BP#6 EpiPen Over Pricing Finally Settled

In this article by the New York Times, Mylan, the maker of the EpiPen, has recently been accused of wrongly classifying its drug as a generic.  Just recently Mylan reached a $465 million settlement with the Justice Department for wrongly classifying its product as a generic.  By classifying EpiPens as a generic drug, Mylan could pay lower rebates then brand names drugs and also wouldn’t have to pay additional rebates if the price of their product rises faster than inflation (which EpiPens did).  This way Mylan could make more money by charging Medicaid more for its product.  By overcharging Medicaid the price of Epi Pens rose from $100 for a pack of two in 2007, to $600 for a pack of two in 2016.

In this case of the overpricing and wrongly classifying a drug, Mylan was demonstrating the use of the Ring of Gyges.  Mylan knew that people need their product to help save someone’s life in case of an emergency, but just wanted to make an extra buck.  Mylan was demonstrating the use of a monopoly in today’s society, and didn’t think they would get caught, or would suffer any consequences.  Mylan thought they would get away with this change to a generic drug, but eventually people and the government stepped up and held them accountable for their wrong doing. Glaucon says,” …it is a mean or compromise, between the best of all, which is to do injustice and not be punished, and the worst of all, which is to suffer injustice without the power of retaliation.”  For Mylan they attempted to do injustice to its customers by overcharging Medicaid, but was eventually caught and fined with a $465 million settlement to the Justice Department.

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