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Ethics and Stakeholder Management CASE -2 TURING PHARMACEUTICALS: THE ETHICS OF DRUG PRICING MGMT - 703
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Table of Contents Content Page number 1.0 Introduction/ symptoms 2 2.0 Define the Problem/Opportunity 3 3.0 Problem Analysis 5 4.0 Identification of Alternatives 7 5.0 Evaluation of Alternatives 8 6.0 Recommended Course of Action 9 7.0 Implementation 10 8.0 References 11 9.0 Rubric 13 Introduction 1 | P a g e
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In 2015, Turing Pharmaceuticals AG (Turing), a privately held New York and led by former CEO Martin Shkreli, acquired the ownership of a drug called Daraprim. This was used as a medicine for toxoplasmosis. Toxoplasmosis is a parasitic infection cause by the parasites, wherein patients have less immunity due to HIV/Aids, cancer, or pregnancy. Turing Pharmaceuticals raised the price of a Dara prime so after acquiring of ownership, by 5000% i.e. from $13.50 to $750 a pill. Identification of symptoms Strong attention from media – Turing Caught huge attention from the media due to rise in the price of Daraprim at such a high rate Environment within the company – the employees were unhappy with sudden price increase Poor past record of Martin Shkreli Controlled distribution system of Daraprim- This stopped the entry of competitors and created monopoly for Turing Health care insurance premiums were increased Medical practitioners and various hospitals started prescribing alternative drugs Prescription drug prices are expected to increase every year. Problem Statements Increase in Price of Daraprim – The price of the Daraprim (drug used for toxoplasmosis – a parasite disease) was increased from $13.50 a pill to $750 a pill overnight 2 | P a g e
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Employee’s accountability – Employees were made to give an explanation for this drastic price rise and they had no clue about it. Burden of high cost on the Patients – they had to take more mortgages to buy the medicines at a higher price. No Entry for Second generic competitor – Turing used closed distributing system to maximize their returns on sale of Daraprim and created monopoly for Turing Unfit CEO – Past performances of Shkreli have not been the best ones. He has been arrested and alleged for unethical practices before Turing. Increase in Health Insurance premiums –Increased price resulted in insurance company asking to pay higher premiums. Company’s Reputation – higher management of the company were worried about the reputation of Turing due to a sudden price rise for a reason they had no idea about. Problem Analysis 3 | P a g e
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Problem 1 – Increase in price of Daraprim - Shkreli said that the reason for sudden price change in Daraprim was to support the research and development for improvements that they wanted to make to the drug and this drug was warranted. He added that it was a bicycle made in 1953 being upgraded to an Ashton Martin in 2015. While the employees claimed that they had no idea about any formal studies being done on such research.
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