Premium Essay

Drug Companies

In: Business and Management

Submitted By atrip
Words 1750
Pages 7
WESTERN DRUG COMPANIES AND THE AIDS EPIDEMIC IN SOUTH AFRICA | | | | | | | |

INTRODUCTION
The AIDS epidemic in South Africa is at an extreme where 4.2 million of the country’s 43 million citizens are afflicted. This translates into one in every ten citizens being infected with the virus. Additionally 34 million Sub Saharan African citizens have been afflicted and 11.5 million have died and that total accounts for 83% of the world’s AIDS related deaths.
Treatment is available in the form of an anti-retroviral, but it is very costly and as such unaffordable for the already impoverished nations in Africa. The AIDS crisis and the expensive treatment have caused the government of South Africa to pass laws authorising the practice of parallel importing and compulsory licensing. Parallel importing allows importers to purchase the medication from the cheapest source whether or not the patent holders gave approval and compulsory licensing allows the government to license local companies to produce cheaper versions of the drug patented by foreign companies with or without their consent.
The passing of the law by the South African government caused a legal dispute with the US drug companies regarding intellectual property rights, compulsory licensing and parallel importing. The dispute caused a debate among public health officials, activists, law makers and the drug companies over the importance of public health versus corporate profits and the bad public relations caused the drug companies to drop the law suit added to which they lowered the price of the medication for the African countries and the government was allowed to engage in parallel importing and compulsory licensing..

QUESTION #1
A patent is a property right granted by the Government to an inventor “to exclude others from making, using, offering for sale, or selling the invention...

Similar Documents

Free Essay

Pharmaceutical Drugs and Drug Companies

...depends on how you look at it, some people conceder drug companies to be monopolistically competitive but I think it is an oligopoly. Oligopoly is a market structure with significant barriers of entry and exit, many consumers and few firms. With a close look of the drug business you will realize that is it has all the characteristics of an oligopoly started above. Because of the fewer number of firms there is always the tendency of collision, secondly in a relatively un-concentrated market barriers to entry and may simply reflect high operating cost. The high cost of getting this product to the market include clinical trials, patent approval and FDA approval; industry-financed studies claimed $114 million 1987, later went up to $231 million, $403 million, and then $2.1 billion in 2006 for FDA approval, patent approval and clinical trials. Oligopolies in most cases tend to go multinational which is largely associated with todays’ drug companies. In terms of research and development, I will say it is the backbone of the pharmaceutical industry which makes it very important. I will want to focus on Pfizer one of the big names in this industry. Pfizer’s Global Research and Development is probably the group that the company takes the most pride in for obvious reasons. If ......

Words: 536 - Pages: 3

Premium Essay

Merck & Company - an Opportunity to Evaluate the Licensing of a Drug

...Problem Definition Should Rich Kender recommend licensing Davanrik, making Merck & Company responsible for its manufacture and its marketing? In order to provide Rich Kender with a good and thorough analysis and recommendation on the Davanrik licensing project, we need to answer the following guidance questions: I. How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop drugs? II. How much should they pay? III. What is the expected value of the licensing arrangement to LAB? IV. How would our analysis change if the costs of launching Davanrik for weight loss were $225 million instead of $100 million? In our analysis we will build a decision tree that shows the cash flows and probabilities at all stages of the FDA approval process. We will assume a royalty fee of 5% on the cash flows that Merck receives from Davanrik after successful launch. Analysis Merck is in the business of developing compounds for pharmaceutical compounds. The required research and development efforts preceding the launch of a successful blockbuster drug is extensive and lengthy process and is therefore a very expensive one. Nevertheless, Merck has proven perfectly capable to achieve high returns on capital. This is a result of numerous factors. First of all, Merck has been able to generate tremendous amounts of sales. Since 1995, Merck has launched 15 new products, resulting in 1999 sales of $32.7 billion,......

Words: 320 - Pages: 2

Premium Essay

Pharmaceutical Companies and the Availability of Hiv Drugs to African Countries

...sold at lower prices abroad (say, in Canada)? Pharmaceutical companies try to maintain a monopoly in the early stages of a drug in order to recover R&D investment. During this period of exclusivity they will try to make a fair profit. This is not a monopoly in the true sense of the word because this period is limited in time. It is perhaps better to describe it as a limited warranty. There are also other limitations. Pharmaceutical companies in some countries may not respect intellectual property and may copy or produce generic drugs even before the patent expires. An important criterion of a monopoly is price control. However, in many countries, a governmental agency is responsible for setting the prices of drugs, making the influence of the manufacturers somewhat limited. This puts pressure on the manufacturers to seek overseas markets in order to maximize their chances of recovering R&D costs and to earn a profit within the period covered by the patent. By so doing the market for re-importation and parallel imports is opened. Some of the prices that the pharmaceutical manufacturers end up accepting under these circumstances do not define a true monopoly. There are several barriers to entry that prevents re-importation into the US of drugs sold at lower prices. These include the following: Price difference Regulatory considerations Trade tariffs Cost of transport Reimbursement procedures Drugs would need to be kept under the same regulatory......

