Basically, it’s a case study related to philosophy and business. I have attached the files so you can get the better idea of what case study is about. basically we have to choose a philosopher and contrast his philosophy with a business from 2008-2020. philosophers such as Aristotle’s Virtue Ethics, Thomistic Ethics, Smith’s Moral Sentimentalism, Mill’s Utilitarianism, Keynes’ Moral Science, Whitehead’s Process Ethics and Sen’s Capabilities Approach. Case-study paper must refer to 2 of the required readings related to that particular philosopher (the primary reading by the philosopher, and the secondary reading by a contemporary business ethicist), I can provide both depending on what you are choosing. I have attached the mock case study too, how it looks like.
Basically, it’s a case study related to philosophy and business. I have attached the files so you can get the better idea of what case study is about. basically we have to choose a philosopher and con
1 MORAL ISSUES IN BUSINESS CASE STUDY ASSIGNMENT Length: 7-8 Pages (excluding title and bibliography) Format: Essays must be typed in double-spaced size 12 Times New Roman font. Pages should be formatted with 2.5 cm margins. Pages should be numbered. Hardcopies must be submitted in person during class. Title Page & Bibliography: Your case study project must be accompanied by a title page which includes a title, your name, student number, and UW email address. A ‘Works Cited’ page containing all relevant bibliographic information should also accompany the assignment. Each entry in your works cited list should look something like this: Last Name, First Name (Year of Publication). ‘Chapter Title’. Book Title. Publisher: City of Publication. Citations: Students are being evaluated primarily on the extent to which they can demonstrate knowledge of the required readings, and apply that knowledge to a critical examination of a specific moral issue in business today. Students are therefore expected to substantiate their interpretative claims and arguments by referring directly to those required readings. When quoting, you must place the borrowed words within quotation marks and provide a citation at the end of that sentence. When citing, follow a simple in-text author-date-page system. For example: According to Bowie, the theory of “utility maximization” is premised on “ideological assumptions” which, so long as they are adhered to, “obliterates ethics” (Bowie 2013, 32). However, even when paraphrasing things in your own words, or when referring to specific concepts, arguments, or examples from texts, you must still offer a citation. For example: The theory of psychological egoism involves ideological assumptions which, as long as they are accepted, prevent any reconciliation between ethics and economics (Bowie 2013, 32). Quotes 4 or more lines in length should be separated from the main body of the text, indented 1 cm on both sides, single-spaced, and placed in size 10-point Times New Roman font. 2 Students must adhere to a strict code of academic conduct. Plagiarism is a serious form of misconduct. Please consult the Regulations & Policies webpage of the University of Winnipeg. Case Study Guidelines: For the case study project, students must select 1 particular moral philosopher studied in Phil 2230: Moral Issues in Business, and choose 1 relatively specific and relatively recent (from 2008 – 2020) moral issue in business. Students must critically analyze and evaluate the morality of their case study topic from within the perspective of their chosen school of moral philosophy. Students must select a school of moral philosophy studied in Phil 2230. Pick one of the following: Aristotle’s Virtue Ethics Thomistic Ethics Smith’s Moral Sentimentalism Mill’s Utilitarianism Keynes’ Moral Science Whitehead’s Process Ethics Sen’s Capabilities Approach Your case-study paper must refer to 2 of the required readings related to that particular philosopher (the primary reading by the philosopher, and the secondary reading by a contemporary business ethicist). Your paper must also refer to at least 1 magazine, newspaper, or academic journal article about the specific issue being analyzed. Please attach a printed or photocopied copy of the article to your paper. No further research is required. Your analysis might include: formulating criticisms of specific business practices and attitudes; garnering insights into the ethical/unethical nature of the situation and response of the business; as well as offering advice for CSR strategies and corporate codes of conduct designed to repair, improve, and/or maintain ethical standards— all of these should be designed from within a theoretical perspective inspired by your chosen school of moral philosophy. You may want to ask yourselves: Why might your chosen moral philosopher criticize certain business behaviours as unethical? What relevance does their critique have for the analysis of moral issues in business today? What moral insights does it offer into the specific ethical dilemmas faced by businesses today, i.e., such as the business in your case study? What might your chosen type of moral philosophy contribute to developing CSR models and codes of conduct aimed at remedying wrongs? What original and substantive contributions does your case study essay make to contemporary secondary literature and scholarly discussions on business ethics? In their case-study assignments, students are expected to: Summarize the nature of their case study topic by referring to and citing their newspaper or journal article; Summarize the meaning and explain the significance of whatever philosophic concepts, arguments, theories, and criticisms they consider to be relevant to their ethical analysis of that topic with reference to the course-related literature; and Evaluate and critically analyze the case study topic within the context of their chosen school of moral philosophy.
Basically, it’s a case study related to philosophy and business. I have attached the files so you can get the better idea of what case study is about. basically we have to choose a philosopher and con
1 Whitehead ’sprocess philosophy is grounded in an ontology of internal relations (Whitehead 1938, 45). The doctrine of internal relations is best defined as the view that the identity or being of an entity is influenced by its relationships to other entities (Ibid., 18). In this worldview, the interconnections between things are conceived of as inner connections in the sense that they are integrated into, or become part of, the character of the related things. In other words, what things are is determined by the network of their relationships with all other things. As Capra and Jakobsen note, this means that Whitehead views both society and nature as made-up of interwoven processes and activities (Capra and Jakobsen 2017, 4). Whitehead was therefore critical of the dominant methodology of the natural sciences because ittends to isolate the object of investigation by severing itfrom its essential connections to its environment (Whitehead 1954, 136). This methodology ignores that the relations, which have been excluded from ‘analysis ’,might determine the object being studied— an “analytical divorce from the total environment ”(Ibid., 142). The natural sciences are thus susceptible to committing what Whitehead dubbed a “fallacy of misplaced concreteness ”— that is, of mistaking athought “abstraction ”with the concreteness of lived reality (Cobb and Daly 1994, 27). Any theoretical model based on abstractions, especially gross abstractions which lead to afallacy of misplaced concreteness, possess limited explanatory power .Such alimited methodological approach can lead to disastrously mistaken conclusions, especially when we are not aware of those limitations. In Science and the Modern World ,Whitehead extended his critique of the methodology of the natural sciences into alarger critique of the theory and practice of economics. He contends that, after Adam Smith, the discipline of economics underwent a process of specialization that led to the compartmentalization of economic theorizing (Whitehead 1954, 189). This “situation has its dangers, ”he warned modernity, because it 2 produces “minds in agroove ”(Ibid., 191). Modeled on the basis of classical physics, economics reproduced all of its methodological shortcomings (Ibid., 185). This led both economists and entrepreneurs into anarrow mindset in which they seem capable of only seeing “this set of circumstances or that set; but not both sets together ”(Ibid., 193). As Cobb and Daly note, this critique of the “physics ”-like methodology of economic thinking presents an even more significant challenge to the theory and practice of economics in our day than itdid in Whitehead ’s(Cobb and Daly 1994, 32). Economics is asocial science concerned with studying the interaction of human beings with one another and with the resources of nature. Its methodology should reflect this sociological fact. However, its importation of an alien methodology from the natural sciences has been disastrous for the development of the discipline over the last two centuries. Ithas “riveted on men acertain set of abstractions ”and led them to “neglect everything else ” (Whitehead 1954, 183). This approach has its “built-in limitations and dangers ”(Cobb and Daly 1994, 37). By ignoring the ‘organic ’interconnections of the economy, and the interactions of the economy with the larger socio-natural world, economics is liable to “committing afallacy of misplaced concreteness ”(Ibid., 34). Ithas created “minds in agroove ”(Whitehead 1954, 191). The “eviscerating analysis ”of the modern economist does not display a “sensitiveness to all the facts ”(Ibid., 182). Their methodology has excluded from consideration all non -economic forms of value— e.g., the value of beauty, our moral values, the value of the environment, etc. (Ibid., 181). Whitehead thus presaged that economic ‘progress ’might cause an inestimable amount of harm to the minds of individuals, to the moral fabric of society, and to the delicate tapestry of relations in our ecosystems. His critique of the theory and practice of economics is relevant to the understanding our time, and itis an approach which can be meaningfully applied to the critical analysis of moral issues in business today. 3 To be sure, our economy is much different than Whitehead ’s. However, the changes which have taken place in those intervening years have only confirmed some of his gloomiest predictions. The global marketplace has become increasingly mathematized. The speed of trading and stock-buying has been intensified in recent years by computerization and the use of complex algorithms (Yee 2017, New York Times ).The tendency to reduce the social science of economics to anatural science, to exclude forms of interaction and isolate objects for analysis, to ignore all sorts of non-economic values, etc.— these are tendencies which have continued to dominate economic thinking.The hyperspecialization of economics has also led to the adoption of aseries of problematic assumptions, viz., that humans are utility-calculating machines operating exclusively on the basis of self-interestedness and possessing all relevant information about the conditions of the marketplace (Bowie 2012, 32). This seems to be grounded in ashallow and one-sided conception of human nature. Such amethodological approach also ignores Aristotelian “final causes, ”namely, of aims and purposes which go beyond mere profit maximization schemes (Cobb and Daly 1994, 28). Instead of emphasizing greater interdisciplinarity, as other social sciences have, the continued specialization of economics as afield of study has only entrapped economic thinking within adeeper “groove. ” Alan Greenspan ’sbehaviour in the lead up to the sub-prime mortgage crisis is an exemplification of this sort of one-sidedness in economic thinking, i.e., of minds stuck in arut and unable to grasp the innerconnections between things. An article by Treanor and Clarke published in The Guardian covered Greenspan ’stestimony before the Senate in the wake of the economic disaster of 2008. Greenspan ’sthinking clearly operates on the basis of those neoclassical assumptions mentioned in the above. He assumes that human beings are wholly “self-interested ”actors, and that the economic competition between such self-interested parties automatically produces the best social outcome (Treanor and 4 Clarke 2008, The Guardian ).Under his helmsmanship as Chairman of the Federal Reserve, he instituted aseries of sweeping changes which deregulated the banking industry and the mortgage markets under both Democratic and Republican administrations (Ibid.). As apractitioner of the Chicago School of economics, he endorsed the repeal of Depression-era legislation which had stabilized the banking sector in America for three quarters of acentury (Ibid.). These laws had prevented banks from engaging in certain speculative investments and practices, and had limited the amount of risky debt which they could hold and trade (Ibid.). Greenspan ’sassumptions about human nature, society, and economics informed his behaviour during his Chairmanship (Ibid.). The process of deregulation around Mortgage-Backed Securities and Credit Default Swaps arguably contributed to the financial disaster, as he himself admitted in his testimony to the Senate (Ibid.). The neoclassical assumptions built into his economic theory prevented him from foreseeing the coming collapse of the economy, and, once the recession was under way, did not enable him to recognize the growing scope and severity of the disaster until itwas too late (Ibid.). In his testimony, he admitted that his “ideology ”contained certain “assumptions ” about unregulated markets (specifically, in the subprime mortgage sector) which he “mistake[nly] ”accepted (Ibid.). There were “flaws in the [theoretical] model ”he had accepted since his days as an Economics student (Ibid.). The theory seemed to be “working exceptionally well ”— that is, until itfailed miserably (Ibid.). From the perspective of process philosophy, Greenspan might be said to have ignored the delicately balanced relationship between investing and banking that had been established since the Great Depression. He ignored how the removal and repeal of banking legislation might influence the behaviour of individual actors in the economy. He ignored how his management of an increasingly deregulated mortgage market would significantly alter the interactions between home-buyers, banks, investment firms, and 5 insurance companies. In other words, he ignored the internal relations that make-up an economy. An economy is much more like an organism ,than amechanism (Cobb and Daly 1994, 33; Capra and Jakobsen 2017, 8). Because the economy is internally-related, any radical reorganizing of its structure ought to be contemplated with sobriety and extensively tested before implementation. But Greenspan ’ssweeping reforms of the economy never registered the impact they would have on the network of interconnections in the global economy. His study of economics had “riveted ”on him afixed set of thought “abstractions, ” including assumptions about human nature and economics. These “flaw[s] ”in his theoretical “model ”of economics went unnoticed for over 50 years. Itwas this limited explanatory model, i.e., neoclassical economics, which contributed the financial fallout of 2008 and the foreclosing of over 10 million American homes (Treanor and Clarke 2008, The Guardian ).Greenspan ’sradical redesigning of the mortgage markets was grounded in the very “fallacy of misplaced concreteness ”that Whitehead had warned us about in 1954 (Cobb and Daly 1994, 35). The former Chairman ’slimited view of reality was entrapped within aset of ideological blinders which precluded him from appreciating the complex interwoven processes which make-up the fabric of the global economy. Greenspan ’sactions contributed to the financial ruin of millions of Americans, and the downfall of the global economic order. In my judgement, although he is indeed morally culpable for his behaviour, he is not as culpable as he might otherwise be. This is because Greenspan was unaware of the “flaw in the model. ”In this respect, he can indeed plead ignorance. Ignorance does not relieve him of moral responsibility altogether, but it does mitigate the level of guilt. After all, his wrongdoing was the result of aseries of “mistake[n] ”“assumptions ”in his economic “ideology, ”an ideology that he had accepted since his time as acollege student. He studied economics and was educated in acontext in which those sorts of assumptions were both commonplace and went unquestioned. He 6 was merely aproduct of his times, and of our times, in which such “abstractions ”go unnoticed and uncritically adopted— including, and perhaps most of all, by experts in the field of study. He was just one among many minds struck in a“groove ”and susceptible to “committing afallacy of misplaced concreteness. ” The theory and practice of economics today requires either radical reform, or, a return to the more tried, tested, and true principles of the past. In either case, the academic study of economics should encourage the broadening, not the narrowing, of young minds. Economics Departments ought to strive for greater interdisciplinarity with other social, rather than natural, sciences, e.g., psychology, sociology, political science, and philosophy. Greater interdisciplinarity avoids the problems of “minds in agroove ”that Whitehead warned us about. Indeed, amore “general ”education was integral to his proposed solution to the crisis of modernity (Whitehead 1954, 198). Whitehead wanted students, particularly in economics-related fields of study, to be able to see situations holistically, instead of from aone-sided perspective (Ibid., 194). He would encourage students majoring in Finance, Economics, and Business Management to develop a “sensitiveness to all the facts, ”including arecognition of the intellectual, moral, and aesthetic values of life (Ibid., 199). As he put it, the modern world needs an economist who is “not weak in zoology, [and] weaker still in his knowledge of Elizabethan drama ” (Ibid., 201). In other words, we should educate economists to be more well-rounded, and less specialized, in order to ensure that the social and natural “whole ”is no longer “lost in one of its parts ”by the “eviscerating analysis ”of economic thinking (Ibid., 184). The broadening of the ‘economic mind ’might yield positive benefits for consumers, workers, businesses, and ecosystems. As Capra and Jakobsen argue, being attuned to internal relationships would improve the health of the economy, society, and nature (Capra and Jakobsen 2017, 6). The global marketplace, our political communities, and our environments are all organic unities whose interrelated processes and activities 7 influence one another— for better or worse. We need to be aware not only of the methodological issues discussed in this paper and related to the mortgage crisis, but also the growing impact of our economies on our environments. By disturbing and damaging the delicate and intricate balance of relations that ecosystems are composed of, we threaten to undermine the very foundations upon which the whole edifice of nature is built (Ibid.). The global economy and the globe itself are intimately intertwined with, and interdependent upon, one another. The two can only be separated by agross abstraction, for, the future fate of both humanity and nature depends upon areform in the theory and practice of economics today. Business students need to be educated in acontext which encourages greater interdisciplinarity and the questioning of foundational assumptions, which stimulates the search for unorthodox solutions to age-old problems and new dilemmas, and which rewards them for independent thinking and novel insights. We need more economists who are not weak in Elizabethan drama.
