Essay on EpiPen Price Gouging Scandal: Ethical Issues Related to the Utilitarian Justice Theory

Published: 2021-07-02
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George Washington University
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As a theory of justice, utilitarianism is based on the principle of utility. This is whereby all actions that increase happiness amongst humans by boosting pleasure or minimizing pain are approved, while those that undermine it are disapproved. The perception of a utilitarian is that justice should try to highest amount of happiness possible for the greatest number of people. A certain law or legislation is considered just only if it leads to a net gain in happiness, even if this occurrence is at the expense of minority grouping. A notable problem with this theory is that minorities may not be among the greatest number, an issue that often occurs within a pluralist society. This essay looks at the EpiPen Price Gouging Scandal and analyses it to find out whether there were ethical issues related to the utilitarian justice theory.

EpiPen Price Gouging Scandal is all about the outrageous increases in price for a life-saving medication called EpiPen. It is an auto-injection system that presents a dose of epinephrine that counters anaphylactic shock likely to take place in the course of an allergic reaction. EpiPen is owned by a company called Mylan that reportedly raked in almost $300 million in revenue between 2011 and 2015. The staggering payoffs were recorded during a period when the listed prices for the drug soared, rising to more than 500% in about ten years. Nowadays, a dose of EpiPens, which costs the roughly $30 to manufacture, goes for more than $600 before rebates or coupons.

Heather Bresch, the CEO of Mylan, testified before a Congressional House Oversight Committee in September 2016. She defended the actions of company and tried to justify what was definitely an outrageous and unsubstantiated increase in prices to the average consumer. She went as far as laying blame on high-deductible health plans and the Affordable Care Act. According to her testimony, Mylan makes only about $50 of each unit of EpiPen that retails at $300. The company started distributing a $300 coupon after the public outcry that attracted the attention of lawmakers into its pricing practices, together with the rollout of a generic version of the drug that costs $300 per two-pack. Bresch argued that these measures by the company had dealt with the skyrocketing price.

All in all, the EpiPen pricing scandal together with Breschs testimony should not be perceived as merely another CEO placed on the hot seat to expound on her firms questionable activities. She has powerful family ties; something that implies she could be an insider, and which apparently confirms a belief by many Americans that the US government and major business organizations collude to fleece ordinary citizens. Breschs father is a US Senator while her mother was the head of a national school board group that set up a broad campaign to require the drug to be provided in schools. The family ties somehow highlight how most citizens think of Washington D.C., a place where everyone knows one another and participate in dubious activities.

Instead of owning up to the idea that hiking the prices of EpiPen by 500% or so within a decade was ridiculous and unfair, Bresch choose to deny responsibility. Her initial reaction to the public outcry over the issue was to blame the advent of high-deductible health insurance plans and Obamacare. While she stated that a broken system was to blame, she did not mention that it is the same system that made it possible for her salary to increase by 700%. Senator Joe Manchin, who is Breschs father, said that his family did not bear any responsibility on the matter. He went on to claim that he had no idea how the company his daughter runs actually operates. While he may not have been directly involved in campaigns that boosted sales of the drug, her mother apparently was. Gayle Manchin led an unmatched effort that spurred states to direct their schools to buy medical devices capable of countering life threatening reactions to allergies such as EpiPen. She did this when she was the chairperson of the National Association of School Boards starting from 2012. She substantially increased lobbying efforts between 2010 and 2010, with the board giving away hundreds of thousands of units of the drug to schools across the country.

Medicare spending on the drug has also risen to ridiculous levels. Between 2007 and 2014, government spending on EpiPens increased by 1151% in the course of a period when the number of the drugs users rose by 164%. Meanwhile, Mylan has been lobbying politicians for months, trying to get the drug on a special federal preventive list. Such a measure would ensure that all health insurance plans would cover patients prescription costs. If it goes through, the company would be able to continue selling the drug at high prices without complaints from patients about the cost.

