In the fall of 2016, Mylan, the company responsible for the production of the Epi-Pen, came under scrutiny after their product’s price continued to rise (Reuters, 2016). Epi-Pens, essential to about one in thirteen children with anaphylactic allergies have seen their price rise by 400% since the Mylan acquired the company Epi-Pen in 2007 (Matthews & Heimer, 2016). Mylan gradually raised the price of Epi-Pens exploiting their monopoly over the market and the essential nature of their product earning 300 million dollars in compensation between 2011 and 2015 for their top executives in addition to high stock prices (Tuttle, 2016). Since their exploits came to the forefront, the company has paid 465 million in compensation for misclassifying the drug as generic, which means it qualified for less of a rebate in health plans (Reuters, 2016). Additionally, Mylan’s stock price underwent a precipitous 15% drop following the scandal, the lowest it had been in 30 years, showing the extreme consequences of their actions (Reuters, 2016).
The Mylan Epi-Pen scandal outlines many of the ideas discussed by Milton Friedman of social responsibility and business ethics. The company ignored its social responsibility to extreme levels, making their product, necessary for many, inaccessible. The company acted in its own self-interest accruing massive profits and compensation for its employees and shareholders. Although Mylan’s actions were unethical, they were rational from a profit perspective. If they had priced the drug to benefit society, executives of the company would be fired for not taking advantage of their monopoly over the market. While the price increases were admittedly extreme, shareholders would have cycled through executives until they felt that the product was at a lucrative price point. Mylan needed to strike a balance, recognizing their social responsibility while also finding a profitable price point. Their actions show the dangers of exploiting the market, as by completely ignoring its social responsibility, they were not only financially crippled but their reputation was tarnished as well. Additionally, Mylan’s actions show that many unethical and socially irresponsible actions can go unnoticed and unregulated. This is where the government must intervene, either setting an artificial price ceiling or introducing competition into the market as it is inexcusable for a company to avoid regulation for nearly a decade.
Mylan’s case illustrates an extreme of Friedman’s theory, showing that if given the opportunity, companies will operate to make a profit rather than benefit society, often to their detriment in the long run.
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Works Cited
Tuttle, B (2016) EpiPen Prices: Mylan CEO Heather Bresch & Big Pharma Scandal, Money. Retrieved from http://time.com/money/4502891/epipen-pricing-scandal-big-pharma-politics/
Reuters. (2016), Mylan’s Stock Is the Lowest It’s Been in 30 Years (2016). Retrieved from http://fortune.com/2016/09/21/mylan-stock-low/
Reuters. (2016), Mylan To Pay $465 Million Over EpiPen Medicaid Rebate Dispute. Retrieved from http://fortune.com/2016/10/07/mylan-pay-epipen-medicaid-rebate-dispute/
Mathews, C., & Heimer, M (2016) The Five Biggest Corporate Scandals of 2016, Fortune. Retrieved from: http://fortune.com/2016/12/28/biggest-corporate-scandals-2016/