| Subject | Management | Pages | 4 | Style | APA |
|---|
Question
Strategic Management of Health Care Organization
Answer
Strategic Management of Healthcare Organization
Abstract
The EpiPen instrument automatically injects a drug known as epinephrine that reverses possibly lethal allergic reactions. Undoubtedly, it is one of the unique devices available in the US. Millions of people depend on carrying the device at all times. For many years, the EpiPen could be obtained affordably until the time when the Mylan Company bought it in the year 2007. From that time, the price of this device has increased significantly, creating a public criticism of media reports, social media petitions, as well as, politicians demanding explanation from the company’s top leadership regarding the rise in the price. Lack of compassion and access greed has tainted the public image of the company. Mylan has embarked on establishing ways of rejuvenating its image by compensating the public by providing them with generic EpiPens, as well as, payment help to eligible patients. However, all these might not be possible in the present communication crisis event.
Problem
In the recent past, Mylan has been under heavy criticism due to occasionally increasing the price of their trusted EpiPen product. For many years now, the company has been the only firm in the market that sells EpiPen. The firm has taken advantage of this monopoly in a bid to increase its performance and revenues by disregarding its customers. Presently, the EpiPen is safeguarded by a patent that is approved by the FDA. This implies that no other company is allowed to manufacturer a similar product because such products will be barred from being sold in the market by FDA. Although FDA continues to safeguards Mylan’s market, the company has continued to raise the price of its product. The company clearly understood the fact that the patent was expiring soon but it continued to endanger the lives of millions of people by being greedy. Essentially, the controversy revolved around the price increase. Precisely, when Mylan first obtained the EpiPen, it was selling the device at $124 for a package of two. Nonetheless, to shorten the expiring patent for more profit; the organization increased the price to above $600. Worst still, the families who need these devices to keep their infants safe are compelled to use the old devices because they are unable to replace them. The company has raised the price of a life saving device while knowing very well that individuals will continue to purchase this product because their lives depend on it.
Analysis
Mylan used its marketing strategy to raise the price of its product almost twenty times during the nine year acquisition time. Intuitively, these increases were enacted in a constant even oppressive manner with the aim of subduing the market. The company not only managed to raise the price of its product but also the frequency of price increased. Single leadership resulted in the monopolization of the manufacturing of EpiPen and the formulation of in-house marketing campaigns. Principally, the actions of Mylan can be explained as a monopoly misusing its power. Besides increasing the price of EpiPens almost twenty times, the company also overcharged the American government for the device. The firm managed to implement this scheme by categorizing the product as generic instead of a branded product. This grouping made the taxpayers to pay about $1.27 billion more than what they ought to have paid.
Assumptions
The pricing mechanism of any pharmaceutical product is quite complete because it entails myriad of factors such as contract negotiations with agencies within the distribution channel, competition in the market, the objectives of the manufacturer, as well as, cost of goods. Therefore, it is assumed that the pricing mechanism of Mylan for the EpiPen product was established by considering these factors as well as, other factors not mentioned here, some of which have neither indirect or direct control. For instance, Sanofi launched its competing Epinephrine injector in the year 2013 and during the same period increased the price of its product by 10% so that it could cost higher than that of Mylan. It was also assumed that the increase in the price of EpiPen was due to the ever changing demand and supply of product in the market. As such, the company increased the price of its product to make sure that in case of an emergency, one will be able to get EpiPen.
Recommendations
Presently, Mylan is facing intense pressure from the community to lower its recent price increases. The company must address this carefully because it wants to remain profitable and the market leader once the patent expires. It is not anything to doubt that Mylan exposed most of its stakeholders to danger. As such, one of its major goals is to formulate a proper mission statement to rebuild its image by providing patients with quality medicine to secure the wellbeing and health of the future world. Secondly, given that the patent is soon expiring, Mylan should consider an action that safeguards its future. In particular, it should reduce the price of EpiPen and work jointly with insurance companies to provide better rebates and other deals to assist pay for the medicine. The company should also form a donation of charity fund for persons from poor financial backgrounds who are unable to purchase EpiPens even at a justifiable price. Similarly, Mylan should lower incentives that could possibly cause workers to act unethically. In particular, it should eradicate the bonus program such as the one that executive would have received in case they attained their set profit target.
References
