Austin Steil

Business Ethics
Case Study Paper
Page 1
Austin Steil
Business Ethics
12/7/2011

Case Study: GlaxoSmithKline, Bristol-Myers Squibb, and AIDS

in Africa
In this case study analysis paper, I shall argue that it is morally acceptable for Indian drug
companies to copy and sell the AIDS drugs developed by GlaxoSmithKline and Bristol-Myers
Squibb. The reasons and evidence that support this moral judgment are as follows:
Utilitarianism states that an action is morally correct if the sum total benefits produced by
the action is greater than the sum total of benefits produced by any other action that could have
been performed in its place. In other words, does the action maximize benefits and minimize
injuries to those affected by it? In this case study its known that AIDS is a major global problem,
and by the Indian drug companies selling the drug developed by GlaxoSmithKline and BristolMyers Squibb would help the 28 million people infected with the disease in sub-Saharan Africa
where the epidemic is at its worst and most of the individuals affected by it cannot afford the
GlaxoSmithKline and Bristol-Myers Squibb made drugs. Since GlaxoSmithKline and BristolMyers Squibb will not provide a reasonably priced drug cocktail and the Indian drug companies
will, the Indian drug companies will be able to save tens of thousands to hundreds of thousands
(possibly even millions) of lives. Preserving life is the ultimate benefit that any action can
produce. By preserving life many benefits subsequently follow. The individuals who will now

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live longer due to the availability of an affordable drug cocktail for their disease will gain the
pleasure of spending more time with their family and friends. They will have the opportunity to
work for a longer time if they are adults and children will live long enough to make it to the
working age. By increasing the lifespan of so many people in sub-Saharan Africa it will provide
Africa with a greater number of workers for a longer period of time which will greatly improve
Africas economy. Along with increased workforce a notable increase in innovation would be
apparent. With all the lives being saved from the disease and subsequently prolonged this allows
individuals more opportunities. Because so many more people are being presented with more
opportunities (opportunities such as education, a stable living environment, etc.) it is unrealistic
to believe that no one would take advantage of these opportunities and work towards making an
idea of theirs a reality, whether it be a cure for a disease or a way to make production of some
good or service more efficient, and help not just Africa but the rest of the world.
The financial loss of the drug companies would not be significant enough to promote
not allowing Indian companies to make and sell the drug. It was reported in 2002 that the ten
largest drug companies had a total profits of 35.9 billion dollars which was over half of the 69.6
billion dollars in net profits of all the other companies that made up the Fortune 500. The ten
large drug companies made 17 cents for every dollar of revenue, compared to the 3.1 cents per
dollar of revenue that the other Fortune 500 companies made on average. In 2003,
GlaxoSmithKline alone had a profit margin of 21 percent, a return on equity of 122 percent, and
a return on assets of 26 percent. Bristol-Myers Squibb had a profit margin of 19 percent, return

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on equity of 36 percent, and return on assets of 14 percent. From this information clearly it is
well within the capacity of the big drug companies to lower prices for AIDS drugs to developing
nations, even if a small portion of these drugs ended up being smuggled back into the United
States. This shows even if it is being sold by another company the big drug company will still
make enough money for its employees. Clearly this option provides the greatest amount of
benefits and has the fewest and least sever negative consequences to those individuals affected
by the action.
According to rights theory an action is morally correct if it respects the natural rights of
human beings. The Indian companies copying and selling AIDS drugs made by
GlaxoSmithKline and Bristol-Myers Squibb respects the right to life. Every person deserves the
right to life and many of the individuals who contracted the disease did so when they were born
and had no control in if they got it or not. Individuals in sub-Sahara Africa have a right to life
and since this is an intrinsic right that each person possess no matter what their socioeconomic
standing in society they have just as much the right to life as anyone. This right needs to be
preserved at all costs because it is the most important right, without life no other rights matter.
This action also respects the right to sufficient health care, these companies are providing
affordable health care to impoverished nations who could not afford the treatment otherwise.
Finally this action respects the right to choose a state of life, to found a family and to enjoy all
conditions necessary for a family life. By providing these drugs to people in poor countries the
Indian drug companies are giving family members the chance to enjoy their family. Children

