Glaxosmithklines Retaliation Against Cross-Border Sales of Prescription Drugs

According to (Johnson et al, 2008:56) the pharmaceutical industry can be traced to the late nineteenth century. It develops, produces drugs for use as medications.

Corporations and business organizations have to face lawsuits due to breach of different laws i.e., consumers laws, copyright laws, compensation laws, security laws, antitrust, employment or environmental laws. For violating any of these laws companies have to pay fines and even go bankrupt. Current paper is a report on one such lawsuit that caused GlaxoSmithKline loss of billions of dollars. The author selected "Avandia Lawsuit" to focus in this report. Avandia is a drug used to treat type 2 diabetes and was prepared by GlaxoSmithKline which was approved by U.S Government in 1998 and became best selling drug. Company generated profit through its sale but soon complains arose due to increasing incidences of heart disease and stroke as side effect of the drug.

The prices in which the medication are set are necessary for research and development. Roy P. Vagelos, discusses about the problems regarding restricting pharmaceutical companies in the written source Are Prescription Drug Prices High?. For instance, it can reduce the profits to support research investments, since it costs at least $231 millions dollars in order to bring one new prescription medicine to the market and in a pharmaceutical company like Merck, there are at least 4500 researchers who work to develop products (Vagelos 1). In other words, it costs millions for researches to develop at least one new drug to present to the market and it also costs to pay researchers to help develop these new drugs. In addition, the article The Real Cost of “High Priced” Drugs,

An issue that has both legal and ethical dimensions is the act of raising the price of the patented B-52 pill 8000%. The price gouging is illegal since it goes against the contract that CDU Inc. has with the Pharmaceutical Association of Canada, therefore a breach of contract exists. The ethical aspect comes in because Brenda knew that people who need B-52 have a lack of choice in alternatives, so they will pay the 8000% increase. The price increase ties in both issues as it is illegal to increase the price by 8000% because of the contract with the Association and also unethical because it is manipulative to raise prices knowing there are no effective substitutes.

* Monopoly Power. Pharmacists often face questions from patients regarding how prices of medications are determined and why, in some cases, they are so expensive. Unlike markets for other goods, in the pharmaceutical marketplace there are a limited number of manufacturers and the medication being sold are not identical, but rather are differentiated. There is a guarantee via patent protection that no potential competitor may manufacture an identical drug and sell it at a lower price in the short run. As a result, the branded manufacturer is able to make profits. Since there is only one seller, the monopolist determines the price of the medicine. This establishes the monopolist as a price setter, permitting prices above the perfectly competitive price by controlling the quantity of medication produced in the marketplace. This is in stark contrast to being a price taker, and accepting a price established within a perfectly competitive marketplace. The end result is that prices are higher under these market conditions than they would be in a purely competitive marketplace.

The high cost of Prescription Drugs is one of the significant issues in the USA for a long time and is rising much faster than the consumer inflation rate. The consumers pay two to three times more than the average cost of medications in the United States. A study by Kessekheim, Avron, and Sarpatwari (2016) shows that the major factors that affect the prices of the medications include are the manufacturer's exclusivity during the time of patents and rights to set the price of the medications. Apart from this corporate greed delayed the availability of generic drugs after the exclusivity period of the medications. Governments in most of the developed countries like Canada, UK, and Germany negotiates the price of the medications with the pharmaceuticals

The exploitation of impoverished peoples is certainly not new, but the fact that the practice continues in the 21st century is caused for great concern among policymakers and nongovernmental organizations alike. Exploitation at any level is unacceptable, of course, but when it involves a major multinational corporation and illegal business practices, it becomes a crime that requires effective disposition. This was the case with the company, PharmaCARE and its subsidiary, CompCARE, which used its position and power in ways that ultimately killed dozens of patients and harmed numerous employees. To determine the facts in this case, this paper provides a review of the relevant peer-reviewed and scholarly literature concerning exploitive business practices and whistle-blowing, followed by a summary of the research and important findings concerning these issues in the conclusion.

