmakers, according to campaign finance disclosures and documents posted on Mylan’s website. Already, at least 30 states permit entity prescriptions beyond schools. Before Mylan’s involvement, no states had enacted such legislation, the company website says.