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arent being forced to work their parents farms because their parents have passed away from a
disease, and adults are able to live long enough to watch their children grow up.
According to justice theory, which states an action is morally correct if it involves
treating similarly individuals who are similar is relevant respects, and dissimilarly individuals
who are dissimilar in relevant respects, in proportion to their dissimilarity, this action is correct.
The Indian drug company is providing the AIDS drugs to people at an affordable price, just as
the GlaxoSmithKline and Bristol-Myers Squibb companies are providing the same drugs to
people at an affordable price. The only difference is the price and that is proportional to the
average income of the people the drug is being sold to. This is relevant to the moral standard
because you cannot expect people who make only 500 dollars a year to spend the same amount
of money on a drug as someone who lives in a developed nation making 50,000 dollars or more a
year. It is reasonable to expect individuals who are going to gain the same benefit from the same
drug to pay the same percentage of their income for the drug. In this case study persons in subSahara Africa making roughly 500 dollars a year spending 200 dollars (or 40 percent of their
yearly income) on a drug to help increase their quality of life and extend their lifespan is
equivalent to someone in a developed nation making 50,000 dollars and spending 15,000 dollars
or more (about 30 percent) that GlaxoSmithKline and Bristol-Myers Squibb charged for the drug
in developed nations.
According to care theory, which states an action is morally correct if it takes into account
the closest relationships of the person doing the action and those people who are vulnerable and
dependent on his/her care, this action is morally correct. The people of the impoverished nations

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who are infected with AIDS are dependent on the drug companies to create a drug that is both
effective and affordable. They are vulnerable to the drug companies prices and if they can afford
them or not. The Indian drug companies are simply taking care of those people who are
depending on them for care. The drug companies GlaxoSmithKline and Bristol-Myers Squibb
are not taking care of those most dependent on them but rather looking towards the
inconvenience that producing the drugs for a lower price would have on their revenue.
Catholic social teaching determines if an action is morally correct if it is consistent with
its 5 core principles. By this standard the action is still morally correct. The Indian drug
companies show respect to the sick individuals of poor nations of sub-Sahara Africa and not just
their own country because they realize people are communal being who have a transcendent end,
and they cannot meet that transcendent end if they die from AIDS or are constantly worried
about spreading the disease. This action shows people have a fundamental dignity and worth as
creatures made in Gods image because they are not limiting the supply of effective drugs to
people based on how much they can pay for them. This respects peoples fundamental dignity
because the Indian drug companies are not looking at the people in sub-Sahara Africa as people
with different social customs or religious beliefs or who have a different nationality, they see all
the people there as humans, and as people who deserve to have a chance at life. It also respects
that people must work to achieve the common good because they are not just giving the medicine
away and allowing people to abuse it they are making them work and pay for it and make them
follow all the directions necessary for its proper use. This action also leads to persons being
treated with justice, which is treating persons who are similar similarly and those who are

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dissimilar dissimilarly. It is seen that the individuals needing the cocktail of drugs are all in the
same situation. Every person with AIDS needs drugs at an affordable price. The Indian drug
companies are providing that for the people in sub-Sahara Africa since GlaxoSmithKline and
Bristol-Myers Squibb will not lower their prices enough to reach this standard.
On the other hand, the reasons that it is not morally acceptable for Indian drug companies
to copy and sell the AIDS drugs developed by GlaxoSmithKline and Bristol-Myers Squibb. The
reason and evidence for that support the opposite of my moral judgment are as follows:
According to utilitarianism, which states that an action is morally correct if the sum total
benefits produced by the action is greater than the sum total of benefits produced by any other
action that could have been performed in its place, this action is not morally correct because it
would not maximize benefits and minimize injury. The big drug companies that created this
drug will have no reason to continue to research into new drugs if they know as soon as they
make a breakthrough it will be used by other companies and sold cheaply and they will not make
a profit, this will put the company out of business and then no more new drugs will be created.
Also if the patients do not take the drugs in the exact method they were intended they could
potentially not work and worse yet the disease could mutate and create a resistance to the drug
and then that will spread and the world will have to try to find a cure for a stronger disease.
According to rights theory where an action is morally correct if it respects the natural
rights of human beings, this action is not morally correct because it does not respect the right of
the individuals right to property and work. The intellectual property was taken from the
GlaxoSmithKline and Bristol-Myers Squibb companies and used without their consent. The