Words: 858 - Pages: 4

Free Essay

Drug Companies

...Answer: Pharmaceutical companies have ethical responsibilities that are to improve the human health and prolonged life that other corporations don’t have. In drug companies ethical values should take priority over economic efficiency. Yes, large US drug companies are good corporate citizens. Some big companies makes drug available at low cost or no cost at all to people with HIV/AIDS in poorer countries. They also donate millions of dollars to nonprofit organization that support patients with life threatening illnesses. Answer: Drug companies don’t have any obligation to make new drug available to patients, who were involved in the development. Yes size of the company does make difference. Big companies can afford to setup their office and absorb the cost of marketing strategy to make the drug available in other developing countries but smaller companies can’t do it. If I were Dr. Lange, I would at least make the drug available to those who were involved in the study. Because it would be violation of ethical obligation and exploitation of human being if they don’t provide the drugs to those patients. The consequences of that the company will be criticized and held morally irresponsible by other patients who won’t be able to get the drug. Answer: Pharmaceutical companies have moral obligation and social responsibility to make the life saving drugs available in poor countries at little or no cost. Disease and illness affect poorest the most and they die of......

Words: 327 - Pages: 2

Free Essay

Western Drug Companies

...Question One: Why is it so important for the drug companies to protect their patents? Answer: In the field of medicine, people begin to focus on intellectual property. Health care related Intellectual Property Right (IPR) is deemed as a special and complex issue, which distinguishes itself from other kinds of IPR with its particular nature and different legal provisions and covers a wide range of subjects. Firstly, medicine is a special and important field of technology. The feature of drug development is large investment, high rise and long cycle. Currently, developing a new chemical drug takes 8 to 10 billion. Moreover, it takes more than ten years to screen a drug and bring it to market. If they don’t protect their patents, new drugs that consumed significant cost will be imitation. Therefore, drug development needs more dependent on protecting patents than other sectors. Secondly, the sustainable development of pharmaceutical industry relies on strong support of new technologies and new products. The return of new drugs is huge and it is over 30 percent of sales. So the huge return needs to be protected. Otherwise it will create duplication of research and development and waste of resources. It is easy to form a vicious marketing competition and goes against technological advances in pharmaceutical industry. For example, an anti-HIV drug successes to be researched and developed in Taiwan. It is said that the effect of prevention of AIDS is 90 percent and an......

Words: 271 - Pages: 2

Free Essay

Could Changing the Way Drug Companies Create Profits Raise Global Average Life Expectancy?

...Could Changing the Way Drug Companies Create Profits Raise Global Average Life Expectancy? Do you believe the “Fixed Reward Pool” model could help raise global life expectancy? Explain how you came to this decision giving at least 4 pieces of supporting evidence. I do believe that the “Fixed Reward Pool” could potentially raise global life expectancy greatly. The program focuses on rewarding pharmaceutical innovators for their activities. This means pharmaceutical innovators will be driven to help more people, because it will correspond with the amount of profit they will gain. Firstly, the program has a fixed budget. It is a $6 billion plan to decrease unequal distribution of medicine globally, focus more money towards research on diseases with the highest global burden, as well as deliver more medicines cheaply to the poor and develop new medicines for the diseases of the poor. This portends that areas of low income will be more focused on (such as Africa). Areas like Africa with low income are usually areas with low life expectancy, which means these areas will be treated. The people in these areas will get good medical care and medicines, and with a life expectancy rise in this one area, the global life expectancy can potentially have a big rise. The current diseases more looked upon currently, are the less dangerous, more common diseases. In less developed countries, about 50,000 people die daily from diseases caused by poverty (diarrhea, tuberculosis, malaria,......

Words: 667 - Pages: 3

Premium Essay

Merck & Company: Evaluating a Drug Licensing Opportunity

...Problem Definition Should Rich Kender recommend licensing Davanrik, making Merck & Company responsible for its manufacture and its marketing? In order to provide Rich Kender with a good and thorough analysis and recommendation on the Davanrik licensing project, we need to answer the following guidance questions: I. How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop drugs? II. How much should they pay? III. What is the expected value of the licensing arrangement to LAB? IV. How would our analysis change if the costs of launching Davanrik for weight loss were $225 million instead of $100 million? In our analysis we will build a decision tree that shows the cash flows and probabilities at all stages of the FDA approval process. We will assume a royalty fee of 5% on the cash flows that Merck receives from Davanrik after successful launch. Analysis Merck is in the business of developing compounds for pharmaceutical compounds. The required research and development efforts preceding the launch of a successful blockbuster drug is extensive and lengthy process and is therefore a very expensive one. Nevertheless, Merck has proven perfectly capable to achieve high returns on capital. This is a result of numerous factors. First of all, Merck has been able to generate tremendous amounts of sales. Since 1995, Merck has launched 15 new products, resulting in 1999 sales of $32.7 billion, which includes $15.2......

