Shareholders of the embattled drugmaker Mylan voted to re-elect its board members at their annual shareholder meeting Thursday morning, despite pressure to oust select executives amid public and regulatory backlash for the skyrocketing price of EpiPens. Shareholders also rejected proposed executive pay packages at the meeting.
Mylan executives had been under fire since the company drastically raised the price of EpiPens, epinephrine auto-injectors that are used in emergencies to stop severe allergy attacks, which had been sold in a two-pack for around $100 for years. The drug now tops $600, an increase of more than 500% since 2007, when Canonsburg, Pa.-based Mylan bought rights to the drug.
Former CEO and current Mylan Chairman Robert Coury received a $98 million compensation package in 2016, and he and other top executives would have received bonuses under the executive pay proposals if the stock price hit certain benchmarks by the end of next year. The company used lofty price hikes and other strategies to reach those goals. Coury also stood to benefit from a $44 million equity grant that would've essentially guaranteed a hefty salary over the next five years.
Institutional investment funds including the California State Teachers' Retirement System and the New York City and New York State comptrollers signed a letter to shareholders urging them to hold Mylan executives accountable "for a costly record of compensation, risk and compliance failures" and turn down executive packages. Critics questioned the value of Coury's role since he stepped down as CEO in 2012.
"Last year was a new low for the Mylan board," the letter reads. "At its core, the EpiPen price-hiking controversy was the costly consequence of a board with a history of oversight failures. From allegedly overcharging both the government and consumers for its lifesaving EpiPen to approving exorbitant pay for its deeply entrenched chairman, Mylan's board has repeatedly enabled self-serving executives at shareowners' expense."
Shareholders suffered a 29.4% loss in 2016, the letter said.
Mylan, which has a stronghold on the auto-injector market, sparked a public outcry after it drastically raised the price of EpiPens, spawning congressional hearings and several lawsuits. The company faces a federal investigation for possible antitrust violations and class-action lawsuits over EpiPens throughout the country.
One of the lawsuits came from its rival Sanofi, alleging Mylan's agreements with pharmacy benefit managers amount to illegal kickbacks. The plaintiffs claim that Mylan paid PBMs—including Express Scripts, CVS Health and OptumRx—to promote EpiPen over competitor allergy injectors, and those payments artificially increased prices. Mylan's actions violate federal racketeering law and state consumer protection laws for allegedly raising EpiPen's list price to provide kickbacks to PBMs, according to the lawsuit.
Mylan reached a $465 million settlement with the federal government in September to settle allegations that it overbilled Medicaid. Yet, HHS' Office of Inspector General recently accused Mylan of overcharging federal taxpayers nearly $1.3 billion. It incorrectly classified the auto-injectors as generics, which means it paid Medicaid a 13% rebate instead of a 23% rebate, according to the government watchdog.
U.S. Food and Drug Administration Commissioner Dr. Scott Gottlieb announced Wednesday that the agency is working on a Drug Competition Action Plan that aims to lower drug prices by getting more generic drugs to market sooner. The FDA looks to close regulatory loopholes that branded drugs use to thwart the development of generics.
"We know that sometimes our regulatory rules might be 'gamed' in ways that may delay generic drug approvals beyond the time frame the law intended, in order to reduce competition," Gottlieb said in a statement. "We are actively looking at ways our rules are being used and, in some cases, misused."