One of the scientists working in the R & D laboratory of a major pharmaceutical company discovers that one of the company’s best selling veterinary drugs, B has the potential to cure a currently incurable liver disease that is prevalent in tribal areas. However, developing a variant of the drug suitable for human beings entailed a lot of research and development having a huge expenditure to the extent of ₹ 50 crores. It was unlikely that the company would recover the costs as the disease was rampant only in poverty-stricken area having very little market otherwise. If you were the CEO, then— (a) identify the various actions that you could take; (b) evaluate the pros and cons of each of your actions.
Subtopic: Case Study · corporate ethics and access to life-saving medicine
How to structure your answer
Written within the word limit
249 words · target 250 words · 20 min
Facts
As CEO, I learn that our veterinary drug B could be developed into a cure for a currently incurable liver disease afflicting poor tribal areas, but the ₹50-crore development cost is unlikely to be recovered from so poor a market.
Stakeholders
- Tribal patients, right to life and health (Article 21).
- Shareholders, to whom I owe a fiduciary duty.
- Employees and the discovering scientist.
- Society and government; the company's own reputation.
Ethical issues
Profit motive versus the value of human life; corporate social responsibility and citizenship; distributive justice for a neglected population; and the fiduciary duty to shareholders.
(a) Available actions and (b) their pros and cons
- Develop the drug fully at company cost. Pros: saves lives, builds goodwill and brand. Cons: large loss, possible breach of fiduciary duty if unilateral.
- Refuse, citing no profit. Pros: protects the balance sheet. Cons: ethically indefensible, reputational and moral cost of letting people die.
- Public-private partnership. Share cost with government (ICMR), WHO, philanthropies (e.g., Gates Foundation) and CSR funds. Pros: viable, spreads risk, serves the neglected disease. Cons: negotiation time; delay for patients.
- Develop with patent + differential (tiered) pricing / voluntary licensing to a generic maker or PSU. Pros: recovers some cost while keeping the drug affordable. Cons: complex, lower margins.
Recommended course
Pursue development through a public-private partnership with tiered pricing, mobilising the company's mandatory CSR (Section 135, Companies Act, 2013), government and philanthropic funds. This reconciles the fiduciary duty with the higher duty to human life, treating patients as ends, not as an unprofitable market to be abandoned.
What an examiner expects to see
- Central conflict: fiduciary duty to shareholders vs the moral duty to save lives (profit vs human life).
- Stakeholders: tribal patients (right to health), shareholders, employees/scientist, society, government.
- Refusing outright is ethically indefensible; developing unilaterally risks breaching fiduciary duty.
- Best-balanced option: public-private partnership sharing cost with government/ICMR, WHO and philanthropies.
- Use tiered/differential pricing and voluntary licensing (or PSU manufacture) to keep the drug affordable.
- Leverage mandatory CSR under Section 135, Companies Act 2013, to fund a neglected-disease cure.
- Kantian lens: treat patients as ends, not merely as an unprofitable market.
Concrete cases, schemes and judgments
- Section 135, Companies Act, 2013, mandatory 2% CSR spend.
- Differential/tiered pricing and voluntary licensing (as used for HIV and hepatitis-C drugs in India).
- Right to health read into Article 21 (Paschim Banga Khet Mazdoor Samity case).
- Product Development Partnerships and Gates Foundation funding for neglected tropical diseases.