The Mylan EpiPen Pricing Outrage Case Study

Introduction: An Overview of the Case

Epinephrine autoinjector is a hand-held medical device that was invented in order to allow people suffering from anaphylaxis caused by severe allergies to inject themselves a required dose of epinephrine in case of emergency (Shaker, 2007). The EpiPen is the brand of autoinjectors that is now an unsurpassed leader at the market (with the app. 90% of the market share). A pharmaceutical company Mylan acquired the right to sell the EpiPen after it signed a contract with Merck KGaA in 2007.

Despite the evident dominance of the device in the pharmaceutical industry (which was re-enforced by rejection of its generic competitors by the FDA), the prices for it have been continuously rising since 2009. By 2013 the EpiPen cost about $265 (as compared to the app. $100 in 2007). In 2015 the price increased up to around $460. 2016 saw an outrageous jump in price – the device now costs $610, which implies a 500% increase since 2009 (Hemphill, 2016). As a result, the company has to face a lot of criticism from people whose life is now at risk as they cannot afford the life-saving injection having no cheaper alternatives.

Research Methodology: Types and Methods of Research, Stakeholders

Since we are interested in a detailed study of one particular campaign and its short- and long-term consequences, a case study approach is implemented in order to focus on the unique descriptive details of the case under consideration. The research is rather qualitative than quantitative, as the only statistical information involved concerns the prices of the product at each stage of the campaign. Although these indicators are important for the research, the paper at hand is aimed to investigate public relations strategies and their effectiveness, rather than numerical data.

The major stakeholder groups of the case are identified as follows (Hemphill, 2016):

• Mylan Pharmaceuticals Inc. (and its CEO Heather Bresch) – the company that has adhered to the price-increasing strategy since the time it obtained the rights for the EpiPen; the CEO of the company, who has shaped its image as a for-profit organization, which has made her a reputation of the greatest “villain” in the industry where human lives are at stake;
• the company’s competitors that produce and promote generic medicines that have the potential to replace the EpiPen in the nearest future and drive Mylan out of the market, which might lead to the company’s bankruptcy;
• patients with allergies who suffer from anaphylactic shock, which can threaten their life unless a dose of epinephrine is injected in due time (Shaker, 2007);
• parents, who are concerned about their children’s lives that are now constantly at risk as they cannot afford the EpiPen injections and thus lose the sense of security (Kim, Sinacore, & Pongracic, 2005);
• schools and other educational institutions that store the EpiPen for emergency cases and will have to manage without these devices in the future unless an alternative cheaper generic enters the market.

Some stakeholder interrelationships may have been overlooked in the research (namely, the relations of the company with its competitors at the market are only partially touched upon) as its primary concern is to investigate how the company managed to implement its plan using various strategies regardless of the clearly adverse attitude of the general public.

The Major Impact Objectives of the Campaign

Impact objectives include those that are connected with the influence the PR activities of the company exert on stakeholders of the campaign (as compared to output objectives that refer to the ultimate results produced at the end of the campaign). There are three types of impact objectives. These are (Tench & Yeomans, 2009):

• informational objectives, which are focused on the message that has to reach the potential audience, its comprehension, and effect;
• attitudinal objectives, which are aimed at shaping perception, changing or supporting the existing views;
• behavioral objectives, which concentrate on creating new patterns of behavior, encouraging positive actions, and preventing negative ones.

If we examine the given case in this context, the following objectives can be identified:

1. According to the company’s CEO, the main informational objective for the last decade was to increase the target audience’s awareness of the consequences of anaphylaxis and the ways to prevent them from using medicine (Hemphill, 2016). This objective was quite appropriate to the situation as not all people knew how to deal with severe allergic reactions in case of emergency.
2. Among the attitudinal objectives, the major ones were: to change the perception of self-treatment (which is generally considered to be dangerous and fraught with health complications); to encourage the idea that educational institutions must be able to provide necessary injections for people with allergy (thereby winning the support of parents); to ensure trust in product quality through advertising campaigns, etc.
3. As far as behavioral objectives are concerned, Mylan wanted to make its customers buy epinephrine devices in order to be on the safe side, no matter how often they experience anaphylactic shock. Besides, they aimed to convince schools, restaurants, hotels, and all other public places to provide access to the EpiPen and to stock the devices for rendering first medical aid when the need arises.

Therefore, we can conclude that the pricing campaign of Mylan elaborated on a proper set of objectives that corresponded to the situation perfectly. However, despite this, their implementation did not lead to the desired effect in the long run as the increase of the product price was unprecedented and outweighed all the advantages the company has been promoting for many years.

Programming

Raising the prices without any visible grounds is impossible unless certain strategies are implemented in order to make the product unique and irreplaceable (Hendrix, Hayes, & Kumar, 2012). In order to be able to increase prices as much as the CEO of the company considered necessary, Mylan resorted to the following long-term strategies and tactics (Hemphill, 2016):

