question:First topic: From an economic standpoint, has Mylan made profit for the company which made the price increase adequate? Explain how the monopoly of Mylan was exacerbated by the FDA and how their margins were huge. LITERATURE REVIEW Mylan is run by Chief Executive Officer Heather Bresch. The company was founded in 1961 with a mission statement reading “helping people in small West Virginia towns and rural communities gain access to affordable medicine” (Peters). Four decades later, in 2007, Mylan 2 Academic Festival, Event 17 [2021] https://digitalcommons.sacredheart.edu/acadfest/2021/all/17 had grown into a global firm going by a new mission statement reading “At Mylan, we are committed to setting new standards in healthcare. Working together around the world to provide 7 billion people access to high quality medicine” (Peters). The company also emphasizes innovation, reliability, leadership, and specifically “do what’s right, not what’s easy”. Following the purchase of EpiPen from Merck, the Mylan website read “At Mylan, we put people first, trusting that profits will follow” (Peters). All these messages are contradictory to the actions of price gouging performed by the company. The Federal Drug Administration (FDA) has played its own role in the crisis. As of 2016 the only company in the United States selling EpiPens was Mylan, holding monopolistic power over the market. The FDA has rejected many companies who have tried to join the market. In comparison to the United States single producer of EpiPen, Europe has eight. Competition is extremely important, and if new companies do not compete with Mylan in the United States, then price gouging will continue to be a legitimate concern (Ho). One potential competitor was approved but the product was later recalled. Two other companies saw their bids to sell the product rejected by the FDA. The FDA is responsible for the safety of the public when it comes to drug administration, however, it should not be a challenge to develop delivery devices that the FDA can approve of. Forbes recommended if the government intended to increase competition in the market, waiving or increasing the speed of aspects of the FDA approval process would lower costs of entry and encourage companies to pursue the new markets (Dorfman). In “GOP E&C Members Ask if FDA Criteria to Blame in Part for EpiPen Mess”, according to lawmakers, laws and regulations “must promote a competitive prescription drug market” and “ultimately lower the cost of prescription drugs for America’s Patients” (Lim). Lawmakers asked questions of the FDA such as ‘how many applications for generic EpiPen’s have been submitted and how many 3 Fusari: Ethics Versus Economics: The EpiPen Scandal and the Role of the F Published by DigitalCommons@SHU, 2021 have failed’. They asked about pending applications and whether these applications are being prioritized. They even inquired about the approval criteria for such products (Lim). The increase in prices due to Mylan’s monopolistic position on the EpiPen market stirred much political debate. Politicians such as Chuck Grassley, a republican of Iowa, and Amy Klobuchar, a democrat of Minnesota, both pushed bills to prevent what is known as a ‘pay-fordelay’ (*Lim). This tactic was used to delay the appearance of Teva’s generic EpiPen in 2011. Mylan filed a citizen’s petition to challenge Teva’s entry to the market just weeks prior to the deadline for the FDA’s approval on the product (Lim). Klobuchar believes “this outrageous increase in the price of EpiPens is occurring at the same time that Mylan Pharmaceuticals is exploiting a monopoly market advantage that has fallen into its lap… Patients all over the U.S. rely on these products” (*Lim). An unnamed congressional staffer spoke with Inside Health Policy on a matter concerning Impax Laboratories Adrenaclick, a product explained as nonequivalent to EpiPen not being covered by insurance companies. The staffer says “Companies are finding ways of taking advantage of entry level barriers that aren’t supposed to be there for competitive windfall… It seems like market failure, maybe it’s the FDA, maybe not” (*Lim). Mylan’s Price Hike of EpiPens: Holding the Pharmaceutical Giant Accountable analyzes the need for the trade commission to investigate antitrust law violations in relation to anticompetitive and exclusionary contracts. The article also offers recommendations of how congress can approach the issue (Hadland). Mylan does not own a patent on the drug epinephrine but rather on the auto-injector of the EpiPen. The efficiency and convenience of the auto-injector also makes the Epi-Pen so valuable compared to tradition administration. Author Hannah Hadland broadly suggests the FDA should “allow more competing auto-injectors on the market” (Hadland). References for this include the FDA’s recall on