Mylan's Epipen Price Boost Risks the Lives of Patients (2009-2016)

Mylan brand logo

Controversy
Mylan has been under fire during the past several years due to periodically raising the price of their trusted EpiPen product. They have been selling in a monopolistic market for several years. They have taken advantage of this situation in order to better their company with disregard for customers. Currently, the EpiPen is protected by a patent approved by the FDA. Meaning, no other company is allowed to produce a similar product, for it will be pulled from the market by the FDA. This has happened once, and even with the FDA protecting their market, they have continued to increase their product's price. David Whitrap, a spokesman for Express Scripts, said, "What we’re seeing from Mylan now is indicative of how many pharmacy companies negotiate during a momentary monopoly they price as high as they can for as long as they can" (nytimes.com). They knew the patent was expiring soon, and the company put the lives of many in danger by being greedy. The controversy obviously revolves around the price hike. When Mylan first acquired the EpiPen it was selling for around $124 for a package of two. To squeeze the expiring patent of a little more profit, they raised the price to over $600. This has been ongoing, meaning it was not $124 to $600 over night; it has happened over the several years Mylan has sold the EpiPen. Families who require these tools to keep their children safe are required to use old products as they cannot afford to replace them. What's worse, is Mylan knows that the EpiPen themselves expire only after one year, whether they are used or not. They have increased the price of a life-saving product that they know people are going to continuously purchase.

Stakeholders

Child using an EpiPen, a life-changing
 item for those with extreme allergies

For Mylan, their stakeholders include patients, insurance companies, pharmacies, families, and schools. Patients are affected because they are the ones that most need the EpiPens and if they do not have one, or if an expired product fails, they will be rushed to the hospital. This would harm a family even more, especially if they couldn't afford the EpiPen in the first place. Insurance companies are invested in this situation as well because they are the ones helping families pay for their drugs and treatments. They will have to pay more out due to the increase in price. Pharmacies such as CVS, Walgreens, and countless others would at a disadvantage because less people would be buying EpiPens. This would result in a revenue drop for the pharmacies. For families, they are obviously concerned about their children and the family's finances. Even worse, if a family has a few kids that have these life-endangering allergies, they are double or triple affected by these price hikes. Schools are required to hold onto a few EpiPens to protect their students. It has been noted that some schools across the country are resorting to holding onto old models.

Individualism

Individualism is one of four ethical theories that will be used to evaluate how ethically Mylan acted. Individualism, also known as the Economic Model of Responsibility, is a frame of mind that evaluates a company's action based on how it benefits the company. "It is the aim and the responsibility of businesses to maximize their profits" (Salazar 17). This ideology was first posed by Milton Friedman, the famous economist. The only constraint given by Friedman, is that all actions must comply with the law. Just this year, Mylan reported revenues of $9.36 billion and net income of $847 million for their fiscal year ending December 31, 2015. Compared to Fiscal year 2013, they earned revenues of $6.85 billion and net income of $626 million; there is evidence to show that the price hike has lead to an increase in revenue as well as profit (Annual Report). It maximized profits and did not have to mistreat its employees in doing so. Stakeholders such as patients and families were treated unfairly, however that is not a factor in individualism. It was ethical when simply taking into account the two key factors of individualism: 1) it maximizes profit and 2) it does so legally.

Utilitarianism

The EpiPen, well known to people
who suffer from severe allergies

Utilitarianism begins to think a little more ethically by taking into account the happiness of those involved. Its goal is to "maximize the happiness in the long run for all conscious beings that are affected by the business action” (Salazar 19). This philosophy began in the 1800's by Jeremy Bentham and John Stewart Mill. It is important to remember that happiness does not simply include pleasure or satifaction, but also the lack of pain. Given this, a utilitarian would be opposed to Mylan's actions. Mylan was generating satisfactory profits before the price hike, and even during the first years of the increase the product was still affordable. However, the price has gone to the extreme and stakeholders are more outraged than Mylan is pleased. People have taken to protesting by marching to Mylan's headquarters and 500,000 individuals have signed a petition simply saying “Mylan, reserve the EpiPen price hikes now” (Wpxi.com). Another group of enraged consumers are requesting Mylan CEO, Heather Bresch, to step down. She received a pay raise of over 600% during her time with the company. They are confused and angry as to why that money isn't being used to offset a lower EpiPen price instead of rewarding those who have acted unethically.

Kantianism

Kantianism is a bit more considerate towards others. It focuses on "ways that respect and honor individuals and their choices. Don't lie, cheat, manipulate or harm others to get your way" (Salazar 20). It taps into our inner humanity and evaluates actions based on whether the party in question 1. acts rationally, 2. allows and helps others to act rationally, 3. respects people, and 4. is motivated by good will. Mylan only complies with the first notion, as they sought to increase their company profit, and therefore rationally increased their product's price. However, they did not allow others to act rationally because there is no manner in which they can. A rational consumer would purchase the cheaper of two options, but Mylan has their consumers backed into a corner only supported by the EpiPen. They also have no respect for their consumers, otherwise they would price their monopolistic product at a level that would allow for increased profits at an affordable price. In regards to the good will, Mylan was motivated by self gain. In addition, to make up excused for the price increase, they told Congress during a testimony that the profits were not as high as people speculated. With a little investigation, that was found to be false and they understated the revenue gained from each EpiPen sale. Between the dishonesty and lack of respect, a kantian would strongly affirm Mylan's actions as unethical.