From a utilitarian point of view, Mylan was capitalizing on a partial monopoly that could raise questions about the ethics of the price hikes. It is a textbook example of a drug manufacturer taking advantage of little or no competition, at the expense of consumers who need the drug. The scandal highlights the dangers associated with a free market that is not governed by morals and ethical principles. Different consumers will be affected by the increases in the cost in various ways. For example, an individual without an insurance cover will have to pay the high costs of EpiPen from his or her pocket. A low-income earning family whose children are on the Childrens Health Insurance Program or Medicaid may get it for tiny co-pay or even for free, with the cost being passed on to the federal or state government. For individuals with private insurance, the amount they pay would depend on their cover. There may be only a tiny increase in their co-pay at the beginning, with a larger raise in their premium coming afterwards. In instances where the drug is not covered by a health insurance cover, a patient may have to cough up most, if not all, of its cost.

Several upgrades were reportedly made to the drug over the years, such as a better grip for the device and a retractable needle. Company officials may argue that many factors are included in manufacture of the drug, such as the cost of ingredients and its production. All in all, experts estimate the cost of the epinephrine contained in EpiPens to be just several dollars. Market forces can also play a significant role in cost, as when a drug manufacturer does not have any real competition, and real market countervailing pressures are absent for a drug company. In the case of EpiPens, a competitor left the market because of issues with the FDA. A competing pen called Auvi-Q is no longer in the market, while another generic substitute to EpiPen was rejected by the FDA.

The EpiPen increase in costs is a symptom of some of the issues being faced by the larger prescription drug market as a whole. It involves increases in the prices of drugs that have been linked to certain firms capitalizing on the so-called market leverage. A good example is Martin Shkreli, who was once the CEO of a drug company called Turing Pharmaceuticals. He attracted a lot of attention when the firm increased the price of its anti-parasite drug called Daraprim to $750 all the way from $13.50. When summoned by Congress, he simply informed the committee members that he would invoke his Fifth Amendment privilege against self-incrimination.

Mylan has been selling their drug in a monopolistic market for a number of years. The company has capitalized on the situation to rake in profits in total disregard for consumers. At the moment, EpiPen is protected by a certain patent that was approved by the FDA. This means that no other firm is allowed to manufacture a similar drug as the FDA will eject it from the market. Even despite the companys market being protected by the FDA, it has continued to increase the drugs price. Mylans actions are an indicator of the way pharmaceutical firms negotiate in the course of a brief monopoly whereby they set the price as high as possible and for as long as they can. Since they were aware the patent was expiring soon, they allowed greed to spur them to put the lives of patients in danger. People who require EpiPen to keep their children safe are forced to use old components of the drug as they cannot afford to buy new ones. To make matters worse, Mylan know very well that the drug has a shelf life of just a year, whether it is consumed or not. It goes on to increase its price knowing that it is a life-saving drug that consumers will continue buying.

Mylans stakeholders include insurance companies, patients, families, schools, and pharmacies. The patients are the most adversely affected considering that they are the ones needing EpiPens the most. Should they not be in possession of one, or an expired dosage does not work, they may have to be rushed to a hospital. Such a situation would cause even more harm to the family, particularly if they could not afford the drug in the first place. Various insurance companies have also capitalized on the situation since they are the ones assisting consumers to pay for the drugs plus treatments. They will charge more for insurance covers as a result of the increase in prices. Various pharmacies would be at a disadvantage since fewer consumers will be purchasing EpiPen from them, leading to a reduction in revenue. In the case of people with children, they are definitely concerned with their well-being and finances. To make matters worse, if a family has several children that suffer from life-threatening allergies, it is affected by the increases in prices several times. Schools are supposed to be in possession of several doses of EpiPen in case allergic students need them. However, it has been reported that some schools across the nation are being forced to hold onto old components.

Utilitarianism starts to think a little more in terms of ethics by taking into consideration the happiness of the parties involved. Hence, according to the theory, Mylans actions were unethical. The company was making satisfactory profits before it increased the price of EpiPen, and the drug was still affordable even in the course of the initial increments. However, the cost has soared to the extreme; a situation that has caused stakeholders to be more outraged than the company is pleased.


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