Auvi-Q auto-injector, sighting 4 Academic Festival, Event 17 [2021] https://digitalcommons.sacredheart.edu/acadfest/2021/all/17 deficiencies in the delivery methods of the drug. According to the article, the number of times Auvi-Q auto-injector failed was about equal in ratio to the number of EpiPen failures, also mentioning many of the failures could be due to operator error. Hannah concludes that the FDA should allow more auto-injectors into the market as there is “no real fundamental differences” and then way things stand the FDA is only encouraging Mylan’s price gouging (Hadland). Lowering the standards for FDA acceptance on auto-injectors is a potential option. However, it may be even more beneficial to remove the prescription only requirement on the product, says Hannah. Several politicians presented more alternative options to creating competition for Mylan Pharmaceuticals on the market. One group of bipartisan senators sought to explore if it would be justified to include a drug on the FDA’s drug shortage list due to price hikes. In turn, resulting in the FDA accelerating the approval process for more similar products on the market. In 2016, Hillary Clinton pledged to hold pharmaceutical companies responsible through funding research programs and requiring companies to justify their price tags. She called on Mylan to immediately reduce prices, as there was no justification for the current costs (Durkin). In 2018, Teva pharmaceutical was finally granted approval from the FDA on its generic EpiPen product in limited quantities. These generic pens now can be purchased anywhere from 300 to 400 dollars in comparison to the name brand 600 dollars. The generic price tag remains 600% higher than the 50 price in 2007 (Kokosky). While not illegal for a company to get rich, price gouging tactics are unethical, and the government has the responsibility to make live saving medications readily accessible to those in need. Investors should consider the ethics of companies they invest in, rather than continue to enable malpractice. CEO of Mylan, Heather Bresch, continued to insist the company had increased availability of the product. She also claimed the company made important contributions to society through its awareness ad campaigns. In 2019 she stepped down from her position of CEO. However, the issues of the scandal and rise in profitability numbers continue and the issue speaks for itself. Adding competition to the market for EpiPens will eventually eliminate the ability to raise prices unethically, however, the FDA has made this extremely difficult prior to Teva’s acceptance. The 8 Academic Festival, Event 17 [2021] https://digitalcommons.sacredheart.edu/acadfest/2021/all/17 FDA easing necessary acceptance requirements, investing in other pharmaceutical companies to ease the difficulty of entry, banning contracts such as pay-to-delay agreements, or simply declaring the drug as non-prescription all would benefit the consumers in this monopolistic market. Use the extract to show how Mylan was actually found guilty for lying about their margins, On September 21, 2016, Heather Bresch was sworn in to testify before the House Oversight and Reform Committee. In her prepared testimony, Bresch said, “Looking back, I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full [list] price or more. We never intended this” (Lopez & Ramsey, 2016, para. 4). During further questioning, Bresch used poster boards to show that Mylan makes a profit of 275 on each 2-pack of EpiPens with a profit margin of about 50 per pen. 9 The low profit margin, she explained, was due to the number of middlemen involved between the list price and the profit that Mylan gets at the end of the transaction. The committee members found the figures hard to believe. “If I could sum up this hearing, it would be that the numbers don’t add up,” Rep. Elijah Cummings said toward the end of the hearing (Ramsey, 2016, para 4). Further attention was drawn to the fact that family had influenced the EpiPen markets. Democratic Rep. Tammy Duckworth of Illinois, who had earlier written to the US Attorney General to question the EpiPen schools program, alleged during her questioning that Bresch intentionally created a monopoly by using her mother’s influence to ensure that schools across the country are required to buy EpiPens. Bresch repeatedly denied the allegations, saying suggestions that her mother was involved in lobbying efforts are inappropriate (Radnofsky, 2016a). Bresch was also questioned about her compensation which had increased from 2.4 million in 2007 to 18.9 million in 2015. Florida Republican John Mica asked her about her compensation. “About 18 million,” she said, quietly. “Sounds like you’re doing pretty well out of this,” he replies. Is that high or low for industry peers, he wondered. “It’s in the middle,” she says, also quietly (Radnofsky, 2016b, para. 2). Source: The Wall Street Journal Bresch was questioned further on the price hikes by the committee. She responded by saying the company made profits far less than what the list price of 605 might suggest. “We believe it was a fair price, and we now just lowered it by half,” she said (Rockoff, Radnofsky & Hernandez, 2016, para. 3). “I am a very conservative and pro-business Republican, 10 but I am sickened by what I’ve heard,” Rep. John Duncan (R-TN) said (para.5). Rep. Gerald Connolly (D-VA) said if he relied solely on Ms. Bresch’s testimony, he would think “what humanitarians” those at Mylan are. “You virtually have a monopoly, and used it to your advantage; but unfortunately, it is at the expense of people who need it” (para 6). On September 26, 2016, the Wall Street Journal published a report revealing that the figures Mylan presented to Congress as profits on the EpiPen included taxes applied at the statutory corporate tax rate of 37.5%, which was five times more than Mylan’s actual overall tax rate of 7.4% for 2015. This means that Mylan’s profits on each 2-pack of the EpiPen was 166, a figure that is 60% higher than the 100 and 50 per pen figure it earlier gave to Congress (Maremont, 2016b). On October 7, 2016, Mylan agreed to pay 465 million to the U.S. Department of Justice to settle the allegations made by senators and federal health officials that it overcharged Medicaid, the government assistance program for low-income families, by wrongly classifying the EpiPen as a generic product instead of brand name to avoid additional taxes (Walker, 2016). In its form 8-K filed with the Securities and Exchange Commission, Mylan stated that the settlement did “not provide for any wrongdoing on the part of Mylan Inc. or any of its affiliated entities or personnel.” It also announced that it expects adjusted diluted earnings per ordinary share (EPS) of between 4.70 - 4.90 as compared to the previous full year guidance of 4.85 - 5.15 per share (US Securities and Exchange Commission, 2016) Economic Standpoint and Profit Adequacy Amid Monopolistic Leverage From an economic standpoint, the scrutiny of Mylan’s monopoly over the EpiPen market must consider profitability and the market mechanisms that influenced its pricing strategies. Mylan’s substantial growth over the decades, paired with its 2007 EpiPen acquisition, marked the transition from a mission centered around affordable access to a more global and ambiguous commitment to setting new standards in healthcare. While the loftiness of its vision implies beneficence, the price escalation of the EpiPen raises the question of whether profit maximization overshadowed the company’s purported ethical compass. Mylan’s monopolistic hold on the EpiPen market in the United States, facilitated to an extent by the regulatory environment of the FDA, became a source of immense profitability. The rejection of competitor products and the complexities of bringing a rival auto-injector to market cultivated an environment where Mylan’s pricing decisions faced little opposition. The case studies suggest that Mylan’s margins on the EpiPen were indeed substantial, contributing significantly to the company’s bottom line. Europe’s multiple producers of epinephrine auto-injectors stand in stark contrast to the American landscape, where Mylan enjoyed uncontested economic leverage—a gap that the FDA’s stringent approval process helped to preserve. The interplay between Mylan’s monopoly and FDA regulatory action is critical. The hurdles faced by potential competitors, such as recall of competing products and rejections of entry bids by the FDA, highlight structural impediments to market competition. While the safety of the public is non-negotiable, the equivalence or adequacy of competing auto-injectors appeared to become secondary to the more pressing issue of accessibility and affordability, exacerbated by Mylan’s aggressive pricing. Mylan’s use of tactics like ‘pay-for-delay’ and the questioning of its EpiPen school program’s ethics further underline the discrepancy between public service and self-interest. Political interventions to address the prospect of price gouging indicated an understanding that regulatory measures could serve as effective deterrents to economic exploitation. Proposals ranged from expedited FDA approvals for generic products to fundamental changes such as eliminating the prescription-only requirement for EpiPens—each with implications for competition and pricing. Upon investigation, Mylan’s professed profit margins from the sales of EpiPens, as presented to the House Oversight and Reform Committee by CEO Heather Bresch, came under skepticism. Not only did law enforcement officials challenge the veracity of these figures, but subsequent disclosures revealed that Mylan had significantly understated its profit