Words: 581 - Pages: 3

Premium Essay

Merck & Company Evaluating a Drug Licensing Opportunity

...Table of Content | |Page | |1. Executive Summary…………………………………………………………… |1 | |2. Main Report…………………………………………………………………….. |2 | |3. Bibliography…………………………………………………………………….. |6 | 1. Executive Summary In 2002 the patents for the most popular drugs which generated $5.7 billion in worldwide sales would be expired. In order to anticipate the loss of sales, it is recommended to update the product portfolio by investing in the development of patented new products. LAB proposed 17 years exclusivity on Davanrik, a substance which has probability to be efficacious for depression or weight loss or both indications. Up to now LAB has completed preclinical testing and entering clinical testing. The clinical testing will take about 7 years which is divided into 3 phases. Based on the analysis given on the report, the cost on Phase I will come up to $30 million and the Phase II will be $25 million. The outcome of Phase III varies and depends on the result on Phase II. The expected outcomes are: Davanrik is 10% effective for depression only, 15% for weight loss only and 5% for both......

Words: 1007 - Pages: 5

Premium Essay

Merck & Company -Evaluating a Drug Licensing Opportunity .Doc

...INTRODUCTION Merck & Company : Evaluating the Licensing Opportunity Various recently-born biotech companies sell their technologies in either finished or early stage to bigger companies in need of financing capital to preceed business, while those bigger companies acquire technologies to scout for promising profitable business. This sort of process needs numbers of decision makings and agreements from both parties on the valuation methods is crucial here. The valuation method being used has to hold objective validity and generality. For the managers to make accurate forecast of future profitability in managing companies, quantified decision making process is needed. Here we are dealing about whether Merck should give financial support to the R&D project of Davanrik offered by LAB, and about the process of valuation and the final decision. First we are to make brief of LAB’s business proposal and practice detailed valuation functions to decide if the proposal is profitable or not. And finally we will make a decision based on the valuation process in perspective of Rich Kender, Vice President of Financial Evaluation & Analysis of Merck. Brief introduction of Merck and its agenda regarding Davanrik project As a world-class pharmaceutical company concentrated on R&Ds, Merck is performing various researches and developments upon medical supplies for human and animals. Merck is providing Pharmaceutical Benefit Management (i.e. PBM) through a company called Merck-Medco......

Words: 1134 - Pages: 5

Free Essay

Business Research Ethics

...its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs. GlaxoSmithKline committed unethical behavior by neglecting to turn in all research on their pharmaceuticals. By them not turning in all the research it hid some information that was critical to rather or not the drug was legal and healthy for the prescribed patients. GlaxoSmithKline failed to report certain safety data that could have caused major harm to anybody that used their product. Blinded by the greed and wanting to produce a well profitable product, GlaxoSmithKline withheld the information and released their drugs. With the safety data withheld and the health care representatives still passing out drud samples to hospitals and clinics throughout the United States, this could have caused a significant medical problem. The possibility of the drug medically injuring a patient would be the worst situation imaginable. The patient is not the only one that could have been injured due to the lack of research GlaxoSmithKline announced about the product. The doctors and clinics who the patients received the drugs from would also be hurt. Granted the doctors and clinics would not be hurt physically, their reputation and image could be significantly damaged if they were the ones who prescribed the drugs to the patient that ended up dead, do to a side effect that the drug caused. Doctors and clinics could lose some previous patients and creditability, but one group of......

Words: 786 - Pages: 4

Free Essay

Pharmacology

...Delirium is marked by disorientation without drowsiness, hallucinations, delusions; difficulty in focusing attention; inability to rest and physical and autonomic over activity. Common causes of delirium are drug and alcohol withdrawal; medication side effects, infections, pain surgery or trauma, hypoxia, and acid-base electrolyte imbalances. Treatment of delirium includes determining the cause of the delirium. Antipsychotic drugs and benzodiazepines may be used cautiously when other non-pharmacological interventions have failed. (Tabors 2009) Dementia is a progressive irreversible decline in mental function marked by memory impairment and often deficits in reasoning, judgment, abstract thought registration, comprehension, learning, and use of language. Symptoms may take months to years to progress and they include poor judgment, clouding of consciousness and orientation, depression, agitation sleeplessness, Patient may become dependent of activities of daily living. Dementia may result from AIDS, chronic alcoholism, Alzheimer’s disease, vitamin B12 deficiency, carbon monoxide poising, hypothyroidism and subdural hematomas. 4.5 million People in the U.S are affected by dementia. 20-40% of patients with dementia are over the age of 85. (Tabor’s 2009) Some of the most common drugs used to treat dementia are Tacrine (Cognex), Donepezil (Aricept), Rivastigmine (Exelon), and Galantamine (Razadyne). When administering these medications to a patient it is important to remember......