Basically, it’s a case study related to philosophy and business. I have attached the files so you can get the better idea of what case study is about. basically we have to choose a philosopher and con
32 2.1 Introduction Aristotle has in recent years enjoyed much attention in business and management journals (Collins, 1987; Dyck and Kleysen, 2001; Solomon, 2004; Wijnberg, 2000). Whether in relation to total quality manage- ment (Schoengrund, 1996), knowledge management (Demarest, 1997), crisis management (Darling, 1994), networking (Schonsheck, 2000), in psychological literature on well- being (Waterman, 1990), or as a general reference point for business ethics scholars (for example, Fontrodona and Mele, 2002; Gimbel, 2005; Solomon, 1992; Solomon, 2004; Wijnberg, 2000), Aristotle’s philosophy enjoys enthusiastic attention in the business field. In order to understand the significance of this, it is imperative that we do not isolate the tenets of his business ethics from their wider philosophical context but, rather, explain the former by the latter. Therefore, in this chapter, we follow his arguments from their beginnings, from his theory of life (1), through his theory of the intrin- sic moral (2) and the extrinsic social (3) relations of material goods, up to the point where consequences for business management today can be drawn (4). Since in Aristotle’s time business organizations other than the household did not greatly matter, we will outline how his think- ing about the household can be applied to modern corporations. We argue that Aristotle’s conception of chrematistike and oikonomia provides a basis for answers to questions raised by the current discourse on social and financial value creation (Carroll, 1991; Carroll, 1999; McWilliams a nd Siegel, 2 0 01), suc h as how busi ness shou ld v iew itsel f w it h rega rd to society, and whether social responsibility is a fundamental practice or only a functional add- on (Pava and Kraus, 1996; Scherer and Palazzo, 2007; Smith, 2003). 2 Aristotle’s Economic Ethics Claus Dierksmeier and Michael Pirson C. Dierksmeier et al. (eds.), Humanistic Ethics in the Age of Globality © Palgrave Macmillan, a division of Macmillan Publishers Limited 2011 Aristotle’s Economic Ethics 33 2.2 Aristotle’s theory of life Aristotle knew that if one’s only goal is to make as much money as possible, a reasonably clear- cut code of conduct can easily be derived from this premise. He felt, however, that to outline a theory of such behavior was precisely what sound economic thinking was not about ( Pol I, 11, 1258b, 33–34). The rules of mere money- making (chrematis- tike ) he found simply too “tiresome to dwell upon ( …) at greater length” ( Pol I, 11, 1258b 34). His predominant interest, instead, was with what should rightfully be considered economics ( oikonomia): the concern for morally adequate individual and public household management ( Pol IX, 1, 1256b, 40 – 41). In other words, the very way in which Aristotle deals with economic affairs is at odds with the modern separation of economics from ethics and all other concerns of life. He therefore dis- cusses economic and business questions as subordinate subjects within his treatise on politics, which itself is worked out in the overall frame- work of his ethics (Koslowski, 1993, 51–53). And Aristotle’s ethics rests upon a ( teleological ) theory about life that ascribes to each living entity a certain goal ( telos) to which it strives. Plants, for example, need specific environments (such as soil, water, and sun) but will, given these conditions, prosper and flourish pre- dictably in a certain way. They thereby realize their genetic program or what Aristotle calls their “final end” ( PA I, 641b, 34 –39). Human beings and organizations strive towards ends, too. However, everything human does not simply follow a predetermined path but relies greatly in its course upon human freedom and agency. Outward conditions can hamper the development of human life, of course, but failure in human affairs also stems from misguided inner direction. The possibility of affecting one’s own well- being negatively, such as through turpitude and vice, is inherent in every human being and organization. For suc- cessful self- management, a ( teleological) concept of what constitutes true well- being (as an end) and of what brings it about (as means) is therefore needed. In all sciences and arts the end is a good; and the greatest good and in the highest degree a good in the most authoritative of all – this is the political science of which the good is justice, in other words, the common interest. ( Pol III, 12, 1282b, 15–19) If economics forms part and parcel of Aristotle’s political science, the proper management of economic affairs can be seen as central to his 34 Claus Dierksmeier and Michael Pirson overall concerns (Dyck and Kleysen 2001, p. 562). What, then, is the contribution of the economy to the overall project of human life? What constitutes economic welfare? What ends should business organiza- tions pursue? What are the right ways to measure economic success? To answer these questions, we need to consider what constitutes value in human life. Reflecting upon what people commonly consider as good, or as a good, makes it clear that most things are valued not absolutely but relatively. Most goods are held in esteem because they serve a cer- tain function, because they are being employed as means to other ends and goods. Aristotle concludes, If, then, there is some end of the things we do, which we desire for its own sake (everything else being desired for the sake of this), and if we do not choose everything for the sake of something else (for at that rate the process would go on to infinity, so that our desire would be empty and vain), clearly this must be the good and the chief good. (NE I, 2, 1094a, 17–23) What is this ultimate goal of human life? According to Aristotle, one thing is clear from the beginning, “wealth is evidently not the good we are seeking” ( NE I, 7, 1096a, 6). The answer instead has to be gleaned from the natural faculties of the human being ( NE I, 7, 1097b, 33). Whatever our private idiosyncrasies, certain capabilities are common to us all. In our most common faculties lie natural objectives. The quest for (goods such as) food, shelter, defense, and procreation, we share with animals. In addition, human beings seek communication, edu- cation, and cultivation (Pol I, 2, 1253a, 10 –39). Yet even these higher goods can be declared functional; they are not necessarily sufficient in themselves, nor are they necessarily sought after universally. Happiness, however, is universally pursued, and, moreover, is sought for its own sake. For formal reasons, it must therefore be declared the ultimate good of human life ( NE I, 7, 1097a, 28 –37). But what, materi- ally, constitutes happiness? Aristotle’s theory is not a hedonistic the- ory. His term for happiness ( eudaimonia) denotes a well- ordered state of affairs. Aristotle does not extol subjective states of euphoria, received passively through the senses. Rather, eudaimonia describes an objective state of being, to be attained by rational activity ( NE I, 7 1098a, 3– 8). Individuals are “happy” (well- ordered) when they rationally harmonize their outer and inner world so as to live self- sufficiently (NE I, 7, 1097b, 15–16). Not fortune or fortunes, but a communal and virtuous lifestyle makes for happiness. Aristotle’s Economic Ethics 35 Yet striving for eudaimonia is not to the same as achieving it. After all, to declare happiness one’s goal does not translate into a very specific pro- gram of action. So how, concretely, is happiness realized? Aristotle shuns an axiomatic answer, since he disagrees with the (Platonic) assumption that one could “deduce” morality from principles (Koslowski, 1993, p. 26). Rather, one must work from experience and develop an understand- ing of different customs and mores (NE VI, 8, 1142a, 13) so as to learn, gradually and habitually, to employ wise judgment in the management of one’s affairs. The good life can neither be defined nor attained in abstraction from the communities we live in (Wijnberg, 2000, p. 334). We need the example of real people ( phronimoi) who excel in judgment and wisdom. By observing how they master life we gain the requisite normative orientation and by imitating them we develop our own char- acter ( NE VI, 4, 1140a, 24; VI, 13, 1145a, 13). 2.3 Intrinsic and moral relations to material goods According to Aristotle, it is only by working out a shared understanding of what constitutes a good and dignified life that we can, as a society, form an adequate notion of the necessities of life, and hence what we should demand from the economy (Solomon 2004, p. 1027). Most of our pursuits require the intelligent use of resources and benefit from social cooperation. Humans come together in cooperative units, such as households and city- states (today we would add “corporations” to the list), in order to organize common efforts and to manage shared interests. For Man is by nature a political animal. And therefore, men, even when they do not require one another’s help, desire to live together; (although) they are also brought together by their common interests in proportion as they severally attain to any measure of well- being. This is certainly the chief end, both of individuals and of states. ( Pol III, 6, 1278b, 18 –24) For Aristotle the function of economics ( oikonomia) is to demonstrate how to govern such public and individual households ( oikoi) through adequate norms ( nomoi) of conduct. It makes sense to extend this theory of individual and public household management to the management of today’s corporations as well, since they too are communities in which common purposes are pursued by organized efforts (Wijnberg 2000, p. 334). Of course, the differences between a modern, shareholder- 36 Claus Dierksmeier and Michael Pirson oriented corporation and ancient households means we cannot treat them exactly the same. Yet as social organizations they also have certain structural features in common that allow us to transfer some insights about the successful management of one to the other. All households and organizations, for instance, must acquire the material necessities for their pursuits. As a sub- goal, therefore, the pursuit of wealth re- enters Aristotle’s theory. Hence, the “first question” in economics is “whether the art of getting wealth is the same as the art of managing a household or a part of it, or instrumental to it (…)” ( Pol I, 8, 1256a, 3–5). Aristotle’s answer is quite blunt: There are two sorts of wealth- getting, (…); one is a part of household management, the other is retail trade: the former necessary and hon- orable, while that which consists in exchange is justly censured; for it is unnatural, and a mode by which men gain from one another. ( Pol I,10, 1258a, 38 –1258b, 2) It would, however, be wrong to stamp Aristotle as “anti- business” on the basis of such quotations (Collins 1987, p. 567). In fact, compared to many of his contemporaries, and especially in direct comparison with his teacher Plato, Aristotle comes across as quite “pro- business.” Plato, it is true, aimed for unity- through- identity in the state and strove for commonality in all things. He was therefore suspicious of the exclu- sive nature of private property and advocated communistic lifestyles. Aristotle, however, advances a political model of unity- in- diversity, and accept s it a s pa r t of hu ma n nat u re to wa nt to have s e c u re d a nd s e c lude d areas of self- realization. He acknowledges and even endorses … the pleasure, when a man feels a thing to be his own; for surely the love of self is a feeling implanted by nature and not given in vain, although selfishness is rightly censured; this, however, is not the mere love of self, but the love of self in excess, like the miser’s love of money; for all, or almost all, men love money and other such objects in a measure. And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property. ( Pol II, 5, 1263a, 40 –1263b, 4) So, for Aristotle private property is an essential “part of the house- hold, and the art of acquiring property is a part of the art of managing the household; for no man can live well, or indeed live at all, unless he Aristotle’s Economic Ethics 37 be provided with necessaries” ( Pol I, 4, 1253b, 23–25). Whereas Plato mistrusted commercial relationships because the grammar of prices does not express the semantics of true value, and thus engages the mind to an untruthful world, Aristotle has a rather positive view of commerce and the social relationships it engenders (Schonsheck 2000, p. 905). He views trade as a relation where, at least potentially, both partners can find benefit ( NE V, 5, 1133b15–20, IX/2, 1164b13–23). It is not from anti- commercial sentiment, consequently, that he argues against some forms of reta il t rade, but f rom a v iew upon what const it utes a n appropr iate, as opposed to an excessive, pursuit of wealth. Economic assessments have to be based on a critical evaluation of our needs; the quantity of mate- rial goods we consume must be in proportion to the specific quality of what a good life requires. Economic analysis is thus not free- standing; success in both business and economics cannot be defined by quanti- tative parameters alone but must operate with