Burroughs Wellcome and the Pricing of Azt (a)

9 Pages Posted: 21 Oct 2008

See all articles by Jeanne Liedtka

Jeanne Liedtka

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Abstract

This case focuses on the development of AZT, the first drug approved for the treatment of AIDS, and the issues faced by its U.K. producer, Wellcome PLC, as it decides how to set the drug's price. The case includes brief overviews of the disease itself, drugs in development to treat it, the pharmaceutical industry and its practices, and the history of Wellcome PLC and its U.S. subsidiary, Burroughs Wellcome. The A case concludes with analysts' predictions for the soon-to-be-announced price of AZT. See also the B case (UVA-E-0075) and the C case (UVA-E-0076).

Excerpt

UVA-E-0074

BURROUGHS WELLCOME AND THE PRICING OF AZT (A)

Early in 1987, the prescription drug azidothymidine (AZT) was cleared for distribution by the governments of England and France. Approval for commercial distribution in the United States was believed to be imminent. Produced under the brand name “Retrovir” by the Wellcome PLC, a UK-based pharmaceutical firm, AZT would be the first drug approved for the treatment of acquired immune deficiency syndrome (AIDS), a fatal disease believed to afflict millions worldwide. In the United States, where pharmaceutical firms enjoyed almost complete freedom in pricing their products, the announcement of the wholesale price of Retrovir by Burroughs Wellcome, the U.S.-based Wellcome subsidiary, was eagerly awaited by investors, insurers, federal health officials, the press, and AIDS activists.

AIDS

By 1987, AIDS had become a household word in most of the world. The virus that causes AIDS—a retrovirus, HTLV-III/LAV (human T-cell lymphotropic virus type III/lymphadenopathy-associated virus)—was isolated by Luc Montagnier at the Pasteur Institute in Paris in May 1983. The virus works by destroying the body's immune systems, making it vulnerable to a host of diseases. The virus incapacitates a special type of white blood cell—a cell that coordinates the activities of other immune cells. Without this “helper” cell, the body cannot respond effectively to many external challenges and is likely to succumb to a variety of opportunistic infections that would pose little threat to healthy immune systems.

After infection with HTLV-III/LAV, a person enters one or more of the following medical classifications: antibody positive or seropositive, AIDS-related complex (ARC), and/or AIDS. After infection, most people become seropositive within two to three months. A seropositive individual does not show symptoms of ARC or AIDS but can transmit the virus to other people.

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Keywords: business and society, ethical issues, ethics, medical, pricing, diversity case, social responsibility

Suggested Citation

Liedtka, Jeanne, Burroughs Wellcome and the Pricing of Azt (a). Darden Case No. UVA-E-0074, Available at SSRN: https://ssrn.com/abstract=1277025 or http://dx.doi.org/10.2139/ssrn.1277025

Jeanne Liedtka (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-1404 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/liedtka.htm

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