To stronghold its strategic position in global Opiates market, it acquired GSK Australia's opiates business which enabled it to:

What is considered an ethical manner? Let’s take for instance the food industry. The producer sales its product to grocery stores and restaurants and make a profit. The Grocery store sales to the consumer and mark the prices up as well for their profit. Technically, we have no idea of how much we need to be paying for a product. How much should food cost? There are people and children going hungry in the states because they do not have enough food on the table.

The corporate social responsibility states that "corporations can and should act ethically and be accountable to society for their actions." Pharmaceutical companies work to save lives and make a profit. Individuals should make sure that

Shkreli's actions under the theory of ethical relativism could be seen as unethical in that, in this situation, he abused his power to set the price for his medicine for his own gain, as no matter what his situation was he was letting people die to make larger profits while they suffered. Gibbs may also be seen as unethical under ethical relativism as he had a responsibility to follow the law and he failed to do so and that he still took someone's life in the end. Shkreli's actions under situational ethics could be seen as unethical in that in his position he had a moral responsibility to not abuse his ability to control the price of his medicine for extreme profits, and he failed to do so. Gibbs could be found have acted unethically in that the factors leading him to murder the drug dealer still did not justify the murder and breaking the law. Shkreli's actions under social contract theory could be seen as unethical in that he broke an implied contract of not overpricing medicine that helps people survive and thereby profiting from suffering.The actions of Gibbs would also likely be found unethical under social contract theory in that he had a duty not to violate his contract to follow the law and not murder despite the drug dealer already breaking his own contract.Shkreli's actions are also unethical under utilitarianism in that his actions caused more harm to the diseased masses than it did help his smaller group of shareholders and himself. Gibbs, however, could be seen as ethical in his situation under utilitarianism in that the drug dealer has already hurt many and potentially go on to hurt many more, thus making stopping the drug dealer there better for more of society in the long run at the expense of those affected by the death of the drug

GSK is the 2nd largest pharmaceutical firm in the world, and the largest in the UK by sales and profits, it is responsible for 7% of the worlds pharmaceutical market, and has its stocks listed both in UK and US (O 'Rourke, 2002). The origin of the so called blockbuster model, is partly linked with Glaxo (as it was previously known). In the early 80’s, then Glaxo brought to light their first blockbuster drug, Zantac, which was an anti-ulcer drug, which was very similar to the a pre existing drug Tagamet (first ever blockbuster) sold by Smith Kline & French, their completion at the time (MONTALBAN and SAKINÇ, 2011). The introduction of this drug, brought about an increasing sales force in the US, the company soon became dependent on the drug, because it represented a large part of their profit. In 2002, 8 blockbusters of GSK contributed to $14.240 million sales revenue, taking up 53% of its total ethical sales (Froud et al 2006). However, due to the nature of the pharmaceutical industry, the patent began to expire, in other to avoid the patent cliff, Glaxo merged with Wellcome in 1995, which ensured a growing number of sales force, and with Beecham in 2000 (Froud et al., 2006) this merger, boosted the confidence of investors, by growing the business inorganically. For Big Pharma, this block buster model is very profitable, because with the high cost of R&D, the drugs are able to generate ample profit, to cover the sunk costs

GlaxoSmithKline is a British pharmaceutical firm established when Glaxo Wellcome and SmithKilne Beechan merged in 2000. It is considered as fourth largest pharmaceutical industry in the world. In 2004 an internet site was launched which contains clinical trial data that anyone can access. In 2009 GSK acquired Stiefel. It has stated in its minion to help the people as much as it can to make them feel better and make them live long.

The unique feature of pharmaceutical industry is that the end user of the product is different from the influencer (read doctor). The consumer has no choice but to buy what doctor says. However, when we look at the buyer 's power, we look at the influence they have on the prices of the product.

| | | |- According to the case, in order to encourage competitive price setting, there are