1. Trying to achieve its informational objectives, the company resorted to the extensive use of mass media, placing advertisements in all places where it could possibly reach potential consumers. More than $35 million was spent on TV advertisements in 2014. This sum increased every subsequent year of the company’s prosperity. However, it was much more difficult to change public attitude to the product than to simply inform about its existence. The problem was that most people did not believe that you could do much with this device. This prejudice against self-treatment was eliminated after several years of successful implementation of the EpiPen.
2. As for behavioral objectives, the company had to increase demand before rising prices in order to make people buy the product no matter how much it costs. This was achieved by getting the devices stored in public places like schools. This action was allowed by federal legislation (after a widely discussed case when a seven-year-old girl died in school after having eaten peanuts), which re-enforced its impact on people’s perception of the product and their level of trust.
3. Marketing strategies also played a significant role in the success of the EpiPen. In 2009 patients suffering from allergy were prescribed to inject two doses of epinephrine. This made the company opt in favor of twin pens (single packs had been produced before). However, the intricacy of this move can be understood when you learn that still, more than one-third of all the prescriptions recommended a single dose. The EpiPen expires after a year, which means that people bought two devices, one of which often went out of date before they could use it.
4. Mylan quickly made use of the change introduced by the U.S. Food and Drug Administration, which allowed everyone to buy and use the device no matter if they had already experienced anaphylaxis or not. The company immediately shifted the focus of its advertisement to the use of the device as a means of prevention of potential reactions one might have to highly allergic products. This tactic helped Mylan win a broader audience.
5. Another strategy was connected with the popularization of the product by acts of donation. Mylan supplied about 60,000 schools with EpiPens completely free of charge. This met both attitudinal and behavioral objectives as it helped to win the commitment of a huge number of grateful parents. Mylan also signed a contract with Walt Disney, which agreed to promote and store EpiPens in all the theme parks.
6. The strategy to increase prices so quickly is rather logical and comprehensible. It was quite clear that, with the appearance of new generic medicine, which would be cheaper, the profits of Mylan will fall drastically. Thus, the company decided to get the maximum until a real competitor appears (which is expected already in 2017).
7. The most brilliant PR tactic was used by the company when the CEO decided to eliminate its potential competitors. Mylan filed a petition (which was ostensibly written by citizens) with the purpose of convincing the FDA to reject the new device introduced by Teva Pharmaceuticals if it was different from the original one. The company did not count on the success of the result and did this trick with another goal in mind. Mylan managed to win 150 days that you have to wait in order to receive a response from the FDA. This delayed the appearance of the new generic medicine (which was finally rejected by the FDA).

If we analyze the PR theories that were implemented in the campaign, we can state that it went through three of them (Hendrix et al., 2012):

• Two Way Symmetric Model was imitated at the initial stage as the most appropriate one for establishing favorable relationships with the public and getting positive feedbacks. The company anticipated the needs and desires of the audience and tried to satisfy them in order to win trust.
• Afterward, Mylan gradually transferred to Two Way Asymmetric Model with the purpose of shaping consumers’ behavior in the direction of the most profitable one. There was still certain feedback but much less than at the very beginning of the campaign.
• At the final stage of the campaign, the company completely moved to the Public Information Model, which excludes the necessity of feedback. In fact, the CEO made no secret about Mylan’s intention to earn more on all the PR and marketing strategies it had applied before. She neither showed any regret about the patients’ problems with new prices nor brought any apologies, which demonstrated total neglect of the audience’s needs and ultimate transfer to one-sided communication.

As we can see, the choice of strategies and communicative models was rather reasonable throughout the whole campaign. However, the negative effect that the company is now experiencing is connected with its new image. These actions can hardly be called ethical and mar Mylan’s reputation, which is now hard to restore.

Evaluation

Evaluation of the results is the concluding part of any PR campaign and also one of the most crucial of its components. Evaluation allows us to assess how successful the campaign was trying to meet all the objectives specified at the initial stage. In the case of Mylan and the EpiPen pricing outrage, media analysis seems to be the most demonstrative. The key factors to consider are the following ones (Watson, 2012):

1. How many mass media covered the case? The EpiPen pricing campaign attracted a lot of attention and triggered heated debate in newspapers, financial journals, on TV, and on the internet.
2. Was the audience big? The target audience of Mylan was not only huge but also diversified as it included people of all ages: children, their parents, teenagers, middle-aged people, and old people. Besides, it also encompassed racial minorities as they often experience problems with health care provision.
3. Were the major messages communicated to the audience? Yes, they were. People’s awareness of the issue grew considerably due to the campaign.
4. How positive was the feedback? Here we first encounter a complete failure as the campaign totally ruined the opinion people held about Mylan. Besides, all the journalists aggravate this negative attitude by their rather ironic articles.

However, if we estimate the financial side of the problem, it would be fair to admit that the company had become a billionaire due to its for-profit policy. This result can be temporary as with the appearance of real competitors, there are chances that the company will lose a considerable amount of its profit.

The timing for close observation was quite sufficient in order to make the results objective and measure them correctly. However, the future scenario of the events is still unclear. Perhaps, it would be valuable to conduct surveys in order to estimate how people intend to deal with the problem of increasing prices and if they will continue using the EpiPen. That would show what is in store for the company in the near and distant future.

Conclusion

The Mylan EpiPen pricing outrage is a unique case, which proves that no matter how successful a company might be in its marketing policies, the human factor also plays a pivotal role. It can tell not only on the financial well-being of an organization but also undermine its further existence in case the public’s perception is negative and adverse. Denying children access to the device that can save their lives when they are completely helpless is not the best strategy to stay afloat at the U.S. market despite its unquestionable financial profit.

References

Hemphill, T. (2016). Mylan’s EpiPen pricing decision was predictable. Web.

Hendrix, J. A., Hayes, D. C., & Kumar, P. D. (2012). Public relations cases. London, UK: Cengage Learning.

Kim, J. S., Sinacore, J. M., & Pongracic, J. A. (2005). Parental use of EpiPen for children with food allergies. Journal of Allergy and Clinical Immunology, 116(1), 164-168.

Shaker, M. S. (2007). An economic evaluation of prophylactic self-injectable epinephrine to prevent fatalities in children with mild venom anaphylaxis. Annals of Allergy, Asthma & Immunology, 99(5), 424-428.

Tench, R., & Yeomans, L. (2009). Exploring public relations. New York, NY: Pearson Education.

Watson, T. (2012). The evolution of public relations measurement and evaluation. Public Relations Review, 38(3), 390-398.