Controversy:
In 2015, Turing Pharmaceuticals, led by CEO Martin Shkreli, raised the price of a 62 year old life saving pill from $13.50 to $750 per pill overnight, over a 5000% increase. The pill acts as therapy for toxoplasmosis, as the victims normally have compromised immune systems due to things like HIV/AIDS. The Daraprim pill previously cost $18, but since the patent expired it was bought by Turing, making them the only company to sell the pill. The pill costs $0.66 in Britain and even less in India. The pill has been around for 60 years, and Shkreli is just now hiking in price, making it very clear that the only reason was the monopoly on the drug. Meaning the CEO was only using this as an opportunity to make significant profits, while putting others lives in danger. There are both legal and ethical dilemmas here. It is interesting to note that the CEO was a former hedge fund manager, which he was a part of another ethical controversy. This is not the first time a drug price has hiked, but it is certainly one of the largest hikes. Especially because the drug can be the difference between life and death there is a serious ethical issue. This brings into question the unregulated drug costs in the United States, which is different than any other advanced country in the world. Another controversy to consider is the employees of the company, and the way they reacted to the hike in prices. It is hard to believe that no one in the company could have done anything to influence the prices. I believe that there was a reasonable social responsibility for the employees to take ethical action.
Stakeholders:
There are several groups of people affected by this price hike, these people are referred to as stakeholders. The first group being the most obvious, is the patients that were directly affected. This drastically increases their cost of living, and will likely lead to death for many of them who cannot afford the drug anymore. Another group is the company itself. They received terrible feedback from the community, completely discrediting the company. Although their profits may have spiked for a short period of time, they dropped in the long run. Along with the patients and company, the U.S. government also has a large partaking in this case. This is mostly because they were expected to outlaw Turing Pharmaceuticals and possibly create something to prevent this from happening in the future. Lastly, the entire biotech industry is now under a microscope because of Turing Pharma. The NASDAQ biotech index has since plummeted. Additionally, the employees of biotech companies are constantly being monitored. Other stakeholders include patent holders, pharmaceutical companies, and the company Martin Shkreli co-founded - Retrophin.
Individualism:
Individualism is one of many ethical theories used to analyze ethics controversies. Individualism is a theory that puts the individual's needs before anyone else. In the business world, this
translates to maximizing profits for the
company and its shareholders within the constraints of the law. The decisions of the company should only concern those who will profit. Anything within the constraints of the law that maximizes profits is ethical. It would be unethical for the company not to maximize profits, because the shareholders invested their money with the purpose of making money. In the case of Turing Pharmaceuticals, Individualists would favor the company. Most individualist would think that the CEO, Martin Shkreli, acted purely for the profit of the company. Shkreli is even quoted saying that, “It’s a great business decision that also benefits all of our stakeholders.” What Skreli did was completely legal and ethical in the eyes of an individualist. Profits skyrocketed at the cost of people’s well-being.
Kantianism:
Kantianism is the second ethical theory I will use to analyze the case of Turing Pharmaceuticals. In agreement to Kantianism, one should act rationally, allow and help people to act rationally, respect people, and be motivated by goodwill. To be motivated by goodwill, one must be rational and rightly motivated. Kantians would react polar opposite to individualists in the case of Turing Pharmaceuticals. That is because Martin Shkreli did not act rationally, act with the right motivations, or respect people. He did not act rationally under Kantianism because rationality is defined by the formula for humanity. The formula for humanity states that people should act with “ends” in mind, and not just “means. Where ends are something valuable for itself, for it’s own sake, and a means is something that is valuable as a way to get something else. Turing had purchased the daraprim patent from another company as a means to achieve greater profit. They were also not acting in goodwill, because they put other people’s well-being in harm's way for excessive profits. Many people were not able to afford this 5000% hike in price; and with no other alternative to the pill they were more susceptible to their disease. Goodwill also includes having the right motivation, which Turing Pharma did not have. They acted strictly in self-interest, and not because it was the right thing to do.