reference to qualitative criteria (Wijnberg, 2000, p. 333). Economics is therefore fundamentally welded to the moral and political discourse of society (Nussbaum 1990, p. 59). For Aristotle, there can be too much or too little of nearly everything; too much or too little sunshine for a plant, too much or too little food for an animal, and indeed, too much or too little wealth for a person ( EE III, 4, 1231b 31). For some, the idea of too much wealth may seem o dd . I s not t he acc u mu lat ion of prop e r t y t a nt a mou nt to stor i ng up f r e e – dom and well- being? Aristotle warns against these assumptions. In all realms of life, he advocates moderation and measure, defining virtue as the rational pursuit of a mean between harmful extremes. Excess, in other words, is bad in itself. What constitutes excess depends, however, on a number of factors. Aristotle illustrates the point with an oft- cited example, referring to the very high meat consumption of Milo, a well- known wrestler of his time. It may be that, given his exercise schedule and physique, an enormous amount of meat intake is “good” for Milo; for everybody else it would be bad, because it would be excessive (NE II, 6, 1106b, 5). Applied to the pursuit of wealth , this notion leads to the following characteristics: The man who is more pleased than he ought to be by all acquisition and more pained than he ought to be by all expenditure is mean; he that feels both feelings less than he ought to is prodigal. (…) And since the two former characters consist in excess and deficiency, and where there are extremes there is also a mean, and that mean is best, (…), it necessarily follows that liberality is a middle state between 38 Claus Dierksmeier and Michael Pirson prodigality and meanness as regards getting and parting with wealth. (EE III, 4, 1231b, 31–39) 2.4 Extrinsic and social relations to material goods Wealth, then, is for Aristotle not an end in itself but a means to the good life: a subordinate end (NE I, 5, 1096a, 6). As a functional good, wealth “consists in using things rather than in owning them; it is really the activity – that is, the use – of property that constitutes wealth” ( Ret I, 5,1361a, 23). Consequently, wealth is to be evalu- ated in terms of how it facilitates the well- ordered or happy life. Wealth cannot be maximized, all else being equal, because the pur- suit of wealth changes the inner and outer conditions in which it takes place: there are opportunity costs to its quest. Other endeavors are not undertaken; other – worthier – ends might not be pursued (Lowry, 1987, p. 234). To Aristotle, these higher ends are, internally, the striving to perfect oneself, and externally, active participation in one’s political community. Whether an increase in wealth is ben- eficial can therefore not be answered in the abstract, but always by a concrete analysis of the foregone alternative uses of one’s time and energy. A crucial question to a modern reader is, how much is enough, and how much would be too much, for the good life (Bernstein et al., 2000; Hawken et al., 2000)? Aristotle proposes the formula that everyone should “have so much proper t y as w ill enable him to live not only tem- perately but liberally; if the two are parted, liberality will combine with lu x u r y; te mp e ra nce w i l l b e a sso c iate d w it h toi l” ( Pol II, 6, 1265a 29–35). To achieve a balance of wealth that realizes this goal, the government has to intervene in the economy. Although Aristotle does not dwell much on the thorny technical aspects of this issue, such as questions of the just measure and proportion of taxation, he makes clear that he means to facilitate fairness in opportunity through distributing and redistributing goods to those who have the most talent to use them ( Pol III, 12, 1282b, 35–1283a, 2). Legislation, however, can only provide the political framework; it cannot make individuals or households “good” without their active contribution. A functioning political community also relies on self- moderation on the part of individuals and households. There are sat- isfaction points for each economic unit. To strive beyond those in the pursuit of wealth is evidence of a harmful desire of wanting ever more ( pleonexia ), that is, people show no moderation mostly because they Aristotle’s Economic Ethics 39 l a c k v i r t u e o r fol low a he d o n i s t ic c o nc e p t io n o f t he go o d ( NE V, 1 , 11 2 9 b 9- 1130a, 13). Since their desires are unlimited they also desire that the means of grati- fying them should be without limit. Those ( …) seek the means of obtaining bodily pleasures; and, since the enjoyment of these appears to depend on property, they are absorbed in getting wealth ( …). For, as their enjoyment is in excess, they seek an art which produces the excess of enjoyment; and, if they are not able to supply their pleas- ures by the art of getting wealth, they try other arts, using in turn every faculty in a manner contrary to nature. ( …), some men turn every quality or art into a means of getting wealth; this they con- ceive to be the end, and to the promotion of the end they think all things must contribute. ( Pol I, 9, 1257b, 31–1258a, 18) Aristotle also had a keen sense that such limitless pursuit of riches on the part of some impoverishes others and undermines society ( Pol VII, 1, 1323a, 35–1323b, 10). Property, while generally private, should there- fore in its use also “be in a certain sense common” ( Pol II, 5, 1263a, 25), he concluded, because society – as the enabler and guarantor of our possessions – has a stake in them. Like the sailor, the citizen is a member of a community. Now, sailors have different functions, for one of them is a rower, another a pilot, and a third a look- out man, a fourth is described by some similar term; and while the precise definition of each individual’s virtue applies exclusively to him, there is, at the same time, a common defi- nition applicable to them all. For they have all of them a common object, which is safety in navigation. Similarly, one citizen differs from another, but the salvation of the community is the common business of them all. (Pol III, 4, 1276b, 21–29) Excessive riches are bad not only intrinsically but also extrinsi- cally insofar as they contribute to the separation of the citizen from their community (Kasser and Ahuvia, 2002; Putnam, 2000). The poor become too destitute to participate in political functions, while the rich have the opportunity to opt out of their communal duties. It is from this angle that wealth in moderation seems best for all “for in that con- dition of life men are most ready to follow rational principle” ( Pol IV, 11, 1295b a, 5– 6). Aristotle calls on the lawgiver to moderate and mediate, because, according to his terse statement “The equalization of property 40 Claus Dierksmeier and Michael Pirson is one of the things that tend to prevent the citizens from quarrelling” (Pol II, 7, 1267a, 37–38). Interestingly, in Aristotle’s thinking being too rich is just as prob- lematic, if not more so, as being poor. To be sure, Aristotle has no illu- sions about poverty’s inducements to vice. Yet the infractions of law caused by poverty are petty: They do not endanger society at large. Not so with the felonies of the rich. Their “ambition and avarice, almost more than any other passions, are the motives of crime” ( Pol II, 9, 1271a, 16 –17). “The fact is that the greatest crimes are caused by excess and not by necessity. Men do not become tyrants in order that they may not suffer cold; and hence great is the honor bestowed, not on him who kills a thief, but on him who kills a tyrant” ( Pol II, 7, 1267a, 12 –16). All in all, the state should act as an enabler of personal perfection in communal interaction. Against the view voiced by some sophists in his time (and by today’s libertarians), that the state should be conceived merely as an insurance against violence and fraud, Aristotle states: But a state exists for the sake of a good life, and not for the sake of life only: if life only were the object, ( …) brute animals might form a state, but they cannot, for they have no share in happiness or in a life of free choice. Nor does a state exist for the sake of alli- ance and security from injustice, nor yet for the sake of exchange and mutual intercourse; (…). whereas those who care for good gov- ernment take into consideration virtue and vice in states. Whence it may be further inferred that virtue must be the care of a state which is truly so called, and not merely enjoys the name. ( Pol III, 9, 1280a, 31–1290b, 9) Yet a state, understood in this light, cannot arise from the calculus of barter. The public covenant is more than the inflation of the logic of private contracts to the proportions of a social contract: a state is not a mere society, having a common place, established for the prevention of mutual crime and for the sake of exchange. These are conditions without which a state cannot exist; but all of them together do not constitute a state, which is a community of families and aggregations of families in well- being, for the sake of a perfect and self- sufficing life. (…). The end of the state is the good life (…). ( Pol III, 9, 1280b20 –1281a, 1) Aristotle’s Economic Ethics 41 2.5 Consequences for the philosophy of business and management We are now at a point where we can fully understand and appreci- ate Aristotle’s distinction, mentioned earlier, between chrematistike and oikonomia , which is central for our application of his theory to contemporary questions of business and economics. Money- making and wealth- getting (chrematistike ) are acceptable as long as “there is a boundary fixed” ( Pol I, 8, 1256b, 27–34) through a purpose- bound and socially embedded household- economy (oikonomia). Yet taken out of this context, the pursuit of wealth typically knows “no limit of the end” and acquires “riches of the spurious kind” ( Pol I, 9, 1257b, 28). Aristotle is fully aware that the unaccustomed eye, when looking at business transactions, cannot always easily make out which is which: “natural” versus “unnatural” chrematistike . In Aristotle’s terms; we might speak of an “embedded” as opposed to a “nonembedded” pursuit of wealth. Since from the outside we cannot always assess correctly the (moral or immoral, “natural” or “unnatural”) end a given transaction serves, self- regulation becomes all the more important (Block, 1996; Davis et al., 1997; Donaldson and Davis, 1991). Legislation alone is futile when decision- makers on all other levels do not concur and rein in their chre- matistic impulses in favor of genuinely oikonomic goals (Pol I, 9, 1257b, 31–1258a, 5). Aristotle’s distinction between these two quite opposite orientations of economic pursuits provides a very helpful tool for thinking through contemporary dilemmas in the field of business ethics, corporate social responsibility, management theory, and social entrepreneurship. This is particularly the case, in our judgment, when it comes to questions of corporate self- regulation and corporate governance. Crucial, in our eyes, is not so much Aristotle’s commendation of specific business practices in household management but rather his overall condemnation of a view that privatizes the realm of economic life and severs it from moral or political concerns. Economic life, to him, is contextualized ab ovo. In other words, Aristotle sees the individual not as a burgher first and a citizen later, but casts him immediately as a political being. The house- hold is therefore, to Aristotle, not an economic entity first and then a political community: He initially conceptualizes it as an integral unit of the polis. Likewise, we think, one should view the corporation not as a profit- machine first and then ask how such “mechanical monsters” (Solomon, 2004, p. 1033) suddenly come to have social responsibilities. 