margins by including taxes at the statutory corporate tax rate, rather than the substantially lower rate they actually incurred. Further, the 465 million settlement for wrongly classifying EpiPen as a generic to dodge higher rebates to Medicaid exemplified a corporate maneuvering to retain high profitability at the expense of ethical practice and societal expectations. Thus, in the context of Mylan’s history, mission, and vision, the surge in EpiPen’s price and the observed monopolistic dominance—which crowded out competition and led to public outcry—reflect a breach of both economic equity and the company’s purported ethical framework. The economic adequacy of Mylan’s pricing strategy, which raised profitability while arguably neglecting the affordability for those in dire need of EpiPens, stands at odds with the initial mission statement to “help people…gain access to affordable medicine.” The literature therefore suggests that from both an economic and ethical standpoint, Mylan’s pricing of the life-saving EpiPen was neither adequate nor justifiable, inciting valid controversy and regulatory action. Write it again but include numbers such as dates and prices or percentages and remember to connect it with the prompt: To what extent has the exorbitant price of Epi-pens been ethically and economically adequate? To what extent has the exorbitant price of EpiPens been ethically and economically adequate? From an ethical and economic standpoint, the reasons behind Mylan’s significant increase in the price of EpiPens—which surged from around 50 per pen in 2007 to a list price of approximately 600 for a two-pack in 2016—invite critical examination. Economically, while higher prices can correlate with increased company profits, suspect in Mylan’s case is whether the monopolistic pricing was necessary or justifiable given the actual production and distribution costs. Additionally, the ethical implications of a life-saving medication becoming less accessible to those in need puts the adequacy of such a pricing model into question. Mylan’s monopolistic standing was supported in part by the FDA’s regulatory environment, which indirectly contributed to Mylan’s control over the EpiPen market. Between rejecting potential competitors and adhering to stringent approval processes, the FDA played a role in fortifying Mylan’s market position. The lack of competition in the US, contrasted with Europe’s eight EpiPen producers, illustrated the disparity between an open market and a monopolized one. Yet, the level of profitability remains the central concern; Mylan’s CEO Heather Bresch presented to Congress a profit figure for a two-pack of EpiPens around 100, a number later contested and revealed to underrepresent true profits by as much as 60% when tax rates were appropriately calibrated. Further complicating matters, Mylan engaged in strategies like ‘pay-for-delay’ to prevent the appearance of generic competitors such as Teva’s version of the EpiPen, which was delayed until 2018. From a market perspective, Mylan’s settlement in October 2016 for 465 million regarding Medicaid misclassification highlights both the economic and ethical impropriety at the core of Mylan’s pricing strategy. By classifying the EpiPen as generic rather than as a brand-name product, Mylan avoided paying higher rebates, a maneuver that contributed to its ability to maintain artificially high margins at the expense of a government program designed to aid low-income families. Economic profiteering at this level suggests a clear departure from Mylan’s original mission of ensuring affordable access to medicine. Increased scrutiny revealed that Mylan’s profit on each EpiPen was significantly understated in their testimonies before Congress. When taking into account Mylan’s actual overall tax rate of 7.4% in 2015 instead of the 37.5% statutory corporate tax rate presented, the profit per two-pack of EpiPens was closer to 166, not the 100 initially claimed. This revelation indicated a 60% disparity in reported profits, raising substantial questions about the economic rationale behind the company’s pricing model. In light of these factors, one must consider whether the increased price of EpiPens has been ethically or economically adequate. Ethically, the pricing actions of Mylan conflicted with the company’s own stated mission to prioritize people over profits. Economically, while Mylan indeed profited from its monopolistic stance, the adequacy of such profits comes into question when one considers the impact on affordability and access to essential medication. Political efforts to address this issue have varied, ranging from proposed legislation aiming to enhance market competition to public calls by figures such as Hillary Clinton for accountability and fair pricing in 2016. Yet, even with the eventual introduction of a generic EpiPen by