Utilitarianism:
Utilitarianism is another common ethical theory along with Kantianism and Individualism. Utilitarians base their decisions on the fact that one’s happiness is not more valuable than anothers. The value of my happiness is not more or less valuable than the person next to me. The theory states that businesses should aim to maximize the happiness in the long run for all conscious being that are affected by the business action. This implies that any action that hurts more people than it helps, is considered unethical. Utilitarians, like Kantians, despise Turing Pharmaceuticals and Martin Shkreli alike. In the case of the drug price hikes, the only parties increasing happiness were the stockholders and the company. Not to mention that some stockholders and employees may have been unhappy with the controversial actions. The parties that were unhappy were obviously the users of the drug, and their immediate friends and family. Also, the entire biotech industry and Martin Shkreli’s previously owned company had gotten a bad reputation. Additionally, the large majority of social media and newspapers were outraged by the hike in prices. It is clear that the number of people who were unhappy greatly outweigh those who were, making Turing’s actions unethical.
Virtue Theory:
The last common ethical theory along with the previous three is the virtue theory. The virtue theory, based on Aristotle's ethics, is based around several different virtues. Virtues are the characteristics that allow things to function properly, as vices are the opposite of virtues. Examples of virtues would be characteristics such as courage, honesty, fairness, temperance, friendliness and moral leadership. Examples of vices would be injustice, dishonesty, greed, envy, jealousy and arrogance. In the case of Turing Pharmaceuticals they would not be considered as virtuous, but quite the opposite. When they hiked prices, and put other people’s lives in danger, they were first greedy and selfish. They put themselves before anyone else, and set an outrageously high price for a drug with no substitute. Had the price been raised to a reasonable price one could have argued that this was not greedy, nor selfish; but a 5000% increase on the drug leads me and the general public to believe it was unreasonable. Following this, Martin Shkreli was then dishonest by claiming the price raise was to create more funding for other drugs development, which was later found to be false. With the presence of vices and absence of virtues, one can conclude that under the virtue theory, Turing Pharmaceuticals and its representatives were acting unethically.
Ethics Evaluation:
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| Martin Shkreli left |
I believe that Turing Pharmaceuticals was completely wrong and unethical for hiking daraprim prices from $13.50 to $750 per pill. The result affected so many people in the United States that were otherwise innocent. The actions were done entirely out of greed and selfishness which make the action unethical to me. The prices were raised to an unreasonable and unaffordable price where the main consumers of the drug needed it to survive. In it’s own, raising a price by 5000% seems disgusting to me alone from the fact the drug was needed to survive. Martin Shkreli was clearly taking advantage of his temporary monopoly of the market. Martin also followed with arrogance through the media, stating anyone who disagreed with his lack of humanity was a moron. He did not break the law, but by no means does that mean what he did was ethical. Although, Shkreli’s arrogance on media resulted in extensive background checks on him. This ultimately results in his demise as he was charged for serious crimes unrelated to Turing Pharmaceuticals and has since stepped down as CEO. I believe that he indirectly served the consequences that were deserved, and it is unfortunate that the ones who were taken advantage of could not be reimbursed.
References
Long, Heather. "'Hated' CEO Lowering Price of $750 AIDS Drug Daraprim." CNNMoney. Cable News Network, n.d. Web. 30 Jan. 2017.
Lorenzetti, Laura. "This 62-year-old Drug Just Got 5,000% More Expensive." Drug Prices: Turing Pharmaceuticals Daraprim Price Raised over 5,000% | Fortune.com. Fortune, 21 Sept. 2015. Web. 30 Jan. 2017.
Luckerson, Victor. "Everything to Know About the Arrested Drug Price-Hiking CEO." Time. Time, n.d. Web. 30 Jan. 2017.
Pollack, Andrew. "Drug Goes From $13.50 a Tablet to $750, Overnight." N.p., n.d. Web.
Stone, Kathlyn. "Was Turing Pharmaceuticals’ 5000% Price Increase a Tipping Point?" HealthNewsReview.org. N.p., 08 Oct. 2015. Web. 30 Jan. 2017.
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