42 Claus Dierksmeier and Michael Pirson Rather, from the outset, we should view firms as corporate citizens with social responsibilities. Aristotle’s framework also allows us to lose the unproductive divide between selfish and altruistic transactions in business (Dyck and Kleysen, 2001, p. 563). By their very nature, business organizations are committed to the interest of their members while servicing the greater community that enables their activities (Solomon, 2004, pp. 1024 –1028). The requirement for ethical conduct in the business field, consequently, neither entails undue self- sacrifice, nor requires ordinary men to behave like saints. It only demands that we realize what the corporation, in fact, is: a social institution, where behavior is modeled, customs are shaped, and people engage in forms of conduct with moral and political signifi- cance (Wijnberg, 2000, p. 340). To take the perspective of virtue and a philosophy of the good life in the business context is therefore “a way of understanding or (re)conceiving what management is, not as a way to pass moral judgment on it” (Dyck and Kleysen, 2001, p. 565). Turning a profit and creating wealth, teaches Aristotle, are not the same. It is the latter that legitimizes and limits the former. From this angle, we can extend to the modern corporation the qualified approval of the pursuit of profit that Aristotle accords to all households (Collins, 1987, p. 570). For the latter a pursuit of profit is acceptable when it is not excessive, does not harm the community, and when it remains subordi- nated to the pursuit of goals that are economic and not merely chrematis- tic in nature. The same can be said for corporations. Viewed in that light, the currently prevailing norms and laws ( nomoi) for business are strongly influenced by chrematistic ambitions. Scholars in economics and management suggest that businesses and their man- agers adhere to maximization paradigms. Having one objective which can be maximized has long been hailed by system theorists and econo- mists as the only viable strateg y ( Jensen, 2002). In Aristotle’s view, such separation of the financial and the political realms signals danger. For him, business is part of society and this embedded status needs to be reflected in all strategic decision making. Thus, oikonomic goal- setting processes encompass ecological, social, financial, and intergenerational concerns. Oikonomic businesses aim at the creation of overall well- being rather than the isolated satisfaction of a special interest group. Maximization strategies are inherently flawed, according to Aristotle, because they are excess- oriented; truly oikonomic strategies are, by con- trast, virtue- based and moderation- oriented. Maximization of any kind precludes moderation and stands in the way of achieving the golden mean, unless the calculus of maximization Aristotle’s Economic Ethics 43 is tied to the goal of eudaimonia . The traditional view of neoclassical economics is that if profit is pursued, the utility of everyone increases as a consequence. With utility as a surrogate for happiness, profit maxi- mization seems causally linked to increases in happiness, theoretically. Yet, in practice, such a clear- cut causality does not exist. Already in Aristotle’s times it was evident that wealth and well- being were nei- ther causally related nor even highly correlated. It is precisely for this reason that Aristotle distinguishes between the notions of hedonic and eudaimonic happiness. The former, induced by the senses and pleas- ures, is short- lived, and can often be achieved through the possession of wealth. Produced by virtuous behavior, the latter aims at excellence in all its dimensions, is less immediate but longer- lived, and cannot be procured through wealth. Recent findings demonstrate that wealth and well- being are only correlated up to a certain wealth level. Easterlin (2001), for example, notes that GNP growth and growth in well- being are actually disconnected in developed societies. Layard (2005) states that beyond a certain income level, well- being is influenced mainly by social factors rather than by income. Biswas- Diener et al. (2004) find that a materialistic attitude and a focus on income have a high negative correlation with individual happiness. Having said that, it is also evi- dent that poor people who lack basic amenities such as shelter are very unhappy. In Aristotle’s words: “No man can live well, or indeed live at all, unless he be provided with necessaries” ( Pol I, 4, 1253b, 25–26). Martin (2005) argues that once a person passes the point of being able to afford “the normal cost of everyday life,” more wealth may increas- ingly be accompanied by less happiness, not more. And with high levels of wealth come increased complications and worries, including con- cerns about losing one’s level of wealth. As a result, the connection of wealth and well- being, once beyond the poverty level, is very unclear. How else, then, can the economy and business be managed to support higher levels of eudaimonic well- being? Many observers deplore the chrematistic spirit of current day businesses and call for corporations to serve society first and put profit second (Arena, 2004). Business organizations, however, often understand themselves as legally bound to maximize profit (Ballou and Weisbrod, 2003; Jackson and Nelson, 2004). By dint of prevalent governance structures they cater to shareholder interests rather than broader soci- etal concerns. While Aristotle obviously never laid out blueprints for modern busi- ness organizations, based on these structural insights, we can say that businesses operated in line with his oikonomic understanding would be 44 Claus Dierksmeier and Michael Pirson embedded within the political and social fabric of the community, and they would view themselves as servicing society, rather than society serving their financial interests. Such businesses would actively pur- sue strategies that integrate social responsibility, not as an add- on, but as integrative part of their day- to- day operations (see Porter and Kramer, 2006). Moreover, oikonomic organizations would be guided by their overall contribution to societal well- being and thus aim for a balance of different imperatives. Instead of serving one special inter- est group alone, such as shareholders, they aim at serving all their stakeholders and society at large (Layard, 2005; Diener and Seligman, 2 0 0 4). Most i mp or t a nt ly, bu si ness, or ie nte d w it h re fe re nce to A r istot le’s philosophy, should also reflect the overall balance orientation in their gover na nce st r uc t u re, g iv i ng a fa i r representat ion to a l l per t i nent sta ke – holders, including employees, customers, suppliers, and societal coun- cils (Spitzeck and Hansen, 2010). In a word, businesses need to restrain their chrematistic endeavors by aiming towards truly oikonomic goals. Shareholder value creation is not an illegitimate but a subordinated con- cern for an oikonomic enterprise. From a primary and exclusive objective of business policy the chrematistic aims of profitability are relegated to secondary and morally integrated goals. When looking for business that exemplify the oikonomic character env isioned by A r istot le, soc ia l enter pr ises come to m i nd, as t hey seek to be, first and foremost, socially, ethically, and environmentally respon- sible ( Jackson and Nelson, 2004; Savitz and Weber, 2006). They straddle the usual divide between nonprofit and for- profit organizations. Like nonprofits, social enterprises can organize in pursuit of a wide range of social missions. Like for- profits, they can generate a broad range of ben- eficial products and services that improve quality of life for consum- ers, create jobs, and contribute to the economy (Strom, 2007). Social enterprises seek to bring benefit to all stakeholders, and reinvest their surpluses to advance their social purposes, thus reaffirming the public and societal function of business. 2.6 Conclusion Aristotle predicted some key problems we are facing today more than two thousand years ago. With his guidance we can reorient the dis- course about the role of corporations in society. In pursuit of alternatives to correct the current excessive orientation towards shareholder value that undermines our society’s long- term survival, Aristotle’s theory of qualitative limitations for economic endeavors helps us conceive of Aristotle’s Economic Ethics 45 alternative business organizations that create healthy wealth. 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Basically, it’s a case study related to philosophy and business. I have attached the files so you can get the better idea of what case study is about. basically we have to choose a philosopher and con
DATE DOWNLOADED: Thu Apr 2 01:15:51 2020 SOURCE: Content Downloaded from HeinOnline Citations: Bluebook 20th ed. Michael A. Carrier & Carl J. III Minniti, The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals, 102 Cornell L. Rev. Online 53 (2016-2017). ALWD 6th ed. Michael A. Carrier & Carl J. III Minniti, The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals, 102 Cornell L. Rev. Online 53 (2016-2017). APA 6th ed. Carrier, M. A.; Minniti, C. (2016-2017). The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals. Cornell Law Review Online, 102, 53-72. Chicago 7th ed. Michael A. Carrier; Carl J. III Minniti, “The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals,” Cornell Law Review Online 102 (2016-2017): 53-72 McGill Guide 9th ed. Michael A Carrier & Carl J III Minniti, “The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals” (2016-2017) 102 Cornell L Rev Online 53. MLA 8th ed. Carrier, Michael A., and Carl J. III Minniti. “The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals.” Cornell Law Review Online, 102, 2016-2017, p. 53-72. HeinOnline. OSCOLA 4th ed. Michael A Carrier and Carl J III Minniti, ‘The Untold EpiPen Story: How Mylan Hiked Prices by Blocking Rivals’ (2016-2017) 102 Cornell L Rev Online 53 Provided by: The University of Winnipeg Library — Your use of this HeinOnline PDF indicates your acceptance of HeinOnline’s Terms and Conditions of the license agreement available at https://heinonline.org/HOL/License — The search text of this PDF is generated from uncorrected OCR text. — To obtain permission to use this article beyond the scope of your license, please use: Copyright Information THE UNTOLD EPIPEN STORY: HOW MYLAN HIKED PRICES BY BLOCKING RIVALS Michael A. Carrier & Carl J. Minniti lflt INTRODUCTION.. …………………………………….. 53 I. EPIPEN HISTORY …………………………… 55 II. ACT 1: SETTLEMENTS… ……………. ……. 59 III. ACT 2: CITIZEN PETITION ………………………. 64 IV. ACT 3: EXCLUSIVE DEALING ……………………………… 67 C O NCLU SIO N ………………………………………………………… 72 INTRODUCTION In the summer of 2016, Mylan found itself under fire for high EpiPen prices. Between 2009 and 2016, Mylan raised the price of this life-saving device, which delivers epinephrine to treat anaphylaxis shock, 15 times, resulting in an increase of more than 400%.1 The medicine in an EpiPen costs only pennies per dose. 2 But a pack of two, which needs to be replaced each year and which families buy multiples of for various locations, costs more than $600.3 The consequences of these prices are felt in all corners, as life-threatening allergies from peanuts, shellfish, and other substances affect fifteen million Americans and 1 in 13 children. 4 The uproar has thundered across the spectrum. t Distinguished Professor, Rutgers Law School; 3L, Rutgers Law School. Copyright C 2017 Michael A. Carrier & Carl J. Minniti III. 1 Sy Mukherjee, How Mylan Got Away With Its Enormous Price Hike for the EpiPen, FORTUNE, Aug. 22, 2016, http://fortune.com/2016/08/22/mylan- epipen-price-hike-monopoly/ [http://perma.cc/CKN9-W8EP]; Matt Egan, How EpiPen Came to Symbolize Corporate Greed, CNN MONEY, Aug. 29, 2016, http://money.cnn.com/2016/08/29/investing/epipen-price-rise-history/[http://perma.cc/JF48-5KQ6]; Anna Edney & Cynthia Koons, Mylan Plans Generic EpiPen to Quell Outcry Over $600 Cost, BLOOMBERG, Aug. 29, 2016, http://www.bloomberg.com/news/articles/2016-08-29/mylan-to-sell-generic-epipen-to-quell-outcry-over-600-cost [https://perma.cc/JB86-TSLY]. 2 Letter from Jason Chaffetz (R-UT) & Elijah E. Cummings (D-MD) to Heather Bresch, Aug. 29, 2016, http://democrats.oversight.house.gov/ sites/ democrats.oversight.house.gov/files/ documents/ 2016-08-29%20JC%20a nd%20EEC%20%20to%20Bresch-Mylan%20EpiPen%20Pricing.pdf [https: / / perma.cc/42HM-UCWV] (questioning price increase and commencing congressional investigation). 3 Id. 4 Mukherjee, supra note 1. 53 CORNELL LAW REVIEW ONLINE Politicians from both parties have expressed concern, 5 including through vigorous criticism at a September 2016 hearing. 6 And the company has been accused of “corporate greed,” 7 with particular ire directed towards CEO Heather Bresch. 8 Many reasons have been offered for the price hike. Some have blamed the FDA for a slow-moving generic approval process. 9 Others have lamented a broken healthcare system.10 And Bresch has indicted a convoluted distribution chain, with multiple parties each taking a portion of the profits.” Missing in this debate has been Mylan’s role in clearing the field of present and future competitors. Piecing together this stealth campaign in outlining a potential antitrust case is the goal of this Essay. After providing a history of the product, it investigates Mylan’s blocking of future competitors, most notably Teva, through an entry-delaying settlement and a questionable citizen petition. It then examines Mylan’s 5 Chaffetz & Cummings Letter, supra note 2; Letter from Charles E. Grassley (R-IA) to Heather Bresch, Aug. 22, 2016, http://www.grassley.senate.gov/ sites/ default/files/ constituents/ upload/ 2016-08-22%20CEG%20to%20Mylan %20(EpiPen).pdf [https://perma.cc/9DSC-GEXZ]. 6 Full House Comm. on Oversight & Gov’t Reform, Hearing on Reviewing the Rising Price of EpiPens (Sept. 21, 2016), available at https://oversight. house.gov/hearing/reviewing-rising-price-epipens-2/ [https://perma.cc/A6FU- QKGF]; Anna Edney & Robert Langreth, Mylan Blasted for Raising EpiPen Prices to Get “Filthy Rich,” BLOOMBERG (Sept. 21, 2016), http://www.bloomberg.com /news/ articles/ 2016-09-21 /mylan-criticized-on-profits-and-pay-at-house- oversight-hearing [https://perma.cc/3YZ5-D2CQ]. 7 Egan, supra note 1. 8 Andrew B. Polumbo, To the EpiPen CEO: My Daughters Will Be Nothing Like You, HUFFINGTON POST, Aug. 31, 2016, http://www.huffingtonpost.com /entry/father-to-epipen-ceo-my-daughters-will-be nothingus_57c48b04e4b024 fca58c9367 [https://perma.cc/YMV5-95BA]. 9 Rand Paul, Sen. Rand Paul: EpiPen Scandal Is a Perfect Example of Crony Capitalism, TIME (Sept. 7, 2016), http://time.com/4482179/sen-rand-paul- epipen-scandal/ [https:/ /perma.cc/B7VA-F3B7]; A Drug Cartel at the FDA, WALL ST. J. (Sept. 26, 2016) (criticizing FDA’s generic label regulations and commenting that “next time you hear a political sermon on the scandalous expense of treatments, remember this government collusion to keep drug prices high”), http://www.wsj.com/articles/a-drug-cartel-at-the-fda-1474931423 [https://perma.cc/4ZSM-BEX7]. 