By HOLMAN W. JENKINS, JR.
Aug. 26, 2016 5:36 p.m. ET

To whom it may concern:

As the CEO of Mylan, maker of the world-famous EpiPen, it gives me great pleasure to address you, via email from an undisclosed location, concerning the pricing of our product.

As you may know, my father is a U.S. senator from West Virginia, where the state motto is “Montani semper liberi.� It means “mountaineers are always free.� Indeed, they are. But pharmaceuticals aren’t—especially EpiPen.

Sadly, thanks to a controversy fanned by the media, even my father, better known as Sen. Joe Manchin, issued a statement this week decrying the “skyrocketing prices of prescription drugs.� He didn’t mention EpiPen for good reason. He’s my dad.

Our health-care system is confusing. The public is understandably confused about why we have raised the price of a two-pack of EpiPens by 500% over the past decade—from $100 in 2007 to $600 today.

That sounds like a lot, especially since the active ingredient, epinephrine, has been around since 1901 and is cheap to make. Yes, we recently improved our injector, but guess what? The old injector worked fine. EpiPen, using the old injector, saved thousands of lives, especially children who are allergic to peanuts or bee stings.

The drug can be bought for 10 cents in many countries; the old injector design our would-be competitors are free to copy to their heart’s content. Our prices would surely be lower, then, if we actually had some competitors. Don’t blame me. The Food and Drug Administration has delayed the entry of one competitor and made noises that recently drove another from the market over product-quality snafus.

As I explained to the New York Times this week, “I am a for-profit business.� EpiPen sales have reached $1 billion a year on my watch, up from $200 million a decade ago. Guess how much of that growth is not increased volume but increased profit? A lot. That’s capitalism. I’m doing my job. Maybe the FDA should do theirs.*

(*Mylan employs lobbyists and lawyers to delay competitors from getting their products approved by the FDA.)

Newspaper and TV coverage of our pricing controversy has not been friendly to Mylan, but most reports at least mention the ways we strive to lower the out-of-pocket price for consumers with coupons and rebates to offset their copays and deductibles. We also provide free drugs to hardship cases. The Washington Post even alluded to these efforts in its headline: “Despite coupons, EpiPen’s virtual monopoly roils critics.�

Sadly, the media have proved unable to explain the finer points of pharmaceutical pricing. Not that we blame the media: health-care pricing is complicated and subject to Reporter Complexity Refusal Syndrome.

And yet the essential matter is not complicated. It can be explained in a sentence: Six hundred dollars is the price we want insurers to pay.

Insurers are not spending your money. They are spending everybody’s money. Look at it from the perspective of health-care providers, drugmakers or medical-device suppliers. All of us are competing for a common pot of loot. Naturally, each wants to maximize his share. That’s human nature. If 10 hungry people are sitting around a small bowl of jelly beans, each will eat more, and faster, than he otherwise would.

Notice something else: How much each provider takes out of the common pot has no natural, organic relationship to the value the provider brings to the patient. Why not? Well, in the rest of the economy, when a consumer is spending out of his pocket, he has incentive to judge whether the service he’s buying is worth the price he’s being asked to pay.

Now you know why we offer coupons and rebates to individual consumers. This is our way of trying to re-desensitize customers to the price of EpiPen in order to counter the efforts of insurers to re-sensitize them by hitting them with copays and deductibles.

Then why does getting our coupons and rebates involve rigmarole? Because certain consumers won’t make the effort, and then we get to keep the money that would otherwise go to defray their out-of-pocket costs.

It’s a great game and we have fun playing it. On average, however, it probably does not increase the health-care industry’s profit margins or the public’s health—but only the share of national income diverted to health care from everything else: beer nuts, wedding presents, automobiles. Our industry’s share of GDP is 17%, up from 13% two decades ago. Hooray, that’s $700 billion a year.

For decades, health-care reform as preached by knowledgeable experts has aimed at fixing this dynamic, and yet every law passed by Congress ends up doing the opposite, basically using taxpayer money to fill the pot with more jelly beans for providers to fight over.

So if you don’t like how much your EpiPen costs, elect different politicians (except for dad).

Sincerely,

Heather Bresch

Chief Executive Officer, Mylan