Virtue Theory

Virtue theory is the last of the four philosophies and also happens to be the oldest. It was introduced by ancient Greek philosopher, Aristotle, as a means to "analyze actions within a virtue theory framework by asking whether the actions under consideration embody or advance virtues or not" (Salazar 23). He developed this framework by establishing four pillars for his theory: courage, honesty, temperance, and justice. Courage has to do with the company's level of risk-taking whether they uphold right ideas and actions. One may argue the company took a risk when they raised the price of their product, but it was not to uphold right ideas. Honesty refers to the company's trustworthiness in agreements. As said previously, they have not been honest as they lied about the EpiPen's profit. Temperance applies to a company's expectations and desires. It is fair to say that it was unreasonable for Mylan to expect their customers to pay more than four times what they normally paid. Justice examines if the company engages in hard work, quality products, good ideas, and fair practices. Mylan employees work had, produce quality goods, and brainstorm excellent ideas, however, they were not fair in carrying them out. They may have been courageous for the wrong reasons, but they were dishonest, misguided, and unfair.

Justified Ethical Evaluation
Mylan has acted in a manner that has negatively affected the ones who rely on the EpiPen. To make matters worse, the dilemma may have been avoidable from the beginning. It makes it must more unfortunate that Mylan chose the action that did not fully take into account the health of others. With a little more research, Mylan could have studied the effects of different price levels. The most obvious aspect is Mylan should have set it not as high. The company already has a near monopoly of the industry, so they don't have to worry about loss of sales to competitors. Of course, it is the nature of business for a company to set the highest price that they can, but it is ethics that helps determine what is too high. They could have researched the demographics of the EpiPen consumer base. By collecting data of various regions, they could have an idea of how many people could afford a certain price and how many could not. Also, the FDA is slightly at fault for letting it get out of hand. They are a government agency established to protect the citizens. They not only let Mylan get away with the price increases, but also ensure they were able to do so as the only product on the market.

Action Plan

Heather Bresch, CEO of Mylan

Currently, Mylan is facing much pressure from the community to remedy their recent price hikes. Mylan has to go about this carefully as they want to remain profitable and remain the market leader when the patent expires. Mylan exposed many of their stakeholders into danger ever since the price increase. The lack of consideration for the lives of patients has caused major problems for the community. Mylan's first goal should be to fix these problems they have caused, and then address the company's motives. Their current mission statement is "At Mylan, we are committed to setting new standards in health care. Working together around the world to provide 7 billion people access to high quality medicine" (mylan.com). The recent scandal has undermined some of what they said they would do, and would require a new statement going forward. A good mission statement to revamp the company image would be something along the lines of "We promise to reasonably supply 7 billion people with high quality medicine in order to secure a healthy future for the world."
With the patent expiring soon, Mylan should consider an action plan that protects Mylan's future. The first and most important action Mylan should do is lower the price of the EpiPen. The next action should be to work with insurance companies to offer higher rebates and other deals to help pay for the medicine. Also, it would benefit Mylan to establish a donation of charity fund for the lower class who may not be able to afford EpiPens even at a reasonable price. Mylan absolutely has to reduce the price in order to pull themselves out of this dilemma. It was absurd for them to raise the price to such ridiculous levels in the first place and the population is acting accordingly. Also, when the patent ends, if they are still at their $600 price level as a cheaper generic enters the market, they will lose most of their market share. In regards to insurance companies, these are the businesses that Mylan relies on for a majority of their profit. The insurance company attempts to cover the cost up to a certain point. If Mylan can make a deal where the insurance companies pay more but buy in bulk and distribute to their clients, a mid-level price around $250 may be reasonable. Lastly, there will always be unfortunate families who require these tools but are too impoverished to buy it even at the original $124 price. Mylan can set up donations to help regain the trust of their longtime customers after years of scandal and dishonesty.
In order to prevent this from happening in the future, I think the introduction of competition will act as a natural barrier. Mylan was mainly only able to carry this out cause there were no consequences. The reason was to increase profit, and if they try this again with a generic on the market, then they will lose profit. Going forward, the only employee who should be penelized is Heather Bresch. Many have called for her to step down; this is a common move for a CEO to make after a scandal. Even if she does not want to step down, it becomes necessary for her to at least reduce her compensation by the 600% that she received for the price hikes; the company cannot endorse unethical behavior. Marketing becomes an important aspect when trying to fix ethical issues. The company has to issue a formal apology to its customers and promise to think about their well-being in the future. Mylan needs to try to regain the trust of patients. They can make deals with doctors to have them hand out brochures about the benefits of Mylan and the EpiPen. Mylan lost sight of the true reason they are a company: to promote the health of the population. With the actions and marketing plans being implemented, the company can grow and form a better ethical standard. They will regain the trust of their consumers and build stonger relationships while remaining profitable.Written By: Kanan Patel

References:

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