10 E.g., Charley Grant, The EpiPen Controversy Isn’t About Mylan, WALL ST. J., Aug. 25, 2016, http://www.wsj.com/articles/the-epipen-controversy-isnt- about-mylan-1472145456 [https://perma.cc/N4C9-YWT7]; Aaron E. Carroll, The EpiPen, a Case Study in Health System Dysfunction, N.Y. TIMES, Aug. 23, 2016, http://www.nytimes.com/2016/08/24/upshot/the-epipen-a-case-study- in-health-care-system-dysfunction.html?_r=0 [https://perma.cc/JF2D-YMRX]. 11 Dan Mangan & Anita Balakrishnan, Mylan CEO Bresch: ‘No One’s More Frustrated than Me’ About EpiPen Price Furor, CNBC, Aug. 25, 2016, http://www.cnbc.com/2016/08/25/mylan-expands-epipen-cost-cutting- programs-after-charges-of-price-gouging.html [https:/ /perma.cc/934Q-PH59]. 54 [Vol. 102:53 THE UNTOLD EPIPEN STORY blocking of present competitors, including Adrenaclick and Auvi-Q, by requiring schools to agree not to stock their products. I EPIPEN HISTORY A brief history puts Mylan’s conduct into perspective. Adrenaline was first marketed by Parke-Davis, a Pfizer subsidiary, at the turn of the twentieth century as a vasoconstrictor.1 2 Since then, epinephrine (also known as adrenaline) has become the essential treatment for anaphylaxis, a condition in which the sudden release of inflammatory mediators leads to immediate respiratory or cardiac arrest and potentially death. 3 Until 1980, epinephrine was delivered primarily through vial and syringe.1 4 But a series of events involving NASA and chemical warfare research in the military led to the development of autoinjectors, a new means for delivering epinephrine.1 Because time is a “grim factor” in anaphylactic episodes and autoinjectors (as compared to vial and syringe) allow a drug to be rapidly administered,1 6 the advance was critical. On the manufacturing side, Survival Technology-which ultimately became Meridian Medical Technologies-introduced the EpiPen to the market in 1980 and received FDA approval in 1987.17 King Pharmaceuticals acquired Meridian in 2002, and Pfizer purchased King in 2010. 12 See Steve Brachmann, EpiPen Gives Dose of Life-Saving Epinephrine for Nearly 50 Years, IPWATCHDOG, June 28, 2016, http:// www.ipwatchdog.com/2016/06/28/evo-of-tech-sheldon-kaplans-epipen-gives- doses-of-life-saving-epinephrine-for-nearly-50-years/ id=70024/ [https:// perma.cc/8FXJ-BQ9T]; Walter Sneader, The Discovery and Synthesis of Epinephrine, 2001 DRUG NEWS & PERSPECTIVE 14(8), 491 (Oct. 2001). 13 Taiil Song, et al., Anaphylaxis Treatment: Current Barriers to Adrenaline Auto-Injector Use, 69(8) ALLERGY 983 (2014). 14 See Stephen Lockey, A New Method ofAdministering Aqueous Epinephrine: The EpiPen, an Automatic Syringe, 17(4) J. ASTHMA RESEARCH 153 (1980). 15 Id; Lydia Ramsey, The Strange History of the EpiPen, the Deuice Developed by the Military that Turned into a Billion-Dollar Business, BUSINESS INSIDER (Aug. 27, 2016), http://www.businessinsider.com/the-liistory-of-the-epipen-and- epinephrine-2016-8/ #when-mylan-acquired-the-epipen-the-drug-was-making- about-200-million-a-year-now-it-makes-more-than- 11 -billion-a-year-mylan- has-about-90-of-the-market-share-for-epinephrine-devices-9 [https:// perma.cc/ SNL7-4G8Y]. 16 Lockey, supra note 14. 17 NDA 019430, [email protected]: FDA APPROVED DRUG PRODUCTS, http://www.accessdata.fda.gov/scripts/cder/daf/ (enter 019430 into the Search by Drug Name, Active Ingredient, or Application Number field). 2017] 55 CORNELL LAW REVIEW ONLINE On the distribution side, in 1997 Meridian granted exclusive marketing and distribution rights to Dey Pharma, a Merck subsidiary.’ 8 In 2007, Mylan acquired Merck’s generic pharmaceutical business, in the process obtaining the EpiPen and expanding its corporate structure to include a “Specialty Segment.”‘ 9 As of this writing, Meridian, a Pfizer subsidiary, continues to manufacture the EpiPen, while Mylan has the exclusive right to market and distribute the EpiPen. 20 After acquiring the rights to the EpiPen, Mylan did not have high hopes. Management “first thought to divest the aging device, which logged only $200 million in revenue.” 2 ‘ But it then decided to “us[e] old-fashioned marketing … to boost sales among concerned parents of children with allergies.” 22 Mylan’s marketing strategy proved successful. In the years since it acquired the EpiPen, revenues increased from $200 million to more than $1 billion. 2 3 Today, the device provides roughly 40% of Mylan’s operating profits, with margins that increased from 9 % in 2008 to 5 5 % in 2014.24 Financial reports reveal the consistency of Mylan’s grip on the epinephrine auto-injector market. After acquiring the rights to the EpiPen, Mylan regularly informed investors that the product possessed a staggering 9 5 % market share. 2 5 18 King Pharmaceuticals to Acquire Meridian Medical Technologies, PR NEWSWIRE, Oct. 21, 2002, http://www.prnewswire.com/news-releases/king- pharmaceuticals-to-acquire-meridian-medical-technologies-76364227.html [https://perma.cc/FL2S-HKZQ]. 19 Mylan, Annual Report (Form 10-KT/A), at 3 (Mar. 7, 2008). 20 For a breakdown of EpiPen’s manufacture and distribution, see Mylan NV, Annual Report (Form 10-K), at 9 (Feb. 16, 2016). The EpiPen is a drug-device combination product. 21 C.F.R. § 3.2; see generally FDA, Guidance for Industry and FDA Staff: Classification of Products as Drugs and Devices & Additional Product Classification Issues, June 2011 (providing guidance on issues related to whether a product should be classified as a drug or a device); Bo Wang & Aaron S. Kesselheim, Promoting Therapeutic Innovation: What Do We Do About Drug- Deuice Combinations?, JAMA, Mar. 1, 2016 (outlining controversies over whether a product should be classified as a drug or a device). 21 Cynthia Koons & Robert Langreth, How Marketing Turned the EpiPen into a Billion-Dollar Business, BLOOMBERGBUSINESSWEEK, Sept. 23, 2015, http://www.bloomberg.com/news/articles/2015-09-23/how-marketing- turned-the-epipen-into-a-billion-dollar-business [https://perma.cc/2NMA- T2SV].22 Id. 23 Id. Mylan has not offered an explanation for this increase, resorting to general justifications like “work[ing] tirelessly over the past years advocating for increased anaphylaxis awareness, preparedness, and access to treatment.” Id. 24 Id. 25 E.g., Mylan, Annual Report (Form 10-K), at 8 (Feb. 21, 2012) (“The EpiPen Auto-Injector is the number one prescribed epinephrine auto-injector with more than 95% market share in the U.S. and more than 90% market share worldwide in the defined auto-injector market during 2011.”). Mylan reported these figures 56 [Vol. 102:53 THE UNTOLD EPIPEN STORY Marketing efforts alone, however, do not explain the EpiPen’s success. At least four government actions contributed. First, in December 2010, the National Institute of Allergy and Infectious Diseases (NAID), a division of the National Institutes of Health, released guidelines anointing epinephrine autoinjectors as the preferred first-line treatment for severe allergic reactions. 2 6 Second, the NAID guidelines required that epinephrine be sold in packages of two doses, 2 7 with Mylan thereafter refraining from selling single pens. 2 8 Third, as discussed more fully below, 2 9 in November 2013, Congress enacted the School Access to Emergency Epinephrine Act, which increased schools’ incentives to stock epinephrine auto-injectors. And fourth, in 2010, the FDA “changed label rules to allow devices to be marketed to anyone at risk, rather than only those who had already suffered an anaphylaxis reaction.” 3 0 The spreading of the EpiPen was matched by the failure of alternatives. Rivals that have offered competing, but not equivalent, products either dropped out of the market or failed to gain traction as a monopoly-constraining alternative to the EpiPen. In 2003, the first challenger appeared: Twinject, which was eventually renamed Adrenaclick. 31 For the past 13 years, various companies have produced Adrenaclick, with Impax acquiring the rights in March 2015.32 The current list price is as low as $142, ‘ far below that of the EpiPen, but the from 2008 through 2011, but stopped including this data in its 2012 annual report.26 Guidelines for the Diagnosis and Management of Food Allergy in the United States: Report of the NIAID-Sponsored Expert Panel, 126 J. ALLERGY & CLINICAL IMMUNOLOGY S1 – S58 (Dec. 2010), http:// www.jacionline.org/article/SO091-6749%2810%2901566-6/fulltext#sec188.8.131.52; see § 184.108.40.206 (“Epinephrine is the drug of choice for anaphylaxis and should be administered as first-line therapy.”). 27 Id. § 220.127.116.11. 28 Koons & Langreth, supra note 21. 29 See infra Part IV. 30 Koons & Langreth, supra note 21. 31 TwinjectAuto-Injector, DRUGS.COM, https://www.drugs.com/pro/twinject- auto-injector.html [https://perma.cc/5BLU-25H5]; Adrenaclick and Its Generic Twin Back, ANAPHYLAXIS EDUCATORS, July 10, 2013, http://anaphylaxiseducators.com/blog/adrenaclick-and-its-generic-twin-back- june-12-2013 [https://perma.cc/5KDM-57C6]. 32 Gillian Mohney & Kavita Vakharia, EpiPen Users Have Few Options for Generic or Alternative Drugs, ABC NEWS, Aug. 26, 2016, http: / / abcnews.go.com/ H ealth/ epipen-users-options-generic-alternate- drugs/ storyid=41667390 [https:/ /perma.cc/A7MG-PVQ9]. 33 E.g., Thomas Hemphill, Mylan’s EpiPen Pricing Decision Was Predictable, REALCLEARMARKETS, Sept. 9, 2016, http://www.realclearmarkets.com/ articles/ 2016/09/ 09/mylansepipen pricingdecision was predictable 102344 2017] 57 CORNELL LAW REVIEW ONLINE product’s market share has ranged between only 2 % and 8 %. 3 4 One reason for this low share is Impax’s lack of an automated process and inability to meet customer demand. 3 5 Between January 2013 and October 2015, Sanofi and Intelliject’s Auvi-Q (initially introduced as “e-cue”) also competed with the EpiPen. 36 This device differed in using a recorded voice to instruct users to operate the autoinjection device. 3 7 Despite its promise, the product was removed from the market because it failed to deliver the correct dose, solidifying EpiPen’s influence and demand. 3 8 As for future rivals offering direct generic competition, Teva and Sandoz, in 2009 and 2011 respectively, each sought approval through the Abbreviated New Drug Application (ANDA) process by which they (by showing that their products work similarly to the EpiPen) could rely on EpiPen safety and .html [https://perma.cc/D384-DXCH]; see also Sam Wood, A Cheaper Way to Get Epinephrine Pen, if You Know How, PHILLY.COM, Aug. 31, 2016, http://www.pliilly.com/philly/health/Theres-a-cheaper-way-to-get-an- epinephrine-pen–but-you-have-to-know-how.html [https://perma.cc/88GZ- X5R8] (reporting that a generic form of Adrenaclick could be purchased for $146). 34 Wood, supra note 33. 35 Mohney & Vakharia, supra note 32. 36 Sanofi-Aventis U.S. and Intelliect, Inc. Sign Licensing Agreement for Novel Epinephrine Auto Injector in North America, SANOFI, Nov. 30, 2009, http://www.news.sanofi.us/press-releases?item=118506 [https://perma.cc/ 5BC4-HSXQ]; Sanofi Announces Auvi-Qm, the First and Only Voice-Guided Epinephrine Auto-Injectors, Is Now Available in the U.S., PRNEWSWIRE, Jan. 28, 2013, http://www.prnewswire.com/news-releases/sanofi-announces-auvi-q- the-first-and-only-voice-guided-epinephrine-auto-injector-is-now-available-in- the-us-188651061.html [https://perma.cc/CW6S-Z2YS]. 37 Sanofi’s Auvi-Q, FIERCEPHARMA, http: / /www.fiercepharma.com/ special- report/ sanofi-s-auvi-q [https://perma.cc/9RH8-EHAD] (last visited Sept. 9, 2016).38 Eric Palmer, Sanofi Recalls All of Its Auvi-Q Devices, Undercutting Its Push to Steal EpiPen Market Share, FIERCEPHARMA, Oct. 29, 2015, http://www.fiercepharma.com/m-a/sanofi-recalls-all-of-its-auvi-q-devices- undercutting-its-push-to-steal-epipen-market-share [https://perma.cc/Z4KC- RKMM]. As of the date of this Essay, the manufacturer was planning to reintroduce the Auvi-Q in the first half of 2017. Dan Mangan, Mylan’s EpiPen Will Get Competition from Return of Kaleo’s Auvi-Q in 2017, CNBC, Oct. 26, 2016, http://www.cnbc.com/2016/10/26/mylans-epipen-will-get-competition-from-return-of-kaleos-auvi-q-in-2017.html [https://perma.cc/JBM6-LFNW]. Further hampering Auvi-Q was the role played by pharmacy benefit managers (PBMs), most notably Express Scripts. Auvi-Q received FDA approval in August 2012 and entered the market in January 2013, but suffered as Express Scripts removed the product from its list of preferred drugs in 2014. The apparent reason for the removal was that, unlike the EpiPen, there were not discounts or rebates on the Auvi-Q. See Matthew Harper, The Insurance Rip-Off at the Heart of the EpiPen Scandal, FORBEs, Aug. 30, 2016, http://www.forbes.com/sites/matthewherper/2016/08/30/the-consumer-rip-off-at-the-heart-of-the-epipen-scandal/2/ #5cc54ac57187 [https://perma.cc/ UR7B-5TXT]. 58 [Vol. 102:53 THE UNTOLD EPIPEN STORY effectiveness findings and avoid the need to undertake independent clinical studies. 3 9 As discussed more fully below, 4 0 Mylan has employed multiple anticompetitive acts to block Teva’s ANDA. And as of November 2016, the FDA had yet to approve Sandoz’s ANDA application, with litigation over the EpiPen patents ongoing. 