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United Steelworkers describe struggle to keep Morgantown pharmaceutical plant alive past July 31

MORGANTOWN – As West Virginia’s population continues dwindling and state leaders grope for ways to bring and keep people here, 1,500 well-paid factory workers face the end of their careers – come July 31 – at the plant that still bears the Mylan sign out front.

“Our nation is going to lose one of our largest generic drug manufacturing sites in our country,” said United Steelworkers Local 8-957 President Joseph Gouzd. The union represents the plant’s 900 shop floor workers. “We’re about to shutter what used to be an 18- to 20-billion dose facility annually for the sake of corporate greed and mismanagement.”

He’s baffled that efforts to reach out to state and federal officials to find ways to perhaps repurpose the plant and keep the workers working have been met mostly with silence. “It is bewildering to us how there is not an essential need for this site to continue to maintain its manufacturing.”

The plant is an essential need for the economy and national security, he said. He estimates that the union’s contribution alone totals $60 million in wages, with a corporate impact on top of that of $120 million. People come to work there from Maryland, Pennsylvania and across north-central West Virginia.

“This is a critical blow to the economy,” he said. And it does nothing to halt the state’s ongoing outmigration.

The closure of the former Mylan plant follows Mylan’s merger with Upjohn into Viatris at the end of 2020 and the resulting planned global restructuring. Part of that restructuring is closing up to 15 plants worldwide: The Morgantown plant was among the first five announced in December and Viatris has since selected another eight, according to SEC filings. It expects its total restructuring to affect about 20% of its total workforce of about 45,000 people.

The Morgantown plant makes pills and capsules – called oral solid doses – and while Viatris hasn’t said which of its facilities will take over those jobs, Gouzd figures much of it will be offshored to plants in India, Australia, perhaps even China.

This will help Viatris maintain profits through lower-cost labor, he said, but does nothing for our domestic drug manufacturing needs or national security. The plant produced more than 9 billion doses for U.S. Veterans Affairs alone, not counting Medicare and Medicaid.

It’s part of the general outsourcing of much of American manufacturing, he said: clothing, microchips, steel. “What’s next for America? … Where’s the end?” Gouzd asked.

With some creative repurposing, he said the plant could manufacture oral solid doses just to fill the regional needs of WVU Medicine, Mon Health and UPMC.

During the recent state legislative session, the House and Senate adopted twin resolutions calling on Gov. Jim Justice “to form a task force with our congressional representatives, labor organizations, and other industry leaders to call upon the president of the United States to invoke the Defense Production Act of 1950, order the Morgantown plant at the Chestnut Ridge facility of the former Mylan Pharmaceuticals to be retrofitted and placed into production relating to the manufacturing, packaging, and shipping of critical, life-saving medical supplies including vaccinations, and empower the governor of West Virginia to save the lives of our friends, neighbors, and fellow citizens.”

Apart from support from local legislators, Gouzd said, nothing has come of that. “It’s almost as if we’re a lost entity.”

Asked about that during Monday’s COVID-19 briefing, Justice simply said he has no authority to invoke the National Defense Act. He did not respond Tuesday to questions regarding what efforts he has made.

The Dominion Post also contacted Rep. David McKinley and Sens. Shelley Moore Capito and Joe Manchin. McKinley’s office said, “Our office has been working with stakeholders to discuss various options – and we are working on legislation to promote domestic pharma production at abandoned plants.”

The Dominion Post learned that his offie has talked with USW, Viatris and state officials. Dicussions have included the possibility of marketing the site to another company.

Capito did not respond. Manchin’s office acknowledged the request but provided no information.

The union is working to ease the pain of the transition for its displaced members, Gouzd said. It’s applied for federal trade adjustment assistance – which provides aid to workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports – and is holding work fairs and educational fairs.

The Dominion Post learned that the trade adjustment assistance has been approved.

Severance talks with Viatris have been sparse, he said – only two in four months. “Our offering for severance is paltry at best.”

Plant background

Mylan began producing drugs in Morgantown in 1965. Troubles began around 2015-16, Gouzd said, when the FDA raised regulatory and compliance issues there.

Troubles recurred in 2018. As previously reported, in April 2018, the FDA completed an inspection at the plant and made observations through Form 483. In the fourth quarter of 2018, Mylan received a warning letter related to the previously disclosed observations at the plant.

Mylan undertook remediation efforts there and in May 2020 it received the closeout of the warning letter. Financial reports indicated it spent $123.2 million on the remediation.

However, there was foreshadowing of what was to come, as Mylan said it expected no significant new product revenue from the Morgantown plant in 2019, “and we are forecasting that only five of our top 50 and only one out of the top 10 gross margin generating products will be manufactured in Morgantown in 2019.”

And then there was the Epi-Pen pricing controversy. In September 2019, Mylan finalized its $30 million settlement with the SEC regarding charges relating to accounting and disclosure failures connected to a Department of Justice probe into its overcharging Medicaid by hundreds of millions of dollars for its EpiPen. That was preceded by a $465 million settlement with the DOJ in 2016.

“Every time we got to a two-way stop sign, we would get through it successfully, and unbeknownst to us, a month or two later we would go up the road, figuratively speaking, and we would hit a three-way stop sign,” Gouzd said. The plant was subjected to ever-changing guidance and procedures stemming from top-level management.

But the skill of the workers and the plant’s flexibility became apparent, he said, in March 2020, when Mylan resumed production there of an anti-malaria medication that was under study as a potential treatment for the COVID-19 virus: hydroxychloroquine sulfate.

While that study didn’t pan out, the plant was able to turn on a dime and put out 100 million doses. The plant has 900 skilled workers with a minimum 12 years of experience who can do whatever they’re called upon to do.

Gouzd referred to the economic impact of the 900 workers at about $60 million in wages. For the sake of comparison, estimate that all 900 make $70,000 a year and that totals $63 million.

And look at the compensation of four Mylan leaders, three of whom are now with Viatris. Former CEO Heather Bresch, who retired upon the merger, was expected to receive a $30.8 million golden parachute upon her departure.

Viatris Executive Chairman Robert Coury’s total 2021 target compensation is $15.3 million, according to an April filing. President Rajiv Malik’s target compensation is $9.9 million and Developed Markets President Anthony Mauro’s is $4.92 million.

Meanwhile, the Mylan/Viatris stock price per share has declined since 2015, when the company fended off a takeover bid by Israel-based Teva (which offered $82 per share) while unsuccessfully making a takeover bid for Ireland-based Perrigo. On a particular day in May 2019, The Dominion Post reported then, the price was $22.17. Viatris’ closing price Tuesday was $13.40.

*The online version of this article has been updated with additional information since appearing in print on May 5, 2021.

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