MGT 672 Saudi Electronic University Ethics of Global Drug Pricing Case Study Essay

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Topic- Ethics of Global Drug Pricing pp. 34-35.
19. Chaison, Encyclopedia of Clothing and Fashion,
19:06-250
20. Ibid.
21. Hartman, Encyclopedia of Business Ethics and
Society, pp. 2034-2041.
25. Ibid.
26. Ibid.
22. Chaison. Encyclopedia of Clothing and Fashion,
Done Irwin_Management_Fred_Lut…
24. Hartman, Encyclopedia of Business Ethics and
Society, pp. 2034 2041.
standards.
43. “Board of Directors,” Fair Labor Association, www.
fairlabor.org/about-us/board-directors.
44. USAS Press Release on “Jerzees de H 4G
Victory.”
114
45. Ibid.
46. Greenhouse, “Labor Fight Ends in Win for Students.”
and In Yardley. “Global Retailers
Times,
Part 1 Environmental Foundation
In-Depth Integrative Case 1.2
The Ethics of Global Drug Pricing
In September 2015, Turing Pharmaceuticals, headed by
former hedge fund manager Martin Shrkeli, increased the
price of a 62-year-old drug used for treating life-threaten-
ing parasitic infections in HIV and cancer patients by over
5,000 percent from US$13.50 to US$750 per tablet.¹
Also in 2015, Valeant Pharmaceuticals raised the price of
a standard-use diabetes pill from US$896 US$10,020,
pills used for Wilson’s Disease from US$1,395 and
US$888 to US$21,267 and US$26,139 respectively, and a
heart rate medication from $4,489 to $36,811.2 In the same
year, Rodelis Therapeutics increased the price of a drug
used to treat multidrug-resistant tuberculosis from around
US$500 to US$10,800 per 30 pills.³ These highlight just
a few examples of numerous recent extreme price increases
that have fueled the debate regarding the cost of prescrip-
tion medication in the United States, prompting compari-
sons to drug prices in other industrialized countries.
Moreover, a related debate has simmered regarding access
to life-saving medicine in developing countries, the rela-
tively low investments by major global pharma companies
in developing new medicines for diseases such as tubercu-
losis and malaria, and the prices major pharmaceutical
companies charge for HIV/AIDS medications.
Pharmaceuticals and Pricing-A Complicated
Calculation
The issue of drug pricing is incredibly complex and, as
more prescription medications are becoming available to
the growing global population, that complexity is increas-
ing. Debates regarding prescription medication pricing
involve such hot-button issues as the appropriate levels of
corporate profits, the responsibility of the corporations
who own the medication (profit for shareholders versus
providing a need for suffering patients), and insurance
coverage, to name a few. The ethical debate over drug
pricing is not confined to just the United States, but
extends to developed and developing companies alike.
and the number of patients who take five or more medica-
tions has doubled to 15 percent. As drug prices continue
to soar, doctors are placed in the difficult situation of pre-
scribing their patients medication that may not be afford-
able or performing alternative methods with lower efficacy.
In defending relatively high prices of drugs, pharma-
ceutical companies routinely cite the high failure rate of
new drugs during the FDA approval process and the steep
costs of research and development. Indeed, some esti-
mates put the price of developing a new drug at nearly
$3 billion when including the cost of failures and drugs
that never reach the marketplace. Opponents of this argu-
ment cite the fact that, in cases where a new drug is suc-
cessful, it enjoys approximately two decades of protection
from any competition under strict patent laws. Addition-
nies senecially in the “orphen” deng
48. Gillian B. White, “Are Factories in Bangladesh Any
Saler Now!, The Atlantic Magazine, December 17,
2015, www.theatlantic.com/business/archive/2015/12/
The pricing of pharmaceuticals is influenced by a
myriad of stakeholders who represent a wide range of
competing interests. These include the patients taking the
drugs, the doctors prescribing the drugs, the insurance
companies paying for the drugs, the pharmaceutical man-
ufacturers that either produce or acquire the rights and
supply the drug, and the governmental forces that often
act as a bulk purchaser and regulator, policing the entire
process. Tensions among these diverse stakeholders are
aggravated by continued growth in prescription-drug
bangladesh-factory-workers/421005/.
spending. In 2014, drug prices grew by 12.2 percent from
the previous year, and prices for some medications,
including effective treatments for hepatitis-C, cancer, and
multiple sclerosis, grew by as much as $50,000.4
Patients need reliable drugs that can be used to treat
their conditions; however, the costs to patients vary widely
based on the health-care system of the countries in which
they live, whether they are subject to public or private
insurance (or no insurance at all), and various other fac-
tors. In the United States, insurance options vary widely,
with some patients paying out of pocket, others opting for
coverage under their employer-paid or commercial insur-
ance, and some utilizing a form of government-paid insur-
ance, like Medicare. The type of provider and type of plan
ultimately determine the cost that the patient must pay out
of pocket for any prescription medications. Some plans
require co-pays, premiums, or deductibles to cover the
costs of prescriptions and some pay a certain percentage
of prescription costs, leaving the balance to the patient.
In many countries featuring single-payer models, health
plans determine which drugs are available and how they
are to be allocated to patients. In a similar vein, insurance
plans in the United States maintain a “booklet” or listing
of what prescription medications are covered under a
given plan. This booklet can change from year-to-year,
meaning that one year a given insurance company will
cover costs for a certain medication and, due to factors
like huge price increases, the medication may not be cov-
ered the following year.
In the United States, prescribing doctors are an impor-
tant stakeholder in this issue. Until recently, their respon-
sibility and incentives were not always well established.
In the past, it was common practice for pharmaceutical
companies to offer doctors fees for research and clinical
assessments. Because these fees created at least the
appearance of a conflict of interest, legislation and regu-
lation began to require greater disclosure and reporting.
Now, all compensation, including nonmonetary items
such as food and entertainment, that pharmaceutical com-
panies provide to doctors in exchange for research and
promotional activities must be reported.³
Putting that role aside, doctors are generally expected
to treat patients with whatever means result in the highest
efficacy levels. Higher prescription drug prices inevitably
interact with that responsibility. Recent trends seem to
indicate that these tensions will only grow; the number of
Americans using prescription medication has increased
nearly 10 percent since 1999, to 60 percent of Americans,
113
In the most egregious cases of price increases, compa-
nies like Valeant and Turing buy the rights to specialty
medications that have been on the market for years and for
which there are few direct substitutes. These companies
then raise the prices of the drugs exponentially. Decades-
old specialty medications often do not have generic alter-
natives due to traditionally low sales volumes. Therefore,
patients who require these medications and have been
using them as standard care are left without any real cost-
effective alternative when prices skyrocket.
Pharmaceutical companies also argue that they provide
subsidies-sometimes significant ones-for patients who
are not able to pay the full cost. These programs include
providing medication free of charge to patients in both
developed and developing countries, as well as offering a
June of financial aid to help other patients obtain the