41 The inability of generics to compete in the market and effectively restrain EpiPen pricing has received attention. But that is not just a random occurrence resulting from the challenges of offering a successful epinephrine treatment. Rather, it also has resulted from the confluence of three separate anticompetitive actions by Mylan, two targeting future rivals and one against present competitors. The next three Parts show how Mylan has engaged in an expansive and aggressive array of actions that exploited (1) the litigation process through settlement, (2) the administrative process through FDA citizen petitions, and (3) the laws requiring auto- injectors in schools through exclusive contracts. II ACT 1: SETTLEMENTS In the pharmaceutical industry, patent litigation concerning generic entry is prevalent. The typical first step involves a brand firm’s listing of patents in the “Orange Book,” an annual compilation of drugs and their associated patents. 4 2 In this case, Mylan currently lists four patents in the 2016 Orange Book: U.S. Patent Nos. 7,440,012; 7,794,432; 8,048,035; and 8,870,827.43 All four claim the same priority date and will expire in November 2025, and each claims a variation of an autoinjector for dispensing a predetermined dose of medicine. After a brand firm lists its patents in the Orange Book, a generic that wishes to enter the market files one of four certifications, with the “Paragraph IV” version having the most direct competitive effect since the generic-on the grounds that the patent is invalid or the generic version will not infringe it- 39 See, e.g., Michael A. Carrier, Unsettling Drug Patent Settlements: A Framework for Presumptive llegality, 108 MICH. L. REV. 37, 46 (2009). 40 See infra Parts II & III. 41 Pfizer, Quarterly Report (Form 10-Q), at 33 (Aug. 11, 2016). 42 See FDA, APPROVED DRUG PRODUCTS WITH THERAPEUTIC EQUIVALENCE EVALUATIONS (36th ed. 2016), http://www.fda.gov/downloads/ Drugs/ DevelopmentApprovalProcess/ucm071436.pdf [https://perma.cc/2VUA- 78J7]. 43 See id. at ADA 68 of 225. 2017] 59 CORNELL LAW REVIEW ONLINE seeks to enter before the end of the patent term. 44 Mylan has enforced its rights under the ‘012 and ‘432 patentS 45 on three occasions. Two of the cases have settled, while one is ongoing. First, on August 28, 2009, Meridian Medical Technologies and King Pharmaceuticals sued Teva for infringement of its patents soon after it filed its ANDA in December 2008 and Paragraph-IV notice letter on July 20, 2009.46 After a four-day bench trial in early 2012,47 the parties settled on April 26, 2012,48 only weeks before post-trial briefings were due in late May 2012.49 While the terms of the settlement are confidential, a Mylan press release confirms that Teva agreed to delay entering the market for more than three years, until June 22, 2015.0 During the period in which Teva could not enter the market, EpiPen prices more than doubled, from (roughly) $220 to $460.91 44 21 U.S.C. §355(j)(2)(A)(vii)(IV). 45 Patents are typically referred to by the last three digits of their patent number. Ian Burns, How To Read Patents, ATIPLAW, Jan. 10, 2014, http://atintellectualproperty.com/how-to-read-patents/ [https://perma.cc/ 5ET3-QQM2].46 Complaint, King Pharm., Inc. v. Teva Parenteral Med. Inc., Case No. 09- 652-GMS (D. Del. Aug. 28, 2009). At the time of this suit, the 2009 Orange Book listed Meridian as EpiPen’s sponsor. Mylan Specialty took over as EpiPen’s sponsor in the 2014 Orange Book. Even though Meridian and King formally filed the lawsuit, this Essay connects the conduct to Mylan given (1) its wholly-aligned interests as exclusive marketer and distributor, (2) the division of responsibility by which Meridian/King filed lawsuits and Mylan listed patents in the Orange Book, and (3) Mylan’s announcement of the settlement, which quotes executives not from Meridian or Pfizer but only from Mylan. See infra note 48 and accompanying text (quoting CEO Heather Bresch: “We are pleased with this settlement, and are confident that the [email protected] Auto-Injector will continue to be a market leader.”). 47 Case No. 09-652, D.I. 150-54 (D. Del. July 25, 2012) (transcript of trial held on Feb. 16, 2012 and Mar. 7-9, 2012). 48 See Mylan and Pfizer Announce Epinephrine Auto-injector Settlement Agreement with Teva, MYLAN (Apr. 26, 2012), http://newsroom. mylan.com/pressreleases?item= 123144 [https:/ /perma.cc/3KAL-L8TG]. 49 Case No. 09-652-GMS, D.I. 146 (D. Del. Apr. 12, 2012). 50 Id. The West Virginia Attorney General has opened an antitrust investigation of the settlement. Chris Morran, West Virginia Investigating EpiPen Maker MylanforAlleged Medicaid Fraud, Antitrust Violations, CONSUMERIST, Sept. 20, 2016, https:/ /consumerist.com/2016/09/20/west-virginia-investigating- epipen-maker-mylan-for-medicaid-fraud-antitrust-violations/ [https:// perma.cc/A2YR-BE6R]. It also bears mention that Teva proposed acquiring Mylan during the period in which it was kept off the market. Teva Proposes to Acquire Mylan for $82.00 Per Share in Cash and Stock, TEVA, Apr. 21, 2015, http: / /www.tevapharm.com/news/tevaproposesto-acquire-mylanfor_8200 per sharein-cash-andstock_04_15.aspx [https://perma.cc/EL5Y-ZJFJ]. 51 See Dan Mangan, This Chart Shows Why Everyone’s Angry About Soaring 60 [Vol. 102:53 THE UNTOLD EPIPEN STORY One cannot know with certainty how the court would have decided the case. But ominous tea leaves on the patents’ validity are revealed by the court’s Markman 2 claim construction hearing. On October 17, 2011, the court construed three terms of the ‘012 patent and six terms of the ‘432 patent. 3 Teva fared well on the ‘012 patent, as the court rejected two of King’s proposed constructions and adopted one of Teva’s constructions. 54 As to the ‘432 patent, the court adopted two “plain and ordinary meaning” 5 constructions, rejected two generic constructions, and rejected two King constructions, resulting in a more mixed conclusion. 5 6 Again, while it is a challenge to determine what the outcome would have been, the court’s Markman construction signaled greater success for Teva than for the patent owners. The settlement was concerning not just Price of Lifesaving EpiPen, CNBC, Aug. 23, 2016, http://www.cnbc.com/2016/08/23/this-chart-shows-you-why-a-lot-of-people-are-angry-about-the-price-of-epipen.html [https://perma.cc/532J-HKKU] (providing figures from July 2012 and May 2015). 52 See generally Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996) (holding that claim construction is a matter of law and that judges are to construe the meaning of patent claims). 53 Case No. 09-652-GMS, D.I. 118 (D. Del. Oct. 17, 2011). 54 For the terms “first locked retracted position” and “second locked position,” the court rejected King’s broad construction of “locked” as a “relative state” and instead ruled that the term more narrowly meant a position “held in place in a retracted state distinct from an extended state.” The court also agreed with Teva that the term “locking mechanism for” is a means-plus-function term, and therefore narrower than King’s interpretation that sought a plain and ordinary meaning construction. The parties’ claim chart can be found at Case No. 09-652-GMS, D.I. 100 (D. Del. July 29, 2011). 55 See generally Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005) (en banc) (“[T]he words of a claim are generally given their ordinary and customary meaning [which is] … the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention.”). 56 The two plain and ordinary meaning constructions included: (1) “to prevent transfer of the residual force to the needle cover” (using the ordinary meaning of “prevent” rather than a transfer of some force); and (2) “the cartridge container having a closed front end except for an opening therein sized to receive the needle there through during a medicament dispensing operation, the closed front end operative to engage the cartridge and oppose continued movement of the cartridge after the needle passes through the front end opening” (which did not receive significant attention in the briefing or court opinion). The court rejected two of Teva’s constructions: (1) “residual force,” for wrongly importing a limitation from the ‘432 patent’s preferred embodiment; and (2) “to prevent kickback of the auto-injector during the dispensing operation,” as lacking support in the specification and importing a limitation from the ‘432 patent’s preferred embodiment. Conversely, the court rejected two of King’s constructions: (1) “a needle cover,” for lacking support in the specification; and (2) “attenuating kickback,” for not sufficiently limiting the claim and contradicting a prosecution history in which King had limited the claim. Case No. 09-652-GMS, D.I. 118 (D. Del. Oct. 17, 2011). 2017] 61 CORNELL LAW REVIEW ONLINE because it delayed a successful generic from the market but also because of its effects on other, later-filing generics. The Hatch-Waxman Act awards 180 days of exclusivity to the first generic to challenge a brand firm’s patent claiming that it is invalid or not infringed.9 7 This period does not begin until the first-filing generic enters the market, in this case three years in the future. Teva was the first filer on the patents-in-suit. 8 In other words, as a result of delaying Teva’s entry into the market, Mylan and its partners delayed all generics that sought to file applications based on the EpiPen. 9 Settlements of patent litigation threaten potential landmines of anticompetitive effects. The Supreme Court made clear in FTC v. Actavis 6 0 that a settlement by which a brand pays a generic to delay entering the market could have “significant adverse effects on competition” and violate the antitrust laws. 61 Although the Actavis decision post-dated the settlement, the parties could not have been unaware at the time they settled in April 2012 that potentially rigorous scrutiny was on the horizon. Any appeal of the Delaware court’s decision would be heard by the Third Circuit. And the settlement was signed shortly after that court’s December 2011 oral argument in In re K-Dur Antitrust Litigation, in which the judges expressed skepticism of arguments for minimal antitrust scrutiny. 62 In July 2012, the court adopted a test of presumptive illegality. 63 Because the terms of the settlement are confidential, it is not possible to know whether there was a transfer of 57 21 U.S.C. §355(j)(5)(B)(iv) (2012). 58 Update: Teva and Antares’s Generic Challenge to Epi-Pen, SEEKINGALPHA, Feb. 23, 2012, http: / / seekingalpha.com/ article/ 388681-update-teva-and- antaress-generic-challenge-to-epipen [https://perma.cc/ RAR7-4A6Y]. 59 See Michael A. Carrier, Payment After Actavis, 100 IOWA L. REV. 7, 15 (2014) (noting that the 2003 Medicare Amendments, which were designed to encourage expedited entry by specifying events that led to a forfeiture of the exclusivity period, were ineffective). 60 133 S. Ct. 2233 (2013). 61 Id. at 2231. 62 Oral Argument, In re K-Dur Antitrust Litig., Nos. 10-2077, 10-2078, 10- 2079, & 10-4571, at 25, 36, 37 (3d Cir. Dec. 12, 2011) (noting that “Senator Hatch himself has said that he thinks these reverse payments are anti- competitive” and questioning arrangement by which brand purchased generic product on grounds that it “led to the presumption that [it] could have been buying off the generic from entering the market earlier” and that “what [the parties] ended up [with] was an allocation of the market -which violates the antitrust laws”). 63 In re K-Dur Antitrust Litig., 686 F.3d 197, 218 (3d Cir. 2012), cert. granted and judgment vacated by Upsher-Smith Lab., Inc. v. La. Wholesale Drug Co., 133 S. Ct. 2849 (2013). 62 [Vol. 102:53 THE UNTOLD EPIPEN STORY consideration to Teva. 64 But the generic-friendly claim construction bolstering Teva’s leverage, together with the vast scale of the market, 65 increased the likelihood that Meridian delayed Teva’s entry through payment. 66 Nor was this the only settlement. On January 19, 2011, King commenced litigation against Intelliject (now Kaleo) for infringement of the ‘012 and ‘432 patents after the company sought approval for Auvi-Q.67 Rather than pursuing approval as an ANDA, Intelliject filed a new drug application under Section 505(b)(2)-in other words, a “paper NDA.” 6 8 On February 16, 2012, the parties settled. 69 Pursuant to the agreement, Auvi-Q could enter the market 273 days later, on November 15, 2012.70 Because the FDA approved the product on August 10, 2012,7 the settlement delayed entry by 64 See Notice of Removal of Action from State Court Pursuant to 28 U.S.C. §§ 1331, 1332, 1338, 1367, 1441, 1446 & 1454 at Exhibit A at ¶34-35, Teamsters v. King Pharms., No. 1:15-cv-04666-LAK (N.Y. filed June 16, 2015) (requesting access to settlement agreement and stating that “[u]pon information and belief, Teva received unjustifiable consideration, incentives, and benefits in exchange for their collusion” since “[n]o rational economic actor with a viable product would refrain from entering a lucrative ‘blockbuster’ market unless they received some form of valuable consideration”). 