Teva, the price remained 600% above the 2007 figure, casting further doubt on the justification of Mylan’s pricing strategy from both an economic and moral perspective. The extent of the ethical and economic breach is perhaps best encapsulated by the public and regulatory backlash that Mylan faced. The continue d insistence on justifying high list prices, even after the introduction of a less expensive generic, underscores a tension between the pursuit of profit and the provision of affordable, life-saving medication. Indeed, while Mylan’s practices were not found illegal, the economic benefit extracted from their monopolistic pricing has been widely regarded as unethical, prompting legal and legislative scrutiny. In sum, given the disclosures about tax rates and profit margins, along with the broader context of Mylan’s conduct and its impact on access to EpiPens, the price hikes cannot be deemed ethically or economically adequate. The high prices ultimately undermined the spirit of the company’s initial mission statement and placed significant financial strain on individuals and the healthcare system. The economic adequacy of Mylan’s pricing, from a market competition and fairness perspective, was further questioned by the company’s apparent misrepresentation of profit margins and the regulatory settlements that followed. Subsequent legislative and regulatory actions pointed to a market failure that was corrected only through external intervention, suggesting that left to its own devices, Mylan’s pricing would have remained unacceptably high both economically and ethically. Now for the next topic explore how the Image of Mylan was hurt by the scandal and use the topic 5.7 of business studies to explore this issue, remember to link back to the prompt. :Crisis Management refers to the steps taken by an organization to limit the effects of a damaging event by handling, containing and resolving the causes and effects. While some crises can be foreseen, others cannot, and so the way a company handles the situation while navigating through one defines its level of success and the level of damage taken at the end of the period. Crises vary in size and strength, ranging from a simple problem to a terrible situation that could possibly lead to a company’s death. C R I S I S C R I S I S C R I S I S CRISISG o o d a n d e f f e c tiv e c risis m a n a g e m e n t n e e d s t h e f o l l o win g c h a r a c t e ris tic s: TRANSPARE N C Y T his m e a n s b ein g h o n e s t a n d o p e n a b o u t t h e c risis, it s c a u s e s a n d c o n s e q u e n c e s. COMMUNICATIO N T h e w a y a fir m c o m m u nic a t e s t o its stakeholders during a crisis deeply affects its results. SPEED Things need to be done ASAP, as the faster you respond to a crisis, the better control you have of it. CONTROL Making sure to manage all effect s o f t h e c risis a n d s o l vin g t h e c a u s e s l e a d s t o c o n t r o l o f t h e sit u a tio n. CONTINGENCYSimilarly to crisis management, contingency planning is all about dealing with situations that can affect the performance of a firm. The main difference, however, is that contingency planning deals with forecasting possible scenarios and preparing for them ahead of time. Although a lot of crises happen unexpectedly, a lot of other scenarios can be forecasted due to the analysis of trends and extrapolation of pathways. The less you’re caught off-guard during a crisis, the more control you’ll have over the situation and you’ll also have a higher chance at solving the problem quickly and effectively. CONTINGENCYIn order to make contingency plans, the following characteristics need to be taken into consideration: COST TIME RISKS SAFETY 1 2 3 4 Good contingency plans are costly, but they are cheaper on the long run than dealing with crises. They are also very time-consuming, but a well-developed and trained plan makes dealing with crises much smoother. Risks of all different levels and likelihoods need to be assessed and taken into consideration to make the plan. Safety of all stakeholders is the top priority of a good contingency plan. This is the 5.7 idea which you will use to analyze Mylans media response. Mylan and CEO Heather Bresch took a minimalistic approach to communicating about the EpiPen price increase. There is no mention of the Congressional hearing on either Mylan or Bresch’s Twitter or Facebook accounts, nor an explanation for the price increase. On August 25, 2016, Mylan tweeted about Bresch’s interview with CNBC Squawk Box and put out press releases on PRNewswire announcing the “Immediate Action” it plans to take on expanding on already existing assistance programs to make EpiPens more available to those who do not have the money to afford the medicine (Mylan, 2016f). A few days later, on August 29, 2016 Mylan put out a press release on PRNewswire announcing that its 300 generic EpiPen, would be offered at more than a 50% discount, and be on the market soon (Mylan, 2016g). On October 7, 2016 Mylan put out a third press release on PRNewswire saying the company had agreed to pay the 465 million settlement on the Medicaid rebate classification for the EpiPen (Mylan, 2016h). 