Mylan's EpiPen Price-Gouging is Simply Unethical

By now, you've likely heard about Mylan's recent EpiPen price-hike, from $461 to $608.61. It’s not the first price increase on the product. From 2007 to 2015, the average wholesale price of an EpiPen increased by 461 percent, from $56.64 to $317.82. During the same time period, Mylan CEO Heather Bresch's salary increased by 671 percent, from around $2.5 million to nearly $19 million. 

Other executives' pay also increased, NBC reported. In 2015 alone, base pay for Mylan President Rajiv Malik increased by 11 percent and chief commercial officer, Anthony Mauro, saw his base pay rise by 13.6 percent. 

Back in 2007, Netherlands-based Mylan bought medicines from Merck KGaA and one of those was the EpiPen. Now, it’s a $1 billion a year money-maker for the company, making up about 40 percent of Mylan’s operating profits. And as Bloomberg reported, Mylan curated these profits from the EpiPen “with a massive public awareness campaign on the dangers of child allergies.” While it spread awareness about child allergies, the price increases became “among the biggest of any top-selling brand drug,” Bloomberg's Cynthia Koons and Robert Langreth reported last year. 

There’s something else that is interesting about Mylan. Open Secrets shows that it increased the amount it spent on lobbying in 2008, one year after it acquired EpiPen. 

Mylan’s response to the backlash about the price increase of the EpiPen is to release the first generic of the drug at $300 for a two-pack carton. It touts the generic version as a “discount of more than 50 percent to the Mylan list price of the branded medicine.” The generic is expected to launch in several weeks. 

Bresch claims that Mylan understands “the deep frustration and concerns associated with the cost of EpiPen to the patient.” And she added that Mylan has “shared the public's desire to ensure that this important product be accessible to anyone who needs it.” The trouble is that even the cost of the generic may be too much for some families.

Five senators wrote a letter the U.S. Food and Drug Administration (FDA) after finding out about the price increase of the EpiPen. They pointed out that the two-pack of EpiPens costs far less in other countries than it does in the U.S. In France they cost $85, in the U.K. they cost $119, and in Canada they cost $131. Alternatives to the EpiPen are available in France, Canada and the U.K. And in the U.K. a competitor, Jext, costs $32 for just one injector.

The U.S. senators mention that epinephrine, the main ingredient in an EpiPen, is “extremely inexpensive.” In some parts of the world, it costs less than a dollar per milliliter. They also pointed out that the lack of competition in the U.S. helps drives the price of the EpiPen up. “It is imperative to understand the FDA's role with respect to EpiPens and its approval of generic equivalents that could help to increase competition and lower prices if introduced,” the letter stated.

Doug Hirsch, co-founder and co-CEO of GoodRx, told CNBC: “I think we're seeing a classic scenario that we see in the drug world, which is less competition equals higher prices.”

What about the CSR implications?

The real kicker here is that Mylan regularly touts its corporate social responsibility (CSR) efforts. The company’s "sustainability booklet" contains a section titled, “Acting With Integrity.” It defines acting with integrity as doing “what’s right and not what’s easy.” That is interesting given the price of a drug that saves the lives of people going into anaphylactic shock.

Does the price-gouging of the EpiPen affect Mylan in a CSR sense? From the public’s perspective, must and undoubtedly will. The price increase greatly affects families, and those families will be loath to care that Mylan’s CEO brags in the sustainability booklet that it “is not just a company, it’s a cause.”

Something in that booklet, which details all of Mylan’s sustainability efforts, stands out. The company aims to “set new standards in healthcare and provide the world’s 7 billion people access to high quality medicine.” But what about Americans? Don’t they deserve access to affordable drugs? How is that practicing good CSR?

The answer to the last question is that the price-gouging is certainly not good CSR. It is unethical. And it must stop.

Image credit: Flickr/Vu Nguyen