65 One analyst anticipated that a Teva victory could have resulted in it “captur[ing] 40% of the Epi-Pen unit market and roughly 20% of current sales, or about $54 million, in the first year of introduction.” Larry Smith, The Promise of the Antares Pipeline is the Basis of My Buy Recommendation, SMITH ON STOCKS, Jan. 25, 2012, https://smithonstocks.com/the-promise-of-the-antares-pipeline- is-the-basis-of-my-buy-recommendation-ais-2-40/ [https://perma.cc/ZEG3- L7ST].66 In the midst of the EpiPen price-hike saga, Teva has declined to comment on whether payment was made in exchange for the settlement. Chris Glorioso & Evan Stulberger, I-Team: Company Behind EpiPen Fought to Keep Cheaper Generic off Market, NBC NEW YORK, Aug. 30, 2016, http://www.nbcnewyork. com/news/local/ EpiPen-Cheap-Generic-Teva-Product-Mylan-Investigation- Drug-Cost-391758871.html [https://perma.cc/4WYV-L3CX]. As of this writing, Teva has not received FDA approval. But that is the result of a history in which it delayed entering for several years, and which conceivably lessened its incentives to enter the market. 67 Complaint, King Pharm., Inc. v. Intelliject Inc., Case No. 1:11-cv-00065- UNA (D. Del. Jan. 19, 2011). 68 A “paper NDA” is similar to an ANDA in relying on others’ information for approval but differs from an ANDA since it “must include some safety and efficacy information that is different from the regular NDA.” SHASHANK UPADHYE, GENERIC PHARMACEUTICAL PATENT AND FDA LAW § 8:1-9 (2016). 69 Phil Milford, Pfizer, Mylan Settle with Sanofi over Epinephrine Injector, BLOOMBERG, Feb. 16, 2012, http://www.bloomberg.com/news/articles/2012- 02-16/pfizer-mylan-settle-with-sanofi-over-device-for-severe-allergic-reactions.70 Mylan and Pfizer Announce Epinephrine Auto-Injector Settlement Agreement, FIERCEPHARMA, Feb. 16, 2012, http://www.fiercepharma.com/ pharma/mylan-and-pfizer-announce-epinephrine-auto-injector-settlement- agreement [https://perma.cc/NGZ3-PV6Y]. 71 NDA 201739, DRUGs)FDA: FDA APPROVED DRUG PRODUCTS, 2017] 63 CORNELL LAW REVIEW ONLINE 97 days. On October 28, 2015, Auvi-Q was pulled off the market for safety reasons. 7 2 III ACT 2: CITIZEN PETITION In addition to delayed-entry settlements, Mylan sought to forestall Teva’s entry by reaching into its toolkit of anticompetitive behavior to pull out a “citizen petition,” which is meant to raise safety concerns with the FDA but which has been used by brand firms to delay generic entry. As we have recently shown in separate work, “citizen” petitions are filed mostly by brand firms, and are almost always ( 9 2 %) denied. 7 3 Mylan filed its citizen petition against Teva’s ANDA on January 16, 2015.74 A response from the FDA was anticipated no later than June 15, 2015 7 6-only weeks before Teva was permitted to enter the market pursuant to its settlement. As our study revealed, Mylan’s petition appears to have been filed as a delay tactic to avoid generic approval and the loss of its overwhelming share of the market. 7 6 Just as concerning, in May 2015, four months after filing the petition, Mylan filed a supplemental study asserting that patients would not be able to operate Teva’s proposed device without retraining. 7 7 Experts have explained, however, that http://www.accessdata.fda.gov/scripts/cder/daf/ (enter 201739 into the Search by Drug Name, Active Ingredient, or Application Number field). 72 Eric Palmer, Sanofi Recalls All of Its Auvi-Q Devices, Undercutting Its Push to Steal EpiPen Market Share, FIERCEPHARMA, Oct. 29, 2015, http://www.fiercepharma.com/m-a/sanofi-recalls-all-of-its-auvi-q-devices- undercutting-its-push-to-steal-epipen-market-share [https://perma.cc/P7UF- D6SD]. On July 14, 2010, King filed a Hatch-Waxman lawsuit against Sandoz on the ‘012 and ‘432 patents. Complaint, King Pharm., Inc. v. Sandoz, Inc., Case No. 10-3568-MLC (D. N.J. July 14, 2010). Sandoz requested a stay of proceedings in May 2011 and the litigation is ongoing. Case No. 10-3568-MLC, D.I. 66. Little information on Sandoz’s generic development is publicly available. 73 Michael A. Carrier & Carl Minniti, Citizen Petitions: Long, Late-Filed and At-Last Denied, 66 AM. U. L. REV 305, 333 (2016) (examining all 505(q) petitions (which ask the FDA to take action against a pending generic application) filed between 2011 and 2015); see also Michael A. Carrier & Daryl Wander, Citizen Petitions: An Empirical Study, 34 CARDOZO L. REV. 249, 274 (2012) (finding that the FDA denies 81% of petitions). 74 Citizen Petition from Mylan Specialty, L.P., Docket No. FDA-2015-P-0181- 0001 at *1 (posted on Jan. 16, 2015). 75 See 21 U.S.C. § 355(q)(F) (2012) (“The Secretary shall take final agency action on a petition not later than 150 days after the date on which the petition is submitted.”).76 See Carrier & Minniti, supra note 73, at 350-5 1. 77 Supplement from Mylan Specialty, L.P., Docket No. FDA-2015-P-0181- 0007 at *10 (posted on May 5, 2015). 64 [Vol. 102:53 THE UNTOLD EPIPEN STORY Mylan’s supplemental study “had a lot of problems” as it “lacked a control group; did not study the actual generic but a prototype instead; used a small number of participants; failed to provide them with proper instructions for use; and told participants to watch a video rather than actually use the Teva device.” 7 8 Shedding even more light on the questionable petition and supplemental study is its timing. In a development of which the industry would be keenly aware, Teva filed its ANDA against the Epi-Pen in 2008.79 And court documents show that Teva produced its ANDA filing in the course of litigation on September 17, 2010.80 This material included “detailed product descriptions, drawings, and instructions for use” for Teva’s proposed generic. 8′ At the time (and to this day), Mylan was working hand-in- hand with Meridian/King, with the former taking over Orange Book sponsorship of the drug application and the latter targeting rivals in litigation. 8 2 It thus seems exceedingly likely that Mylan would have been aware of Teva’s ANDA in 2008 and aware of documents explaining Teva’s product in 2010. In fact, it was Mylan that announced the settlement of the litigation, confirming its close connection to the case. 8 3 This connection raises significant concerns that Mylan waited more than four years to file its citizen petition in 2015. Even though Teva’s ANDA was ultimately denied in February 2016,84 Mylan would not have known this when it filed its petition in January 2015. And our comprehensive study of citizen petitions found that in 2015, the FDA approved three ANDAs on the same day it denied a petition, suggesting 78 Ed Silverman, How Mylan Tried to Keep Teva fron Selling a Generic EpiPen, STAT, Aug. 31, 2016, https://www.statnews.com/pharmalot/2016/08/31/ mylan-teva-generic-epipen/ [https://perma.cc/ESK3-339W]. The petition also included a statement from Dr. Eli Meltzer-who received roughly $95,000 from Mylan between 2014 and 2015-that users trained on the EpiPen would not “be able to reliably use a different operational platform in an emergency situation as safely and effectively.” Id. 79 Smith, supra note 65. 80 Defendants’ Brief in Support of their Motion to Dismiss at 6, King Pharm., Inc. v. Teva Parenteral Med. Inc., Case No. 09-652-GMS at *6 (D. Del., filed Dec. 13, 2010). 81 Id. 82 See supra note 46. 83 See supra note 48. 84 Carly Helfand, FDA Swats Down Teva’s EpiPen Copy, Putting Mylan in Cruise Control, FIERCEPHARMA (Mar. 1, 2016), http://www.fiercepharma.com/ sales-and-marketing/fda-swats-down-teva-s-epipen-copy-putting-mylan-cruise- control [https://perma.cc/8RF5-YEGN]. 2017] 65 CORNELL LAW REVIEW ONLINE that generic approval was at least partially delayed until the petition was resolved. 85 We think it reasonable to conclude that Mylan’s (1) filing of a petition years after invariably knowing about Teva’s generic, (2) filing of a petition calculated to delay entry after settlement, and (3) late-filing of a supplemental study together comprised a strategy to delay Teva’s ANDA approval beyond the already-delayed agreed entry date of July 22, 2015. Although the FDA is required to respond to petitions within 150 days, on numerous occasions the agency offers only an interim response explaining that it requires more time due to “complex issues raised” in the petition. 8 6 As a result, a strategy similar to the one Mylan used easily could have pushed a petition’s disposition (and thus generic approval) past 150 days. For a billion-dollar drug product like the EpiPen, each day of delay meant an extra $3 million. Parties filing petitions with government agencies often can rely on the immunity from the antitrust laws provided by the Noerr-Pennington doctrine, as “[t]hose who petition [the] government for redress are generally immune from antitrust liability.” 8 7 But this defense is not absolute. In particular, there is a well-established “sham” exception, which could be satisfied in this case by Mylan’s likely longstanding knowledge of Teva’s generic, the timing of the petition in relation to the settlement, and the questionable nature of the supplemental study. 8 8 On a broader level, the petition could be viewed as an integral part of an overall scheme of monopolization, together with settlement and (as discussed immediately below) exclusive dealing. 8 9 85 Carrier & Minniti, supra note 73, at 341-44. 86 E.g., Interim Response Letter from FDA CDER to Cubist Pharm., Inc., Docket No. FDA-2015-P-1595-0004 (posted on Oct. 26, 2015) (interim response from FDA, 173 days after petition filing, stating that “FDA has been unable to reach a decision on your petition because it raises complex issues requiring extensive review and analysis by Agency officials”). 87 Profl Real Estate Investors, Inc. v. Columbia Pictures Indus., 508 U.S. 49, 56 (1993). 88 E.g., Tyco Healthcare Group v. Mutual Pharm., 762 F.3d 1338, 1348 (Fed. Cir. 2014); In re DDAVP Direct Purchaser Antitrust Litig., 585 F.3d 677, 694 (2d Cir. 2009); In re Flonase Antitrust Litig., 795 F. Supp. 2d 300, 317 (E.D. Pa. 2011); In re Prograf Antitrust Litig., 2012 WL 293850, at *5 (D. Mass. Feb. 1, 2012). See also Tyco Healthcare Group v. Mutual Pharm., 2015 WL 3460790, at *9 (D.N.J. May 29, 2015) (denying summary judgment because generic offered evidence that petition delayed entry). 89 See, e.g., In re Neurontin Antitrust Litig., 2009 WL 2751029, at*15 (D.N.J. Aug. 28, 2009) (“Courts have routinely upheld the validity of ‘overall monopolization scheme’ claims in the patent context, even in the absence of allegations that any one of the scheme’s predicate actions was independently 66 [Vol. 102:53 THE UNTOLD EPIPEN STORY IV ACT 3: EXCLUSIVE DEALING In addition to delaying future generic entry from Teva (and others waiting in line behind it) through settlement and petition, Mylan blocked present competitors through its program for distributing the EpiPen to schools. 9 0 In November 2013, in response to a seven-year-old girl at a Virginia school dying after an allergic reaction to peanuts, 9′ Congress passed the School Access to Emergency Epinephrine Act. 9 2 Under this law, the Secretary of Health and Human Services is authorized to give preferential funding to states with schools that maintain an emergency supply of epinephrine for students. 9 3 The law has had a significant effect: 11 states require 94 and 38 encourage 95 schools to stock epinephrine. 96 This federal legislation has been supplemented by state laws that mandate that public schools obtain autoinjectors. 9 7 Mylan played a role in the enactment of the 2013 Act. Bresch “successfully pushed legislation to encourage use of the EpiPen in schools nationwide, making it a must-have drug for patients with allergic reactions.” 9 8 In particular, lobbying violative of antitrust laws.” (quoting Abbott Labs v. Teva Pharm. USA, Inc., 432 F. Supp. 2d 408, 428 (D.Del 2006))). 90 The New York Attorney General launched an antitrust investigation of this conduct. Press Release, N.Y. Attorney General, A.G. Schneiderman Launches Antitrust Investigation into Mylan Pharmaceuticals Inc., Maker of EpiPen, Sept. 6, 2016, http://www. ag.ny.gov/press-release/ag-schneiderman-launches- antitrust-investigation-mylan-pharmaceuticals-inc-maker [https://perma.cc/ QPM9-SS42]. 91 Koons & Langreth, supra note 21. 92 Pub. L. No. 113-48, 127 Stat. 575 (2013) (codified at 42 U.S.C. § 280g(d)(1)(F)-(G)). 93 Id. 94 School Access to Epinephrine Map, FOOD ALLERGY RES. & EDUC. https://www.foodallergy.org/advocacy/epinephrine/map [https://perma.cc/ 78A6-Y7R3] (last updated July 6, 2016). 95 Id. Hawaii is the only state that does not require or allow schools to stock ephinephrine, though it has pending legislation on this issue. 96 Koons & Langreth, supra note 21. The White House explained that “[an estimated 9.5% of American children suffer from asthma, and between 4 and 6% of children are affected by food allergies, either of which can strike in an instant, and have life threatening consequences.” Valerie Jarrett, President Obama Signs New EpiPen Law to Protect Children with Asthma and Severe Allergies, and Help Their Families to Breathe Easier, WHITE HOUSE BLOG (Nov. 13, 2013, 5:17 PM), https:/ /www.whitehouse.gov/blog/2013/11/13/president-obama-signs-new- epipen-law-protect-children-asthma-and-severe-allergies-an [https://perma.cc/ EK7G-8WMU].97 See Aimee Nienstadt, Comment, The Insufficiency of the Law Surrounding Food Allergies, 36 PACE L. REV. 595, 611 (2016) (providing analysis on state epinephrine autoinjector laws). 98 Edney & Koons, supra note 1. See also Jayne O’Donnell, Family Matters: 2017] 67 CORNELL LAW REVIEW ONLINE disclosure forms made clear that “Mylan spent about $4 million in 2012 and 2013 on lobbying for access to EpiPens generally and for legislation, including the 2013 [Act].” 