In the past, drug makers have been reluctant to invest in cures for diseases in developing countries

Question:

In the past, drug makers have been reluctant to invest in cures for diseases in developing countries such as Africa and South America. Most people in these countries cannot afford to pay for treatments, and managers have typically invested in other long-term projects having higher returns.

However, a few pharmaceutical companies have chosen to invest in neglected diseases, including tuberculosis, malaria and other tropical diseases. As an example, GlaxoSmithKline formed a joint venture with the World Health Organization to develop a malaria drug that costs less than 50 cents for a three-day treatment.

This type of investment has several goals. From a reputation perspective, managers accused of keeping drug prices artificially high may believe that providing low-cost cures will alleviate pressure from regulators and consumers to lower prices for drugs sold in the United States and other developed countries. Furthermore, people from some less-developed countries will eventually have the ability to pay for cures. Finally, ‘it is the right thing to do,’ according to journalist Robert Langreth. Novartis chairman Daniel Vasella says, ‘If you only look at maximizing short-term profit, you may not survive in the long term’.

Required

Using figure 21.7, address the following question for this ethical dilemma to improve your skills in making ethical decisions. Think about your answers to these questions and discuss them with others: Does an ethical problem arise if pharmaceutical companies charge lower prices for drugs in developing countries than in developed countries? Why?

Figure 21.7