The Examination of Turing and Mylan Pharmaceuticals price increases of Daraprim and Epipens, respectively

Name
Instructor
Course
Date
The Examination of Turing and Mylan Pharmaceuticals Price Increases
Public Response
The public responded to the increase in price with a loud uproar. This was because the government had kept a blind eye on previous price hikes of drugs such as the price for HIV/Aids medicine by Martin Shkreli and the Gilead who raised the price for Hepatitis C medicine. The public argued that the government was no longer worried about the effects the price had on people who depended on the auto-injectors due to allergic reactions. Apart from torturing them from the lack of the medicine, it was raising their cost of living amid the deteriorating economy and increase in prices for other basic things. Rather, the terming of the hike by the senator as a PR fix enraged the public the more who reported that the previous price increases on vital medicines were similarly regarded as verbiage. To them, the unjustified costs was a way of denying the ordinary citizens a life-saving treatment while they need it all the time(Hiltzik 3). As a result, patients who could not afford were forced to continue using the expired ones after a year of usage, hoping that the medicine would work in the instance of an emergency. Further, some resulted to other cheap alternatives regardless of the side effects. According to Prescott, some of the members of the public took to social media to rally others to join in and collect signatures to halt the move. One campaign started by a wife of a man who depends on the drug attracted over 80000 signatures.

As a result, the company CEOs were examined an exercise that made them introduce a generic model of a two pack at half the initial cost (Mangan 5). This is a strategy by the company to level the price by first raising it above what people can afford and then lowering it to their set price. This way there would be no much outcry and the company would have settled for a better price.
Industry Response
The management defended the price increase on the basis that the company had outsourced their research and development from the research funded by the federal government. Under the law, the government requires the company to supply the medicine at affordable prices but criticized its ability to do so. In a bid to reach the market, cover the production cost and pay the employees, the company had to keep on increasing the price. The Mylan asserted that to meet the consumers’ expectations concerning regulations in America and abroad it consumes a lot of resources, money and time. If they did not increase the cost, then the company could close hence risking the lives of more people. To reclaim that capital fast, they price the medicine at a price that is calculated for short term basis (“Mylan Proxy Statement” 10-15). The company promised to help the families who could not afford the drug through a coupon program or by offering them assistance cards. A clear path the company might have taken is that lowering the prices of the medicine would allow them to negotiate the drug prices, a practice that is prohibited. Further, the officials indicated that patients are not required to pay for the drug in cash but the deductible insurance plans hence making it affordable.
Although profit seems to be the answer for the company, it could have made a conclusion that the drug, unlike other drugs used by severely sick people ailing from diseases like sclerosis, cancer, is required by healthy people. The drug is used only in emergency cases that may not necessarily occur in a year. These patients do not have many other expenses on medicals and could easily afford the drug. However, the price is too high for many ordinary citizens.
Business Impact
It is evident that the move to hike the prices was premeditated and a strategic growth drive aimed solely at maximizing their profits. According to the 2015 proxy summary, the strategy was objected at increasing the shareholders’ value (“Mylan Proxy Statement” 5). In the end, Mylan recorded an outstanding and record growth of 25.4% and 20.7% total shareholders return from 2010 to 2015. This exceeded the S&P 500 and similar pharmaceutical index results over the period. Further, the net sales in Europe rose by 67%, 16% in Southern America and 38% in the rest of the world. By 2015, the consolidated asset value for the company stood at $17 billion which was the highest the company has ever recorded. All this indicates booming profits from the gradual increase in the prices. Essentially the company benefitted from the move
Turing, on the other hand, made a considerable profit by increasing their prices. According to Pollack, the drug sales shoot up from $667,000 in 2010 to $6.3 million in 2011, even when the prescriptions stood at the same number of 12,700 (2). These sales increased further in 2014 by about $9.9 million although the number of prescriptions dropped to 8,821. And while these numbers precluded those medicines used by inpatients, the ethicality of both Mylan and Turing were questionable among professionals and citizens. Following the five step test for product ethicality, the two companies were reported to have violated the principle of ethics. First, in any business, the buyer must be notified the price and allowed to decide whether to purchase the product or not voluntarily. Secondly, the seller must not mislead the buyer by presenting false information. Further, the supplier must ensure access to the goods in time and at a convenient place. Mylan passed all the three except that they exploited the patient’s essential requirements. The medicine was no longer serving its intended purpose of life-saving when it was unaffordable
Reputational Impact
The companies have soiled their reputation. In public, law firms, and the judiciary. According to Mangan, the final price drew the attention of the press, Congress and the patient’s advocacy groups (3). The CE of the Turing Pharmaceuticals, Shkreli, was sued for raising the price of Daraprim by a whopping 5000 percent overnight (from $15 to $750). Although he alleged that the product did not reflect a real cost to the patient like Mylan, he did not prepare the consumers through a gradual increase. Rather the impromptu hike was a hit to many patients who critically required the medicine. The criticism the companies received from the public is a clear indication that they were more than willing to migrate to other products if they were given a chance. This is the reason some patients opted for epinephrine ampoules and refilling their syringes (“Epipen: Instructions, Side Effects & Warnings – Drugs.Com ” 1). Even though they profit through their price hike, some issues adversely impacted the two firms. They violated the consumers’ rights to affordable access to goods and services. This is very vital when the product in question is a life-saving medicine. Secondly, they violated the congresses directive to lower the prices. Instead, they introduced a generic product at half the price. This is torture and robbery from the patients by providing them goods and services that are not original or of high quality.

Works Cited
“Epipen: Instructions, Side Effects & Warnings – Drugs.Com.” Drugs.com. N.p., 2016. Web. 2 Dec. 2016.
“Mylan Proxy Statement.” Sec.gov. N.p., 2016. Web. 2 Dec. 2016.
Hiltzik, Michael. “Mylan Will Help More Patients Pay For Its Epipen. Here’s Why That’s Bad News For Healthcare”. latimes.com. N.p., 2016. Web. 2 Dec. 2016.
Mangan, Dan. “How Mylan Hiked Prices Of Many Other Drugs Besides Lifesaving Epipen.” CNBC. N.p., 2016. Web. 2 Dec. 2016.
Pollack, Andrew. “Drug Goes From $13.50 A Tablet To $750, Overnight”. Nytimes.com. N.p., 2016. Web. 2 Dec. 2016.