its creation, Mylan Pharmaceuticals has been in several legal battles and has
faced a number of ethical quandaries. These litigations have taken the company
from a corporation “free of problems” (Freudenheim, 1989) to a company who has
been vilified for its extreme and insensitive price hikes on life-saving
medications. While the negative press has created a public that is less than
trusting, Mylan has maintained the company is still invested in providing high
quality products for a low cost because they “care about the people who are
helped by what they do” (Mylan, 2017).
In 1961, two United States Army
buddies, Milan Puskar and Don Panoz, flipped a coin to see who would name their
budding company and who would serve as its first president. Milan
Pharmaceuticals began as a drug distribution company, which would purchase
finished medicines and then resell them to medical personnel and pharmacies.
Five years later, Mylan Pharmaceuticals received its first approval for the US
Food and Drug Administration (FDA) for their newly created generic medicine:
Penicillin G. In 1972, “Milan” was changed to “Mylan” to help the company’s
stock stand out from other stocks beginning with the letter “M” after taking
the company public.
Although created with a distribution philosophy in
mind, Mylan Pharmaceuticals was producing five generic antibiotics, which made
up half of the 10 most prescribed generic medicines, by the end of the 1970s
and, by the beginning of the 1980s, Mylan Pharmaceuticals began marketing their
products under their own brand. By the end of the 1990s, Mylan had acquired a
number of subsidiary companies and at the turn of the millennium, Mylan had
achieved global recognition.
In February of 2004, a decision in an employee suit,
Lynne Robertson versus Mylan Laboratories, a subsidiary of Mylan, for gender
discrimination was rendered. Employed as a scientist, Robertson was promoted to
Manager of Permeations. Mylan decided to restructure the Formulations Group and
two new senior staff leader positions were created: Supervisor of Drug Delivery
and Supervisor of Polymers. The drug
description for Supervisor of Drug Delivery required a Ph.D. in Pharmaceutics,
Material Science or Chemical Engineering and five years of transdermal formulations
experience. Robertson contended an external applicant was hired instead of her
because of her gender and alleged discrimination. Hasl-Kelchner (2006)
describes discrimination as “being treated unfairly due to their race, national
origin, religion, age, disability and equal pay.”
Robertson stated the applicant was interviewed before
the job existed and this violated a company policy of posting positions and
interviewing internal candidates before external ones. She alleged the job
description was created to fit the qualifications of the hire and that in a
number of cases, the company waived minimum education requirements for
applicants that were near the requirements. They did not waive the requirements
for her and according to her, it was because of her gender.
If this were true, Mylan would be in direct violation
of Title VII of the Civil Rights Act of 1964, which prohibits employers from
refusing to hire employees because of their “race, color, religion, sex or
national origin” (United States Equal Opportunity Employment Commission, n.d.). Ms. Robertson failed to prove her case.
According to case files, Mr. Robertson had been allowed to apply and simply did
not meet the minimum qualifications. Mylan Pharmaceuticals arose the victor.
Employee suits are lawsuits an employee (or ex-employee) brings against their
employer. These most often occur because of “discrimination, harassment and
wrongful or constructive discharge:” (Hasl-Kelchner, 2006). Mylan has had
several employee suits filed against them since their inception, including one
suit that claimed the employee was fired for being a whistleblower.
In 2007, Mylan Pharmaceutical entered into a contract
with GlaxoSmithKline (GSK) which gave Mylan intellectual property rights to
manufacture and market a generic version of GSK’s paroxetine hydrochloride ER
tablets. GSK worried the Federal Trade Commission (FTC) would have concerns
over the exclusivity given to Mylan and their ability to retail the ER tablets,
so in the contract, GSK created an exception stating two years after Mylan
launched its generic drug, GSK or its
affiliate could market and sell the generic drug. In 2010, GSK agreed to supply
Apotex Corp. with the generic ER tablets to sell after settling an antitrust
lawsuit with them.
Mylan Pharmaceuticals viewed this as a breach of
contract as Apotex Corp. was not an affiliate of GSK and their contract
specifically stated GSK or their affiliate could market and sell the generic
product. A breach of contract is basically a violation of a contract. The
contract between Mylan and GSK did not allow for third-party pharmaceutical
companies to be used to advertise and sell the generic tablets, Mylan claimed. While a district court found for GSK in 2012,
a Third Circuit court overturned the ruling in favor of Mylan. The language
used in the contract seemed to support Mylan’s claim that GSK had agreed they
could not use a third-party to market and sell the generic drug. The contract
was deemed enforceable by the courts (meaning it had no factors to deem it
voidable) (Hasl-Kelchner, 2006) and Mylan was awarded over a hundred million
dollars in damages as a remedy to the contract breach.
According to the Judicial Education Center (n.d.),
contracts are agreements made that benefit both parties involved and are
enforceable by law. While contracts suffer from various issues, the most common
is interpretation, which seems to have been the case in Mylan versus
GaxoSmithKline. While GSK maintained they could supply any party to sell the
generic product after the two year term, the language when read in context and
with all other clauses clearly read in support of Mylan’s claims.
