Azt Pricing Decision Essay

In 1986, Burroughs-Wellcome Company introduced the first major breakthrough against acquired tolerant deficiency syndrome (AIDS). It was the life-prolonging medicine AZT. The product has turned out to be truly successful for the company and, largely because of AZTs success,Burroughs-Wellcomes bread have doubled in the three days ending in 1988. The Food and Drug Administration (FDA) plans to expand the authorization for the medicines usage to those who ar infected with the AIDS virus, but not even so showing signs of serious illness. The estimate of the size of this market is hundreds of metres rather than the tens of thousand who are currently sick with AIDS (1988).The controversy over the drug centers on its price. AZT costs about $8,600 for a years supply for each patient (lowered from $10,000 in 1987). Critics in the gay, medical, and legal communities campaign that Burroughs-Wellcome exe excommunicationives are corporate extortionists. Some believe that the company has already do too much m cardinaly at the expense of the sick. The price is so far out of reach of indigent and moderate-income people that the federal administration had to step in with subsidies of one million million millions of dollars.Burroughs-Wellcome defends it pricing practices by stating that its profit margins (in the 50-70 percent range) are in line with those companies introducing new drugs. They contend these high returns are requisite to finance research and recoup the millions of dollars invested in developing the drug. They initially gave the drug free-of-charge to as many as 5,000 AIDS patients and spent $80 million on a new plant.Additional criticism revolves around the authentic development of the drug. The Wall Street Journal stated, But Wellcomes righteous position is undercut by its relatively minor role in the creation of AZT. Researchers at the Michigan Cancer Foundation, from West Germany, and at the field of study Cancer Institute are credited with th e major discoveries that led to AZT.Nevertheless, Wellcome performed toxicology, pharmacology, and sensual studies before AZT was given to the first human volunteer. It also financed the bombastic clinical trial and bankrolled the give-away to the patients in the initial experiment.Wellcome is under pressure to cut its price. The government is attempting to institute a reasonable price clause where an unduly high price could trigger a government order for a company to open its books. Any company found in assault could be sued for breach of contract. Congress is also studying AZT and one Congressman wrote the company contending that the original price rationale (achieving a seemly return on investment during a short product life) no longer exists as the drug has been on the market for three years and the market is growing for the product.