3.2 | Public Response Revelations from the Congressional hearing was met with outrage by the public. On Twitter, some questioned Mylan’s justification for the price increases and wondered why a device that delivers only 1 worth of drugs to patients could cost over 600. Some pointed to the potential impact of the lifesaving drug on patients who could not afford it, while others wondered why the EpiPen which costs 290 in Canada could cost 620 in the United States. In a tweet, Senator 11 Bernie Sanders alleged that Mylan engaged in corporate inversion to reduce the taxes it pays in the US. Its decision to offer a generic version was also seen as a preemptive strike against Teva Pharmaceuticals, a company set to launch its generic version of epinephrine in 2017 (Bomey, 2016). Source: Twitter.com, 2016 The situation also gave rise to public petitions. Some angry consumers took to Facebook and created a page titled, “Fire the Wicked Witch of Mylan Pharmaceutical Heather Bresch Today.” The page shares multiple articles dating back to the beginning of the crisis on August 25, 2016. On August 27, 2016, the user of the page shared a petition asking followers to request that President Obama get the “FDA to strip Mylan’s monopoly over EpiPen”. So far, the petition has been signed by more than 50,000 people. The goal is to obtain more than 100,000 signatures. Business and Social Impact Given the outcomes outlined above such as falling stock prices, the filing of class action lawsuits and the development of DIY-EpiPens, it is evident that the crisis is already making an impact on Mylan’s bottom-line and on society. In terms of direct financial costs, Mylan has lost 465 million which it agreed to pay in a settlement with the Department of Justice for overcharging Medicaid due to its misclassification of brand name EpiPens. On November 9, 2016, Mylan posted a third quarter loss of 119.8 million, or 23 cents a share, compared with a profit of 428.6 million, or 83 cents a share during the same period in 2015. Shareholders took a hit as adjusted earnings fell to 1.38 a share. Sales were down 4% as wholesalers cut back purchases in anticipation of the introduction of a 300 generic EpiPen (Steele & Rockoff, 2016). This outcome translates not only into huge losses in stock value and reduction in operating capital, it also resulted in lower earnings for shareholders. From a social perspective, the crisis also created a risk for the millions of patients who might turn to makeshift cures, hacks and dangerous DIY-EpiPens because of rising prices. Source: Twitter.com, 2016 4.3 | Corporate Governance and Reputational Impact The handling of the Congressional hearing by Mylan CEO, Bresch and her team raises questions about the consistency between Mylan’s professed corporate governance policies and its actual corporate actions and decisions. The company presented conflicting figures about its profits to the committee, raising doubts about its integrity, transparency, and adherence to generally accepted accounting principles. Congress also raised questions about fair pricing, conflicts of interest with family about its lobbying activities, anticompetitive practices and the connection between high prices, and the rising compensation of its top executives. These are allegations which the CEO struggled to defend even though policies to prevent such situations are enshrined in the company’s corporate governance handbook. The results of a sentiment analysis conducted with Crimson Hexagon, a social media monitoring and analytics tool, showed that the Mylan EpiPen price increase received on average about 4% basic positive, 69% neutral, and 26% basic negative sentiment on social media during the height of the crisis. Additionally, the results from the emotion analysis 14 conducted, surprisingly show that 82% of emotions recorded are neutral. However, out of the 18% remaining, about 75% are negative emotions ranging from sadness, disgust and anger to fear and surprise (forsight.crimsonhexagon.com, 2016). Sentiment + Emotion Analysis Source: Crimson Hexagon, 2016 Given the reaction from Congress and the public, the EpiPen crisis is certainly not without an effect on Mylan’s corporate reputation. Because the company had to go before Congress to defend allegations leveled against it, questions were raised about trust, transparency, accountability and credibility. In comparison to its peers in the pharmaceutical industry, Mylan was not included in the 2016 Harris Interactive’s Reputation Quotient (RQ) Poll