Brand, Reputation, and 548% Price Increases

This week, we considered the ethics of advertising and pondered the seesaw of right versus profitable. In considering right versus profitable in marketing, I admit I was distracted from promotion to one of the other four marketing “Ps”—price. Recent news that Mylan had jacked up the price of the EpiPen 548% had me saying ‘What about price?!” If there are guidelines to protect consumers against false advertising, surely there should be legal or ethical guidelines against outrageous price gouging for life-saving drugs.

Apparently not.

In an interview, “pharma bro” Martin Shkreli, who the BBC dubbed “the most hated man in America” after he raised the price of  life-saving drug Daraprim more than 5,000 percent, expressed disbelief over the backlashed that ensued, saying , “The attempt to public shame is interesting because everything we’ve done is legal.”

In a free market, supply and demand control price. But what if there is no viable competition and neither the industry nor lawmakers will step forward to regulate prices? Then what? When marketing their products, will pharmaceutical companies look at their product roster and decide to charge what they want for products that have no competition?

So what does this have to do with marketing? If I would have considered the question of price gouging before these incidents, I would have immediately thought a company would never do such a thing; to do so would surely create irreparable damage to its brand and reputation.  After all, we’ve been well-schooled in the importance of brand and brand value, and raising the price of life-saving medicine by 548% seems highly unethical and thus a certain path toward brand and reputation destruction.  In the meantime, Mylan made more than $1 billion in revenue from the EpiPen last year, and I’m left wondering if pharmaceutical companies can continue to break all of the rules for brand and reputation building with no consequence.

References

McLean. B. (2016). Everything you know about Martin Shkreli is wrong—or is it? Vaniity Fair. Retrieved from http://www.vanityfair.com/news/2015/12/martin-shkreli-pharmaceuticals-ceo-interview

Rockoff, J.D. (2016, August 24). Mylan faces scrutiny over EpiPen Price increases. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/mylan-faces-scrutiny-over-epipen-price-increases-1472074823