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In 2007, as part of a s6.7 billien deal with Merck & Co. Inc., one of the largest pharmaceutical companies in the world. Mylan N.V., an American generic and specialty pharmaceuticals company, acquired the EpiPen, an epinephrine injection device used to treat the potentially fatal allergic reaction known as anaphylaxcia. At the time. EpiPen was not a household brand that everyone knew. but efforts by Mtylan's CEO Heather Bresch changed the landscape rthis device. According to Jen Wieczner, in an article in Fortune: "She poured marketing resources into the product. and embarked on an awareness and political campaign to get more EpiPens into schools and other public institutions. Today. 47 states have laws about making epinephrine auto-injectors avalable at school in case of an anaphylaxis incident, largely as a result of Bresch's efforts" (Jen Wieczner "Mylan CEO Blamed Obama Care for EpiPen Sticker Shock." Fortune. August 24, 2016). The market for such devices was relatively competitive until EpiPen's biggest competitor Sanofi's Auvi-Q, went off the market in 2015 due to recalls. Because of the severity of allergic reactions treated by the EpiPen, this kind of injection device is hardly optional for those patients who need it. This means that demand for this type of good is likely relatively inelastici in other words, an increase in price of EpiPens would not have a large affect on the quantity demandedi

In 2007, as part of a s6.7 billien deal with Merck & Co. Inc., one of the largest pharmaceutical companies in the world. Mylan N.V., an American generic and specialty pharmaceuticals company, acquired the EpiPen, an epinephrine injection device used to treat the potentially fatal allergic reaction known as anaphylaxcia. At the time. EpiPen was not a household brand that everyone knew. but efforts by Mtylan's CEO Heather Bresch changed the landscape rthis device. According to Jen Wieczner, in an article in Fortune: "She poured marketing resources into the product. and embarked on an awareness and political campaign to get more EpiPens into schools and other public institutions. Today. 47 states have laws about making epinephrine auto-injectors avalable at school in case of an anaphylaxis incident, largely as a result of Bresch's efforts" (Jen Wieczner "Mylan CEO Blamed Obama Care for EpiPen Sticker Shock." Fortune. August 24, 2016). The market for such devices was relatively competitive until EpiPen's biggest competitor Sanofi's Auvi-Q, went off the market in 2015 due to recalls. Because of the severity of allergic reactions treated by the EpiPen, this kind of injection device is hardly optional for those patients who need it. This means that demand for this type of good is likely relatively inelastici in other words, an increase in price of EpiPens would not have a large affect on the quantity demandedi

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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**The Virtual Monopoly of EpiPens** In 2007, as part of a $6.7 billion deal with Merck & Co., Inc., Mylan N.V. acquired the EpiPen, an epinephrine injection device used for treating anaphylaxis. At the time, EpiPen was not widely known, but efforts by Mylan's CEO Heather Bresch changed the landscape for this device. According to Jen Wieczner in an article from *Fortune*: "She poured marketing resources into the product, and embarked on an awareness and political campaign to get more EpiPens into schools and other public institutions. Today, 47 states have laws about making epinephrine auto-injectors available at school in case of an anaphylaxis incident, largely as a result of Bresch’s effort" (Jen Wieczner, “Mylan CEO Blamed Obama Care for EpiPen Sticker Shock,” *Fortune*, August 24, 2016). The market for such devices was relatively competitive until EpiPen's biggest competitor, Sanofi's Auvi-Q, was pulled from the market in 2015 due to recalls. Due to the severity of allergic reactions treated by the EpiPen, demand is highly inelastic; an increase in price has little effect on the quantity demanded. **Graph Explanation:** The graph illustrates the inelastic demand for EpiPens. The steep demand curve indicates that quantity (on the x-axis) changes very little even as the price (on the y-axis) increases. In 2016, with minimal competition, Mylan raised the EpiPen's price to over $600 from $100 in 2009. According to Wieczner’s article in *Fortune*: “Public and Congressional outrage not only forced Mylan to pay a $465 million settlement and launch a cheaper, generic version of the injection device, but it also spurred rivals and regulators to speed competing epinephrine injectors to market to lower costs” (Jen Wieczner, “Mylan’s EpiPen Recall Couldn't Come at a Worse Time,” *Fortune*, April 3, 2017). Monopoly power was achieved through a lack of close substitutes, barriers to entry, and patents. While costs are now more controlled, the situation poses questions about other necessary goods like insulin. EpiPens are considered __essential__ by patients who suffer from severe allergies.
Transcribed Image Text:**The Virtual Monopoly of EpiPens** In 2007, as part of a $6.7 billion deal with Merck & Co., Inc., Mylan N.V. acquired the EpiPen, an epinephrine injection device used for treating anaphylaxis. At the time, EpiPen was not widely known, but efforts by Mylan's CEO Heather Bresch changed the landscape for this device. According to Jen Wieczner in an article from *Fortune*: "She poured marketing resources into the product, and embarked on an awareness and political campaign to get more EpiPens into schools and other public institutions. Today, 47 states have laws about making epinephrine auto-injectors available at school in case of an anaphylaxis incident, largely as a result of Bresch’s effort" (Jen Wieczner, “Mylan CEO Blamed Obama Care for EpiPen Sticker Shock,” *Fortune*, August 24, 2016). The market for such devices was relatively competitive until EpiPen's biggest competitor, Sanofi's Auvi-Q, was pulled from the market in 2015 due to recalls. Due to the severity of allergic reactions treated by the EpiPen, demand is highly inelastic; an increase in price has little effect on the quantity demanded. **Graph Explanation:** The graph illustrates the inelastic demand for EpiPens. The steep demand curve indicates that quantity (on the x-axis) changes very little even as the price (on the y-axis) increases. In 2016, with minimal competition, Mylan raised the EpiPen's price to over $600 from $100 in 2009. According to Wieczner’s article in *Fortune*: “Public and Congressional outrage not only forced Mylan to pay a $465 million settlement and launch a cheaper, generic version of the injection device, but it also spurred rivals and regulators to speed competing epinephrine injectors to market to lower costs” (Jen Wieczner, “Mylan’s EpiPen Recall Couldn't Come at a Worse Time,” *Fortune*, April 3, 2017). Monopoly power was achieved through a lack of close substitutes, barriers to entry, and patents. While costs are now more controlled, the situation poses questions about other necessary goods like insulin. EpiPens are considered __essential__ by patients who suffer from severe allergies.
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