or by the Reputation Institute’s 2016 Global RepTrak 100 for top companies for the best reputation in the world. It was, however, ranked 21st in the SyncForce Top 50 for global pharma companies, a ranking based on sales in 2015. The EpiPen pricing crisis may have moved the needle in the perception of Americans about corporate governance in the healthcare industry and strengthened the idea that action needs to be taken to assert more control over the sector through legislation and regulation. In a HealthDay/Harris poll conducted online among 2,100 Americans aged 18 and over between October 12-15, 2016, most respondents said they favored price caps and were in support of Medicare’s right to negotiate the cost of drugs. Eighty one percent support control caps on drugs and medical devices compared to 73% in 2015, while 74% expressed support for Medicare to negotiate prices for all insurers, a jump from 66% in 2015. Many also agree with some common criticisms of the pharma industry. Ninety percent agree that "raising the prices of life-saving medications is taking advantage of consumers” and that "pharmaceutical companies make too much money off 15 of life-saving medications.” Eighty-eight percent also agree that “pharmaceutical industries have too much freedom to set prices for life-saving medications” (Thompson, 2016, para. 12). “The very large majorities of people who support tough government measures to rein in drug prices – including government price controls and drug importation – have become even larger,” said Humphrey Taylor, chairman emeritus of The Harris Poll” (Thompson, 2016, para. 4). The EpiPen pricing scandal severely impacted Mylan’s corporate image and tested its crisis management skills. According to the 5.7 topic of business studies, crisis management is the process by which an organization addresses a disruptive and unexpected event to limit damage. Effective crisis management encompasses transparency, communication, speed, control, and having contingency plans. Crisis Management: Mylan’s response to the EpiPen crisis demonstrated flaws in several key crisis management areas. Transparency was lacking, as observed in the company’s Congressional hearing, where Mylan presented conflicting profit figures and faced allegations of anticompetitive actions and conflicts of interest. This raised serious concerns about the company’s integrity and transparency, crucial aspects of crisis management, which dictate honesty and openness about a crisis and its implications. Communication with stakeholders is vital during crises, and Mylan’s approach was minimalistic, failing to adequately explain the price increase through social media channels. Their response was reactive rather than proactive, focusing on damage control measures like announcing a generic EpiPen version and financial assistance programs after considerable public backlash. The speed of their response could have been swifter and more comprehensive. A faster, more decisive response might have helped Mylan exert more control over the situation and mitigate the damage to its reputation. Contingency Planning: Contingency planning was clearly insufficient. Mylan seemed unprepared for the magnitude of the public and political reaction. Adequate contingency plans should account for cost, time, risks, and safety, with the aim of preventing crises or managing them effectively. Mylan’s public relations strategy did not reflect a robust contingency plan to address such foreseeable adverse reactions. Public and Corporate Governance Repercussions: The public response was overwhelmingly negative. Mylan’s strategy led to outrage on social media, a call for the CEO’s dismissal, and petitions for regulatory intervention. This negatively affected Mylan’s stock prices and sales, reflecting how a crisis can impact a company’s bottom line. The reputational damage became evident as Mylan was scrutinized for its corporate governance. Despite having policies to prevent such scenarios, the company struggled to align its practices with those policies, leading to a public question of Mylan’s credibility and accountability. Impact on Mylan’s Image: Mylan’s handling of the EpiPen crisis damaged its corporate image, leading to erosion of trust among stakeholders. They were not listed on the 2016 Harris Interactive’s Reputation Quotient (RQ) Poll or by the Reputation Institute’s 2016 Global RepTrak 100, reflecting a potential decline in their industry standing. Social media sentiment analyses further revealed negative public sentiment during the crisis. The broader impact on Mylan’s corporate reputation and the healthcare industry at large was palpable. The crisis fueled public perception that the pharmaceutical industry requires greater regulation and oversight, with many Americans supporting government-imposed price controls and negotiation rights