Drug company Mylan has been widely condemned this year for the skyrocketing cost of its EpiPen, an emergency allergy medication. Now, media reports say that executive bonuses may have played a role in the price-gouging. The Wall Street Journal reported on Thursday that two years ago, Mylan put in place a “special incentive plan” to reward executives for hitting “aggressive profit targets.” The New York Times described the bonus as a “one-time stock grant” given to executives “if the company’s earnings and stock price meet certain goals by the end of 2018.”

This could explain why your EpiPen two-pack costs $600 today, versus half that amount in 2014: A drug executive’s bonus might depend on it.

The Mylan case is an example of how performance-based pay can end up hurting customers while fattening executives’ wallets. For the last two decades, the government has encouraged these kinds of schemes through a lucrative tax break that gave corporations incentives to focus on their firms’ stock price rather than their core business. A new report from the Institute for Policy Studies (IPS) shows how companies continue to exploit this loophole, costing taxpayers tens of billions of dollars and undermining the economy. Read More