9 9 Nor are schools the only setting in which Mylan has sought to promote the EpiPen. Bresch explained that Mylan was “continuing to open up new markets, new access with public entity legislation that would allow restaurants and hotels and really anywhere you are congregating” to have “access to an EpiPen.” 0 0 And it “signed a deal with Walt Disney to stock EpiPens in Disney’s theme parks and on cruise ships.”‘ 0’ On one hand, such an arrangement could increase access to a life-saving device. But on the other, it could exclude competitors. As a condition of receiving discounted EpiPens,1 0 2 schools were required to agree that they would “not in the next twelve (12) months purchase any products that are competitive to [email protected] Auto-Injectors.” 0 3 Although Mylan admitted such a practice,1 04 it claims that this requirement is no longer in force.10s If so, this would be a recent change, as the language appeared in order forms in August 2014, June 2015, and April 2016. 106 In antitrust terms, this conduct offers a discount price EpiPens Had High-Level Help Getting into Schools, USA TODAY, Sept. 21, 2016, http://www.usatoday.com/story/news/politics/2016/09/20/family-matters-epipens-had-help-getting-schools-manchin-bresch/90435218/ [https:// perma.cc/RX3W-LY8U] (noting that, after becoming president of the National Association of State Boards of Education in 2012, Gayle Manchin, Heather Bresch’s mother, “spearheaded an unprecedented effort that encouraged states to require schools to purchase medical devices that fight life-threatening allergic reactions”); Anna Edney & Billy House, The Senator’s Daughter Who Raised Prices on the EpiPen, BLOOMBERG (Aug. 24, 2016), http://www.bloomberg.com/politics/articles/2016-08-24/the-senator-s- daughter-who-raised-prices-on-anti-allergy-epipen [https://perma.cc/XK9W- LNUG]. 99 Edney & Koons, supra note 1. 100 Koons & Langreth, supra note 21. 101 Id. 102 Ike Swetlitz & Ed Silverman, Mylan May Have Violated Antitrust Law in its EpiPen Sales to Schools, Legal Experts Say, STAT, Aug. 25, 2016, https://www.statnews.com/2016/08/25/mylan-antitrust-epipen-schools/ [https://perma.cc/ES2J-SSZJ] (noting that the “discounted price was $112.10,” roughly “a quarter of the cost charged to pharmacies at the time”). 103 Id. 104 Full House Comm., supra note 6 (pt. 1, at 1:44:00) (in testimony to House Committee, Bresch responded to Representative Duckworth’s question about whether “schools purchasing discounted EpiPens had to make any representations or warranties to Mylan that they would adhere to certain conditions in order to access the discount price by conceding: ‘For people that wanted to buy it at the discounted rate, yes’). 105 Swetlitz & Silverman, supra note 103. 106 Id. 68 [Vol. 102:53 THE UNTOLD EPIPEN STORY based on exclusivity. As the leading treatise explains, such an arrangement “should generally be treated as no different from an orthodox exclusive-dealing arrangement.”1 0 7 Exclusive dealing case law stems from Section 3 of the Clayton Act, which prohibits a “discount … or rebate … on the condition, agreement, or understanding that the … purchaser … shall not use or deal in the goods … of a competitor” where there is an adverse effect on competition.10 8 Exclusive dealing also can constitute monopolization under Section 2 of the Sherman Act if the defendant has monopoly power.10 9 The general concern with exclusive dealing arrangements is that they block competitors from the market and result in higher prices and lower output. In evaluating the antitrust aspects of such arrangements, courts have historically focused on the share of the market foreclosed by the arrangement, requiring plaintiffs to show roughly 30 to 40% foreclosure.11 0 Assuming this threshold is cleared, courts then analyze other factors, such as the duration of the contracts, prevalence in the industry, existence of entry barriers, distribution alternatives, and other competitive effects.”‘ Recent cases have shifted the emphasis away from foreclosure. One commentator has concluded that courts “have looked beyond foreclosure to focus instead on the effect of exclusive dealing in creating, enhancing, or preserving the defendant’s market power.”” 2 Recent cases “have … found exclusive dealing and similar arrangements unlawful despite minimal, or even zero, levels of percentage foreclosure from access to the ultimate consumer.”11 3 In fact, the “precise percentage of the market asserted to be foreclosed … appears to be a wasteful exercise” as “[flew serious cases today are based on assertions that foreclosure alone is the source of the asserted competitive harm.”114 Applying antitrust law to Mylan’s EpiPen contracts, the first question is whether distribution through schools 107 XI HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION I 1807b, at 133 (3d ed. 2006). 108 15 U.S.C. § 14 (2012); see id. 109 15 U.S.C. § 2. 110 HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY: THE LAW OF COMPETITION AND ITS PRACTICE 596 (5th ed. 2016). 111 Id.at597. 112 See Jonathan M. Jacobson, Exclusive Dealing, “Foreclosure,” and Consumer Harm, 70 ANTITRUST L.J. 311, 311 (2002). 113 Id. at 363. 114 Id. 2017] 69 CORNELL LAW REVIEW ONLINE constitutes its own market. An expansive view would combine distribution in varied settings including schools, hospitals, amusement parks, and families. According to such an interpretation, the share distributed to schools would likely be a modest subset of the total number of devices. But a more justified interpretation is that schools constitute their own separate market. While each state law differs on the particular age through which students are required to attend school, it is generally accepted that children up to the age of eighteen must do so.11 After the passage of the 2013 legislation, schools are either required, or receive significant incentives, to stock epinephrine auto-injectors. Schools’ decisions on which devices to purchase are not tied to those of parents and hospitals. And given the number of children that do not carry EpiPens with them, school nurses play an irreplaceable role during school hours on the front lines of treating anaphylactic shock, buttressing the conclusion of a market for distribution through schools.116 In the market of school distribution for epinephrine autoinjectors, the precise extent of foreclosure is unclear.” 7 There are roughly 129,000 elementary, middle, and high schools in the U.S. today: 98,000 public”1 8 and 31,000 private.” 9 While more than half of these schools, over 65,000, receive free EpiPens, the number of schools that have bought EpiPens at a discount is less clear, which prevents definitive conclusions on foreclosure.1 2 0 115 See 78A C.J.S. School and School Districts § 988 (2016). 116 See David Stukus, New Epinephrine Study Shows Alarming Results, KIDS WITH FOOD ALLERGIES: KFA MEDICAL ADVISORY TEAM (July 14, 2014), http: / / community.kidswithfoodallergies.org/ blog/ new-epinephrine-study- shows-alarming-results [https://perma.cc/3A67-QFN5] (study showed that only 40% of families carried self-injectable epinephrine with them). 117 E.g., EpiPen4Schools Program, MICH. ASS’N OF INTERMEDIATE SCH. ADMINS., http://www.gomaisa.org/epipens-4-schools-program [https://perma.cc/KW9E- PJ72] (covering “qualifying public and private kindergarten, elementary, middle and high schools in the U.S.”). 118 Jill Barshay, Number of U.S. Charter Schools Up 7 Percent, Report Shows, THE HECHINGER REPORT (Nov. 3, 2014), http://www.usnews.com/news/articles/ 2014/11/03/number-of-us-charter-schools-up-7-percent-report-shows [https://perma.cc/4SYY-J5XY]. 119 Facts and Studies, COUNCIL FOR AM. PRIV. EDUC., http://www.capenet.org/facts.html [https://perma.cc/2CAF-T39T]. 120 Swtlitz & Silverman, supra note 102; Mylan Letter to Sen. Elizabeth Warren et al., Sept. 12, 2016, at 7-8 (noting that 1,348 schools purchased EpiPens at a discount between September 2015 and September 2016 but not explaining whether restrictive contracts were in place for entire period or whether such figures were representative of earlier periods); Ed Silverman, Lawmakers Call for FTC Probe into Potential Antitrust Violations in EpiPen School Program, STAT, Nov. 8, 2016, https://www.statnews.com/pharmalot/2016/11/08/ftc- 70 [Vol. 102:53 THE UNTOLD EPIPEN STORY Regardless of the percentage of the market foreclosed, other factors favor antitrust liability.121 For competitors not yet on the market, there are high entry barriers in the form of FDA approval. It is particularly difficult for companies to obtain approval of epinephrine autoinjectors as the FDA is cautious given the potentially fatal consequences from misapplication.1 22 Barriers also applied to alternatives on the market like Adrenaclick and Auvi-Q, as the Mylan contracts made it more difficult to gain a foothold. Nurses would be trained on the EpiPen, and caregivers whose children’s lives were saved by a nurse using an EpiPen-or even who merely knew that the devices were present at the school-would tend to purchase (and tell relatives and others to buy) EpiPens. In addition, the competitive effects are as clear as they ever are in these cases: a 400% surge from 15 price increases between 2009 and 2016.123 For each of those increases, Mylan hiked the EpiPen’s price at least 9%, and as much as 15%.124 In short, Mylan’s exclusive dealing agreements appeared to block competitors from the market and to increase price. Given that Mylan has 94% of the market,12 5 which easily clears the threshold of monopoly power, this analysis forms the basis for not only a Clayton Act Section 3 claim but also a monopolization claim.1 26 mylan-epipen-antitrust/ [https://perma.cc/C5YY-FN6D] (noting that “700,000 free pens have been distributed to schools” and that “another 45,000 pens” were distributed at a discount). 121 The 12-month duration of the contract would present the sole factor that would counsel against liability, but would likely be significantly outweighed by the other factors. 122 See Helfand, supra note 84 (“regulators flagged ‘certain major deficiencies’); see generally Pauline Bartolone, EpiPen’s Dominance Driven by Competitors’ Stumbles and Tragic Deaths, NPR: SHOTS HEALTH NEWS FROM NPR (Sept. 7, 2016), http://www.npr.org/sections/health-shots/2016/09/07/ 492964464/epipen-s-dominance-driven-by-competitors-stumbles-and-tragic- deaths [https://perma.cc/29YJ-8BXU]. 123 See supra note 1. 124 Jayne O’Donnell et al., EpiPen’s Steady Price Increases Masked Until Deductibles Rose, USA TODAY, Aug. 25, 2016, http://www.usatoday.com/ story/news/politics/ 2016/08/23/ epipens-steady-price-increases-masked- until-deductibles-rose/89123786 [https://perma.cc/G756-388U]. 125 E.g., Matt Egan, EpiPen Outrage May Fuel Cheap Generic in 2017, CNNMONEY: THE Buzz (Aug. 26, 2016), http://money.cnn.com/2016/08/ 26/ investing/ epipen-price-liike-generic-alternative/ [https://perma.cc/8WBY- DDED].126 In fact, courts have accepted lower foreclosure figures in the context of monopolization. See United States v. Microsoft Corp., 253 F.3d 34, 70 (D.C. Cir. 2001) (“[A] monopolist’s use of exclusive contracts, in certain circumstances, may give rise to a § 2 violation even though the contracts foreclose less than the roughly 40% or 50% share usually required in order to establish a § 1 violation.”). 2017] 71 CORNELL LAW REVIEW ONLINE CONCLUSION There are many reasons why the price of the EpiPen has surged more than 400% in recent years. This Essay has shown that Mylan bears significant responsibility for this increase. Through entry-delaying settlements and a citizen petition, Mylan forestalled future generics that could have offered a similar version of the EpiPen. Most directly, it blocked Teva, one of the most successful generics of all time, from entering the market. And because of Teva’s privileged perch as a first filer, the delay also prevented all other generics from entering. In addition, given Mylan’s likely longstanding knowledge of Teva’s generic, the timing of its citizen petition in relation to settlement, and the questionable nature of the supplemental study, Mylan further delayed Teva’s entry through its petition. At the same time, through its exclusive contracts with schools, Mylan made it much more difficult for current rivals like Adrenaclick and Auvi-Q to establish a foothold to challenge its monopoly. From the information publicly available, Mylan’s conduct, individually and in combination, raises red flags that strongly implicate an antitrust case based on monopolization. And that evidence raises even more questions about information that is not publicly available. Did the settlement with Teva include payment? How about the settlement with Intelliject? Why did Mylan file a petition more than 4 years after it likely knew of Teva’s generic product? What percentage of schools was foreclosed by exclusive contracts? Does the Disney contract (and perhaps others) have similar exclusivity clauses as the one with schools? Mylan’s full range of behavior-both known and unknown-raises significant antitrust concerns and deserves a thorough investigation. Given the consequences of a $600 treatment for a life-saving device and an array of conduct that exploited the litigation process through settlement, the administrative process through FDA citizen petitions, and the auto-injector school laws through exclusive dealing, the public deserves no less. 72 [Vol. 102:53
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