Words: 483 - Pages: 2

Premium Essay

Suze Orman Rhetorical Analysis

...tactics to motivate his audience to take such actions. A reformed drug addict can inspire teenagers to prevent drug abuse, for example, or a former managing director, the company can now talk to the vendors to boost morale. The ultimate goal of an effective motivational speaker is to convince his audience to do some kind of personal or professional change in themselves. A former New York detective named David Toma is perhaps one of the most recognized motivational speakers in the United States. Toma personally witnessed the devastating effects...

Words: 473 - Pages: 2

Free Essay

The New Drug War

...Drug pricing and accessibility were the main issues discussed in this article. The topic was discussed in a very great debt, and it also showed how it is affecting the world as a whole. It talks about how drug price is so high in very developed countries, to an extent that even the rich can barely afford them. Most companies even go as far as suing government and others who try to work out modalities to see that drugs can get to as many people as possible. There are even cases in a country like the United States of America were people with insurance can barely afford. It is true that it cost so much to make a drug, both money and time wise, but at the same time this drugs are developed for people, to say alive. While some health activist, companies and government agencies are fighting so hard to make drugs accessible and affordable, pharmaceutical companies are also fighting to maximize profit as much as possible. Profit and utility maximization is an ethical issue, as well as it is an economic issue. If there is no balance between these two factors, there will definitely be a great reason for concern. So if drug companies fight the society and the people it should be serving in, then there is no balance. Also, there should be justification of the market system and this is archived by promoting the welfare of the whole society. In an instance where pursing profit seems to be most important to these pharmaceutical companies than anything else, then the purpose of......

Words: 375 - Pages: 2

Free Essay

The Medicines Case Study

...The Medicines Company, founded in July 1996 by Clive Meanwell, acquired, developed, and commercialized pharmaceutical products in late stages of development. The first product bought by Medicines was Angiomax, an anticoagulant in Phase III trials, from Biogen. This drug is a superior substitute as compared to heparin, the industry standard, because the effects of a dose are predictable, the product works better among patients at risk for bleeding, it works faster than heparin, and the drug has no immune response. Marketing was set and a sales force was assembled for Angiomax. The company also bought IS-159, a nasal spray to treat acute migranes, but more money and time was needed to change the content of the drug or prove the safety of an additive. Medicines also bought CTV-05, designed to treat bacterial vaginosis (BV), but this drug was only in Phase I clinical trials and not proven to work yet. There are three key issues facing Medicines currently. First, Medicines must decide how much above heparin Angiomax should be priced. Secondly, a product portfolio must be developed, since the company's success depends on the development of a drug pipeline. With FDA approval for Angiomax but problems with the second acquisition, it was questioned whether there was a need for a drug pipeline. Third, the Medicines faces the reality of the stock market as stocks fell when they were expected to sharply increase. This caused people to question the company's core business strategy. ...

Words: 903 - Pages: 4

Premium Essay

1. on Balance, Do You Think Merck Is an Ethical and Socially Responsible Company? Why or Why Not?

...hesitated for over 3 years to recall the drug. There was also an allegation that the company had manipulated and covered-up the results of the medical trials in their favor. An ethical thing to do would be to simultaneously recall the drug as well as inform the public about the dangers of using Vioxx. Instead Merck not only continued to produce and sell the drug, they had also spent hundreds of millions of dollars a year in marketing, partly to counteract any questions raised. According to The Wall Street Journal Merck’s “training document listed potential tough questions about Vioxx and said in capital letters, "DODGE!" , meaning that the company advised marketers to avoid direct answers on the health consequences of the drug. The article even mentions that many doctors and medical professors who raised questions about the safety of Vioxx were being pressured and intimidated by Merck. There is no doubt that all this behavior was deliberate and illegal. A company doing this kind of practices cannot call itself ethical. After the Vioxx scandal, Pfizer - the producer of Celebrex and Bextra (drugs with a very similar chemical composition to Vioxx and its biggest competitors) was in a perfect spot to immediately recall it’s medicine from the market and therefore prove to the public that the company is more ethical and way more trustworthy compared to Merck, therefore gaining competitive advantage. Instead, Pfizer has stubbornly refused to take their drugs off the market. Pfizer......

Words: 517 - Pages: 3