for Medicare. In Conclusion: Mylan’s crisis management during the EpiPen scandal highlighted the company’s shortcomings in transparency, communication strategy, speediness of response, and contingency planning. Despite Mylan’s efforts to mitigate the situation, the crisis led to significant damage to the company’s reputation and finances. Public opinion shifted towards stronger regulatory measures, resulting in a clear and lasting impact on Mylan’s image and the perception of the pharmaceutical industry. This case underlines the importance of having a well-prepared crisis management and contingency plan that can swiftly and effectively address public concerns and regulatory compliance. answer it again but in paragraph format, with topic sentences and then sentences The EpiPen pricing scandal severely tested Mylan’s crisis management skills, highlighting areas of deficiency in the company’s approach, and ultimately causing significant damage to its corporate image. Effective crisis management requires key elements such as transparency, communication, speed, and control, all of which Mylan failed to appropriately leverage during the scandal. Mylan’s lack of transparency during the crisis was particularly evident. The conflicting figures presented to the Congressional committee about EpiPen’s profitability and Mylan’s defensive stance on pricing strategies undermined public trust. A fundamental tenant of crisis management is the honest and open disclosure of information to all stakeholders, and Mylan’s opaque handling of the crisis called into question its integrity and transparency. When it came to communication, Mylan’s effort fell short. The company’s decision not to address the Congressional hearing or the justification for the price increase on social media platforms like Twitter and Facebook was a glaring omission. Timely and clear communication is crucial during a crisis; Mylan’s belated responses in press releases and interviews were reactive rather than proactive, offering solutions such as generic versions of EpiPen only after significant backlash had already taken place. Moreover, the speed of Mylan’s response was inadequate. The company’s slow and reserved reaction allowed the negative public opinion to fester, exacerbating the crisis’s impact on its reputation. A faster, more decisive response could have provided Mylan with greater control over the narrative and potentially limited the reputational fallout. In terms of contingency planning, Mylan appeared to be unprepared for the crisis. Effective contingency planning involves forecasting possible scenarios and having strategies in place to address them, which Mylan evidently lacked. A well-prepared plan might have prevented the extent of the damage or at least provided the company with a roadmap for swiftly addressing the crisis. Public perception and corporate governance repercussions following the scandal further demonstrate the breadth and depth of Mylan’s reputational damage. The public outcry on social media, the impact on the company’s stock prices, and the concerns raised about corporate governance practices all reflect the far-reaching consequences of the crisis. In conclusion, the EpiPen pricing debacle revealed significant flaws in Mylan’s crisis management and corporate governance strategies, resulting in a damaged public image and eroded stakeholder trust. The company’s post-crisis response, although geared towards remediation, was insufficient to reverse the reputational harm. The scandal underscored the critical importance of transparency, communication, prompt action, and robust contingency planning as integral components of effective crisis management. Use the numbers, dates, percentawges, prices, and evidence that I gave you in your response, the more the ebetter The EpiPen pricing scandal tested Mylan’s crisis management proficiency profoundly, yielding significant damage to the company’s image. Effective crisis management underscores the importance of transparency, communication, speed, and control, aspects that Mylan seemingly neglected, as evidenced by the series of events that unfolded. Transparency was starkly absent in Mylan’s crisis management. When grilled by Congress in September 2016, Mylan presented conflicting profit figures, initially claiming a 100 profit for a two-pack of EpiPens, only for a later report by The Wall Street Journal to reveal profits were closer to 166 after accurate tax considerations – underscoring a stark 60% disparity. These conflicting accounts led to skepticism about the company’s transparency and integrity. Mylan’s communication strategy during the EpiPen crisis also faltered, evident in the minimal disclosure on social channels and lackluster explanations for the price hike, which jumped from approximately continue

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