Research Paper on Mylan's EpiPen Price Gouging

2021-06-19 05:44:22
3 pages
552 words
University/College: 
Harvey Mudd College
Type of paper: 
Research paper
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Ethical business behavior involves acting according to what the society, which is composed of the consumers typically think is acceptable and it involves applying good business values (Zwolinski, 2008). From ethical business behavior, the consumers of goods are not exploited by the producers. Ethical behaviors are good for business, and they involve practicing according to moral principles. The moral principles concerning ethical business behavior are fairness, equality, and observing dignity (Zwolinski, 2008). For this business ethics evaluation, I will focus on Mylan's EpiPen price gouging ethical case.

Case Background

Epipen price gouging ethical case involved price hiking behavior whereby, the price was hiked from $461 to $608.61. This was not the first prices hike scenario for the organization. Following the price hiking behavior, the company had gained 461% increase of its wholesale price between 2007 through 2015. The percentage reflection increase from 2007 through 2015 moved from $56.64 to $317.82. Apart from increasing the Epipen commodity price, the CEO had also hiked his salary with 671% from $2.5 million to about $ 19 million, and other executive's salary was also increased. In this case scenario, the price hiking behavior was driven by personal achievement and not Mylan's organizational needs such as increased production cost of the Epipen drug product. Mylan Company also produced a generic drug which was sold at an expense close to the original drug. It now clear that the Company managers were after exploitation of their consumers since the company was aware of the drug demand. With the high demand of the commodity and lack of competition, the company didn't use this opportunity to fulfill the consumer needs rather they kept on hiking the price.

The price hiking behavior regarding this company will be analyzed using two business ethical perspectives. The first ethical perspective is price discrimination (Zwolinski, 2008). In price discrimination, the company used different prices that favored specific individuals and neglected the demand. The price hiking behavior observed at Mylan Company for the Epipen drug was discriminative since, at a point, the drug was sold to some countries at a different price different from the quoted price. The second perspective is price skimming (Zwolinski, 2008). Regarding price skimming, the Mylan Company practiced unacceptable price skimming behavior by hiking the price of Epipen drug very high, and at some point, the price was gradually lowered.

Causes of the behavior

The first cause of this behavior is that the company's CEO was hiking the price for personal gain.

Secondly, the company lacked a close competitor who could produce a similar product at an affordable price.

The companies CEO and the senior took this opportunity to hike the price of the Epipen drug.

Parties affected

The parties affected by this behavior included the consumers and retailers. The consumers of this drug were the most affected by this behavior. Following the price hiking behavior in the Mylan Company, patients had a high demand, but the price of the drug was unaffordable. It is ethically wrong to hike the price of a commodity whose cost of production has not changed, and its demand is still at the peak.

The other party affected by the behavior was the retailers. Buying and selling of this commodity were a big trouble for the retailers since the buying price was extremely high for them to set an affordable dispensing price of the drug.

 

References

Zwolinski, M. (January 01, 2008). The Ethics of Price Gouging. Business Ethics Quarterly, 18, 3, 347-378.

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