Most recently, Mylan has been
battling over the price of their EpiPen. EpiPen is a single-use syringe used in
anaphylaxis treatments. Mylan markets this product, not as a generic item, but
a branded item, however, to reduce rebates Mylan would need to pay to Medicaid
programs, classified it as a generic treatment.
According to Andrew Pollack at the International New York Times, in 2007, Mylan’s
EpiPen has risen from a cost of $100 for a pack of two to over $600 in about 10
years. For parents and patients, this is an astronomical cost and because
EpiPens have a one-year shelf life, a recurring astronomical cost.
The surge of price increases were driven by Mylan’s
ability to monopolize the market for anaphylaxis treatments. The rejection by
the United States Food and Drug Administration (FDA) of the expected generic
from a company called Teva, helped to solidify Mylan’s place in the market.
With one of its competitors out of the arena, insurers and pharmaceutical
managers can’t negotiate pricing. In 2011, a non-generic alternative, Auvi-Q,
was pulled from the market which allowed Mylan to set the prices without
worrying about negotiating prices.
Mylan’s ability to monopolize this particular market
has also been, in part, due to the patents that protect the device of the
EpiPen. The device, including the safety cap, is protected by various utility
patents. Utility patents protects inventions (Eisenberg, 2008) and prevents
other companies from recreating this device. Mylan has recently settled various
claims over their overcharging, paying out $465 million dollars (Dyer, 2017).
This monopolization could be seen as a violation of
antitrust laws. Antitrust laws seek to encourage a competitive market and with
the lack of competition, Mylan has dominated the market as the sole provider of
a life-saving device.
forty years ago, a Nobel Prize winning economist, by the name of Milton
Friedman, published an article in the New
York Times about the social responsibility of companies. He argued each
company had a responsibility to use their resources to maximize their profits
within the “rules of the game” (Friedman, 1970) and without deception and that
this responsibility was the only social responsibility companies were required
If a company acted against the interests of the owners
or employees, they were acting irresponsibly and in direct contradiction to
their purpose. If a business took money from the company’s public funds for
private affairs, it was acting against the interests of the company and their
employees and therefore against the purpose of the business.
Mylan Pharmaceuticals, throughout its lifetime, has seemed
to both reject and embrace this ideology. In its early years, Mylan
Pharmaceuticals appeared to want to genuinely help customers afford quality
medications that could save the life of a patient, as shown, have invested
their own funds to ensure a competitive market for genetic pharmaceuticals was
possible, even though this didn’t assist in increasing profits. However, with
its recent legal issues stemming from the drastic increases of the cost of
their EpiPen, it would seem Mylan Pharmaceuticals has fully embraced Friedman’s
view that companies don’t have an ethical social construct they must follow
when marketing and developing products. Indeed, Mylan has enjoyed the lack of a
competitor, been able to monopolize this particular market and have solidly
maximized their profits since 2007.
Mylan Pharmaceuticals have argued against the outrage
of the public citing their actions have been within the confines of the law,
seemingly holding to Friedman’s philosophy, but do the “rules of the game”
speak merely about the law, or are the public perceptions and socially
acceptable corporate behaviors also considered when Friedman uses the phrase
“rules of the game?” If indeed he meant to imply that companies should act with
these factors in mind, Mylan Pharmaceuticals would appear to be cherry-picking
Friedman’s philosophy to uphold their efforts to increase their profits, even
at the risk of preventing people the ability to afford their high cost
Mylan Pharmaceuticals claims, on their website, to have
a culture that understands and fosters a sense of global social responsibility,
not only serves, but cares, about their customers and continually engenders an
ethical corporate environment, “doing what’s right, not what’s easy” (Mylan,
2017). On its face, Mylan may very well use the virtue ethical framework.
The virtue ethical framework describes one in where an
entity is always seeking to better itself to reach its potential (Halbert &
Ingulli, 2008). This framework allows an entity to establish a culture that
repeatedly exposing their members to appropriate and wanted behaviors.
Mylan Pharmaceuticals has an established Code of
Conduct, which is reinforced by both computer-based and instructor-led
training. Not only do they support their own employees, but have conducted
anti-corruption training which is offered to third-parties. To ensure their
policies and necessary laws are being followed, Mylan conducts audits and
follows checklists to ensure compliance standards are being adhered to. In
2014, Mylan Pharmaceuticals hosted over 50 inspections (Mylan, 2017). In the
80s, Mylan uncovered evidence of the FDA accepting bribes which led to FDA
reform. In 2007, Mylan helped to shape legislation called the Food and Drug
Administration and Innovation Act, which allows the FDAs authority to be
strengthened to safeguard the public.
While these attributes and acts do fall in line with a
virtue ethical framework, the recent litigations against Mylan would seem they
have been edging closer to the free market ethics philosophy.
Mylan Pharmaceuticals has been entangled in various
legal and ethical issues since its inception in the 1960s. They have