Matthew Waterman
1
All posts from Matthew Waterman
Matthew Waterman in Brand Power,

You Are Mad At Mylan For The Wrong Reasons

I've covered in the past a particular problem that exists in healthcare in the United States. Ok well that was ambiguous, there are a lot of healthcare problems in the U.S., but I think that maybe the worst of these is that we have conditioned ourselves to distribute the cost burdens unevenly. That is, traditionally we would all pay in to our plan premiums, and then expect to get all of our drugs and doctor visits cheaply. When the insurance companies flipped the tables on this concept by charging higher deductibles, suddenly people who were getting more out of the insurance were suddenly forced to pay more to do it. 

This had two effects on people's psychology: 

1) That people who were paying more tended to believe that they were entitled to more, and

2) That people who weren't using the insurance for anything got sick of paying the premiums. 

Those thoughts are unfortunately at odds with each other, and with the large number of healthcare plans out there, it is increasingly more difficult to get the coverage that you actually need. That's not Mylan's (MYL) fault. Of course, it was their option to raise the price on their Epipens, but this had a lot more to do with the pharmacies selling the product. And if you had a monopoly on a lifesaving drug, I hate to say it, but you would do the same thing. That, or somebody else would. That's just how a free market economy works. 

Don't panic. This environment won't last forever.

There are other generic pens that are starting to get noticed now. Mylan is even getting ready to release a cheaper generic of their own product. This is what happens when there is a supply/demand imbalance, substitutes start appearing. It can't happen overnight in the pharmaceutical world because it takes time for the FDA to review these products for safety. Epinephrine is not the kind of thing you want to be injecting into yourself unless you are at a true risk of dying right that moment. The shock of the adrenaline rush can kill you on it's own. This is why competing products by Sanofi (SNY), Teva (TEVA), and Antares Pharma (ATRS) had to be held off the market for a time.

At any rate, Mylan is running a business, not a charity, and you should expect that their first goal is to make a profit. In spite of the news you may have read about the CEO gettng a raise, they aren't having an especially strong year. The raise was likely in options to promote new ideas for growth. I know it sucks to have your medication shoot up in price, but if it weren't for this system, these medications would probably never have made it to market in the first place. 

I'm not personally long any of the companies mentioned here. I don't like to buy into situations that are highly competitive.