Price Control in The Biotech Industry: a Look at The Hillary Clinton's Plans

Theme of Article

This particular article is about pharmaceutical companies stocks plummeting after democratic presidential candidate, Hillary Clinton tweeted her proposed plan on handling the “price gouging” issue within the biotech industry. Biotech consists of all pharmaceutical companies who make biologic or “specialty drugs” which are designed for patients with serious ailments. Such ailments include immune deficiencies, HIV and other infectious diseases, cholesterol issues, cancer, hepatitis C and other parasitic infections; all of which are extremely expensive to manage and help reduce caused pain. The top 20 drug makers of these particular pharmaceuticals all suffered heavy losses on Monday following Clinton’s tweet revealing her initiative on “price gouging.” Clinton’s outrage in regards to these pharmaceutical companies was sparked from a hefty price hike by Turing Pharmaceuticals. The company took a pill, Daraprim, which helps patients suffering from problematic immune systems, and jacked the price from $13.50 to $750 (The Associated Press, 2015). This caused the medical community to erupt with anger and as pharmaceutical stocks continue to fall, such companies are beginning to scramble as a war is upon them.

Some of these companies include Johnson & Johnson, Pfizer, Merck & Co. and Bristol-Myers Squibb. Each of these pharmaceutical companies and many more will face an onslaught of media and government intervention due to their price gouging over the years which is illegal. According to Schneiderman, New York’s Attorney General, “New York State’s Price Gouging Law (General Business Law § 396-r) prohibits merchants from taking unfair advantage of consumers by selling goods or services for an ‘unconscionably excessive price’ during an ‘abnormal disruption of the market,’ which would include Hurricane Sandy. The price gouging law covers New York State vendors, retailers and suppliers, including but not limited to supermarkets, gas stations, hardware stores, bodegas, delis, and taxi and livery cab drivers.”

Relationship to Business Ethics

With that definition of price gouging, it seems that each of these companies will have million dollar lawsuits against them very shortly as they practiced an unethical method of business. These pharmaceutical giants have a corporate social responsibility to do what is in the best interest for all stakeholders. “Corporate social responsibility is seriously considering the impact your business has on society; where the corporation is responsible for its workers, consumers and society as a whole” (Palazzolo). The companies that have taken place in this price gouging have failed to comply with this corporate social responsibility as they have not considered the impact of its effects on its consumers and the society.

In regards to the four elements of ethics covered in class, these pharmaceutical companies have not really met their social expectations. They have been economic as they are extremely profitable by maximizing sales and minimizing sales, but mainly because of their illegal price gouging activity. The legal element has been ignored since price gouging is illegal and these drug making companies have disobeyed such laws and regulations. As mentioned earlier, the element of ethics itself has been broken due to these companies (and possibly the majority of the industry) have not avoided questionable practices and have not done what is right for its stakeholders. In the philanthropic aspect, although only desired by society, has not met its expectations either even if these companies have given back to their communities. Besides giving back to the community, companies are expected to be good corporate citizens and obviously have not been as they have been ripping off society for who knows how long. These large pharmaceutical companies have denied to follow all four elements of societal expectations and have therefore lost all trust with their consumers and society. It will take a very long time to repair that broken trust even after all potential court hearings and verdicts are finished.

The Theories of Business Ethics Mentioned

Altruism is the concern for welfare of others and less concern for self. This is the exact opposite of what the pharmaceutical giants have done, even though this is what they are supposed to be reflecting in their business operations especially being in the drug industry. The drugs they create are meant to help patients with such ailments not only by use of the drug but through pricing as well. Ripping off consumers has shown how the true selfishness of the pharmaceutical industry. The industry does not seem concerned with their high prices in a market that has been struggling around 10 years or so now, where it is hard to afford health insurance let alone pay for upwards of 30% of $80,000 worth of drugs for a year [for some cases] (The Associated Press, 2015). This is another example of self-interest as well. Self-interest is the norm of thinking and acting that focuses on the advantages accruing to oneself and/or one’s own personal interests (Palazzolo). In this case, the pharmaceutical companies’ self-interest was to maximize profits as much as possible and continue to grow upper management (most likely, assuming) even richer.

Reaction to the Article’s Content

At first I thought that Hillary Clinton was just making accusations via Twitter until I read further into the article and found some ridiculous statistics provided. A markup of 5,000% of a pill that has been around for over 50 years, is absolutely absurd (The Associated Press, 2015). There are people in our society who need certain drugs to survive and be able to function in everyday activities and cannot afford such ridiculous prices for these drugs. It is not like these patients can go elsewhere for treatment, these pharmaceutical giants basically have a monopoly over the industry as they have been clearly determining the high prices of their drugs they produce and consumers cannot do anything about it. Now with this new information surfacing about the drug industry actively engaging in price gouging, they will sued and taken to court for action and large monetary benefits for their consumers. I am already against the industry and drug use with all their potential painful and deathly side effects, but this just takes my position against the pharmaceuticals even further.

How I Would Address the Issue

From this point, I would launch a massive investigation into the entire pharmaceutical industry in regard to the price gouging dating up to 50 years, if not more. The investigation would consist of questioning all upper management and accounting sectors of each company about the price gouging activity. It would also include to review all accounting files, books, etc. and then compare the results to other companies. Then authorities would have to look into the possibility of companies collaborating together to fix the market. Once all necessary information is found, the next step is to file a lawsuit, or in this case maybe multiple lawsuits, against all participating companies in the industry and wage war in court. Most likely it would be a long battle in court over the next few years or so and ultimately taken to the Supreme Court.