AZT Pricing Decision
In 1986, Burroughs-Wellcome Company introduced the first major breakthrough against acquired immune deficiency syndrome (AIDS). It was the life-prolonging drug AZT. The product has turned out to be very successful for the company and, largely because of AZT’s success,
Burroughs-Wellcome’s profits have doubled in the three years ending in 1988. The Food and Drug Administration (FDA) plans to expand the authorization for the drug’s usage to those who are infected with the AIDS virus, but not yet showing signs of serious illness. The estimate of the size of this market is hundreds of thousands 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 year’s supply for each patient (lowered from $10,000 in 1987). Critics in the gay, medical, and legal communities contend that Burroughs-Wellcome executives are “corporate extortionists.” Some believe that the company has already made too much money at the expense of the sick. The price is so far out of reach of indigent and moderate-income people that the federal government had to step in with subsidies of 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 necessary 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 actual development of the drug. The Wall Street Journal stated, “But Wellcome’s moral 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 National Cancer Institute are...
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