Prepared by: Anuradha Navya Sarika Vishal

Ethicality of various issues such as

Taking advantage of physically vulnerable people Provide a great service to humanity by developing drugs for many diseases, should we expect them to adhere to the strictest moral guidelines? OR like other businesses, have one ultimate goal in mindto make money ??? Charging people whatever they are willing to pay - is it acceptable? Could pharma companies deliver less expensive drugs without sacrificing R & D? What would you call an unethical price or unreasonable profit?

Point to ponder:

Pharmaceutical companies are intrinsically different from most other businesses because many of their products are necessary for survival, which makes them providers of indispensable healthcare.

45 million Americans, including 11 million children, who are currently un-insured Many health insurance companies are decreasing the benefits of its members Employers are even completely dropping medical benefits

Azidothymide (by Burroughs-Wellcome Company) treating complications from AIDS - $6500 a year same as an expensive cancer therapy Arguments by BWC to justify the price:

High R&D costs fundamental principle of Free Market economics - high risk deserves high rewards Threat of obsolescence Proceeds from sale of AZT would be used to finance other AIDS drugs Soon, a superior 2nd generation of AZT would make the current one obsolete Patent expires -> market share of AZT would fall due to generic competition Compensate for many commercially unsuccessful drugs

Point to ponder:

Last year, the average pharmaceutical company earned $36 million more than was needed to pay off R&D costs for each new drug. The excess profit was claimed to represent about 4.3% of the price of each drug.
-Ann-Marie McIntyre, Key Issues in the Pharmaceutical Industry

AZT (by Burroughs-Wellcome Company) treating complications from AIDS - $6500 a year same as an expensive cancer therapy Arguments by BWC to justify the price:

High R&D costs Threat of obsolescence Proceeds from sale of AZT would be used to finance other AIDS drugs Soon, a superior 2nd generation of AZT would make the current one obsolete Patent expires -> market share of AZT would fall due to generic competition

Point to ponder:

Last year, the average pharmaceutical company earned $36 million more than was needed to pay off R&D costs for each new drug. The excess profit was claimed to represent about 4.3% of the price of each drug.
-Ann-Marie McIntyre, Key Issues in the Pharmaceutical Industry

Ethical Questions
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How to judge a reasonable/ethical profit level in case of vital commodities?

Should free market determine the price of essential goods such as pharmaceuticals?

Is it ethical to make profits at the expense of human sufferings?

Should pharmaceutical companies choose humane empathy and fairness over superior financial performance?

Charging the price determined by the market forces

Free Market Philosophy: Primary duty of managers is to maximize Shareholders wealth

Free Market Philosophy: Managers should not consider social factors while making decisions Corporate decisions often have powerful social impact

 Stakeholder Model: Linking pricing with social

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and ethical concerns

Corporations acting as more responsible social agents

Free Market Philosophy: Corporations are pure economic agents Hence, Free market policy is not useful for ethical pricing

 Price determined by calculating Industrys average cost

Impact on inefficient firms with above average costs Diminished competition, fewer players and higher prices No real incentives for efficiency and cost controls

Unfeasible solution

 Self-Regulation: The burden of morality and social responsibility does not lie in the marketplace or in the hand of government regulation but falls directly on the corporation and its managers

Moral Point of view: Primacy to virtues such as justice, integrity and respect

Turning from a narrow self interest to a wider interest of others

Justice is not a part of the virtue, but the whole of excellence or virtue Aristotle
John Rawls Theory of Justice Principles for establishing just institutions in a society Principle 1: The principle of equal liberty Principle 2: The difference principle and all the principle of equal opportunity
Each person has an equal right to the most extensive basic liberties compatible with equal liberties for all Social and economic inequalities are arranged such that they are to the greatest benefit of the least advantaged Social and economic inequalities are attached to offices and positions open fairly and equally to all

DISTRIBUTIVE JUSTICE: Fair distribution of societys benefits and burdens

Premium drug prices

Artificial Scarcity

Poor and lower middle class unable to avail costly drugs

Inequitable distribution

Unjust pricing

To explore fair pricing we use the concept of Kantian Personhood and Rawls theory of Justice
Kantian Personhood Equal Worth and universal dignity for all Self- fulfilment, self determination, ability to live ones own conception of a good life Respect the same capacity of self-determination in others

Justice means that Kantian persons are entitled to liberties and material goods These are called primary social goods: those which are absolutely necessary for self-determination and fulfilment Distribution of primary social goods should be detached from ability and merit Inequities should not be tolerated if they violate the concept of Kantian personhood

Their unequal distribution should only be allowed if it benefits the least advantaged in the society(difference principle)

Healthcare is a material good, should be detached from ability and merit, unequal distribution does not help least advantaged in any way

The just pharmaceutical corporation must be diligent and consider implication of its pricing policies for an equitable distribution of products Demand for justice has to be balanced with economic objectives Goals of justice and economic viability are not mutually exclusive Trust corporations to arrive at their own estimates

Reasonable level of profitability

Case histories: Hoffman-LaRoche v/s UK Govt. Corporation charged with quoting excessive prices for librium and valium. Reasonable profits profits no higher than is necessary to obtain the desired performance of industry from the point of view of economy as a whole

For those drugs which are truly essential, the just corporation will aim to charge prices which assure largest possible distribution of this product with a reasonable level of profitability

Distributive justice cannot be the exclusive concern in pricing, but must be given its proportionate weight depending on criticality of the drug for patients
Nature of disease What is the nature of the malady? Is it life threatening or physically and/or mentally disruptive? Does it deprive the afflicted of their physical or mental well-being (e.g. schizophrenia) or is it more of an inconvenience (e.g. baldness)? Treatment Alternatives Do patients have other options? Is there any other therapeutic recourse? Is this medication a last resort for the illness in question? Medicine alternatives Are there other drags available for similar effectiveness and if so how affordable are these drugs? Price affordability At the planned pricing level will people likely he deprived of treatment? Riskiness How "experimental" is this drug considered to be? What is the likelihood that government agencies and insurance companies will offer assistance so that it can be afforded by everyone who needs it? End-user Who is the likely end-user of the drug? The chronically ill? The elderly? Special consideration should be given to these groups who bear the biggest burden of high drug prices.

Premium pricing policy perpetuated by industry wide peer pressure No followers for a company which distributes its products equitably Current impasse can be overcome by decisive intervention and European Style control Transcend traditional thinking and bottom line mentality

Adopt a framework that centers on mutually beneficial relationships Independent government regulators dont have access to information , Collaborative approach will ensure the community is well-served

Healthcare, under primary social goods, crucial for ones self determination Distribution not on ones standing in the community Pharmaceutical firms must impose restraints on profits for sake of distributive justice Involvement of government will lead to cumbersome pricing regulations ,in effective in long run

Imperative of justice has to be balance with financial objectives The question of how critical the product is, nature of illness and availability of substitutes Major producers should act in collaboration with government to ensure fair pricing scheme If done, promotes common good ,just community and greater harmony between corporation and stakeholders

Is it ethical to profit excessively at the expense of human suffering? Should free market, competitive forces determine the price of essential goods like pharmaceuticals?