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persons who worked and invested their time and energy into creating those drugs deserve the
right to continue their work on their drugs and research without the fear of losing their jobs after
they create a drug because some other company took the formula and makes and sells it for
cheaper. These people deserve to reap the rewards of their labor. The right to work is also
violated because by allowing smaller Indian drug companies to copy and sell the drugs made by
GlaxoSmithKline and Bristol-Myers Squibb it would drastically cut into their research and
testing fund. They would not make as much money because their drugs would be sold at low
prices by the Indian drug companies and that loss in money would slow down research and
testing opportunities in the company leading to fewer people working. The people who are not
working are having their right to work and earn a fair wage infringed on by the actions of the
Indian drug companies.
According to justice theory, which states an action is morally correct if it involves
treating similarly individuals who are similar is relevant respects, and dissimilarly individuals
who are dissimilar in relevant respects, in proportion to their dissimilarity this action is not
morally correct because it is treating similar individuals dissimilarly. It is not fair for one
company to do all the work creating and producing a drug and have another company that
discovers the formula and methodology to make the same product and sell it without the consent
of the original company, especially if they are selling it for cheaper and not compensating the
original company. These companies are not similar, GlaxoSmithKline and Bristol-Myers Squibb
invested large amounts of money and time into researching and developing these drugs and drug
cocktails and took on a lot of risk compared to the Indian drug companies which did not invest

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the time or money into researching and developing these drugs and drug cocktails so these
companies should not be treated equally by allowing both companies to sell the drugs at the
prices they want to. Only GlaxoSmithKline and Bristol-Myers Squibb should be able to do that
until their patent expires.
In the final analysis, the reasons and evidence which support my moral judgment that it is
morally acceptable for Indian drug companies to copy and sell the AIDS drugs developed by
GlaxoSmithKline and Bristol-Myers Squibb far outweigh the opposite of my moral judgment.
Here is why:
In terms of utilitarianism the number of people positively affected by the drugs is much
larger than the number of people being negatively affected by it. There are more people
suffering from AIDS who could use the drugs than there are people who could use more money
that work for the drug company. The magnitude in which people are positively affected by the
drugs is greater than those who lose money because of their cheaper production. The individuals
who are positively affected by the drugs gain things that money cannot even compare to such as
more time with family and friends, longer lifespan that will eventually lead to more opportunities
for the African people to pull themselves out of poverty whether it be with education and moving
up the corporate ladder or creating something new or fixing an inefficiency. Going along with
the idea of African people pulling themselves out of poverty, if one looks strictly at the monetary
consequences of producing the drugs as an affordable price for the African people it would be
observed that the GlaxoSmithKline and Bristol-Myers Squibb companies would lose some of
their revenue. However, the combined increase in incomes of all the persons who would be

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positively affected by the affordable drugs due to longer working lives would far outweigh the
losses of GlaxoSmithKline and Bristol-Myers Squibb. If one looks at the math of the situation
they will find that if seven million of the 28 million people infected with AIDS in sub-Saharan
Africa each lived only one working year longer which each person averages only 500 dollars a
year those people would gain 3. 5 billion dollars or 10% of leading pharmaceutical companies,
comparable to GlaxoSmithKlines and Bristol-Myers Squibbs, revenue. This is a rough
estimate on the low end because most people on this medication live much longer than just one
year and it is not unrealistic to believe more than one in four people with AIDS would receive the
drug treatments if they were affordable. It is highly unlikely that this one drug will produce
more revenue for GlaxoSmithKline and Bristol-Myers Squibb than the amount of additional
money the combined people who will be receiving the drug in sub-Sahara Africa because of
extended lives and working careers. The natural rights of life and sufficient health care far
outweigh the natural rights of property and work, thus since this action cannot meet all the
natural rights, the most important ones must be given priority. The individuals are being treated
with justice is greater than the injustice perceived by the companies in this case. The right to life
along with the right to sufficient healthcare are more important because they immediately relate
to a persons wellbeing. Additionally these rights lead to the fulfillment of the right to choose a
state of life, to found a family and to enjoy all conditions necessary for family life, compared to
the right of work that does not relate immediately to the wellbeing of a person. The companies
are treated more similar because they are more similar compared to the people being treated
dissimilar because they are vastly different in impoverished nations compared to developed

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nations. It is easy to see care theory and Catholic social teaching only apply positively to my
moral judgment. Care theory takes into account the people most dependent on your action and
the Indian drug companies are doing that compared to GlaxoSmithKline and Bristol-Myers
Squibb which are just taking into consideration the employees and stockholders of their
companies. The Catholic Social Teaching is not followed by the opposition of my moral
standard because it does not respect that humans are communal beings with a transcendent end
or have certain natural rights where my moral standard does. After considering all there facts it
is clear to see my moral judgment that it is morally acceptable for Indian drug companies to copy
and sell the AIDS drugs developed by GlaxoSmithKline and Bristol-Myers Squibb outweighs the
opposite moral judgment that it is not morally acceptable for Indian drug companies to copy and
sell the AIDS drugs developed by GlaxoSmithKline and Bristol-Myers Squibb.