Life-saving Drugs for Desperate Patients at a Fair Price By: Ronald F. White and Sean Fraley College of Mount St. Joseph

In recent years there has been a growing concern that pharmaceutical corporations have been profiteering at the expense of the public good. That industry is, after all, one of the most successful in the United States with an average profit margin of 15 percent. It has yielded investors an annual return of 25% over the last decade.' But is this level of corporate "success" consistent with our moral standards of "fairness" when drug prices are set so high that many desperately ill patients are either driven into poverty or denied treatment because they cannot afford to pay for their lifesaving drugs? The prices of three drugs of desperation currently marketed in the United States illustrates this point. In the United States, the high cost of pharmaceutical products is fueled by two primary conditions. First, patients suffering from painful, debilitating and potentially fatal diseases are often willing to pay a high price for pharmaceutical products that promise, even a modicum of relief. Second, high prices are also sustained by imperfect competition in 1 CHART I Drug Company Use Initial Price AZT Burroughs Welcome AIDS $8,300 yr. Clozaril Sandoz Schizophrenia $9,000. yr Zofran Glaxo Anti-nauzea $1,800 6 months used with chemo or $300.per dose pharmaceutical markets buoyed by third party payment systems, FDA regulations, patent laws, and other forms of governmental market manipulation. Together, these two broad factors have made the industry enormously successful, but also a frequent target of social and economic reform. This essay will explain how desperation and imperfect competition in pharmaceutical markets frame public policy debates over the fairness of drug pricing policies. Philosophically, this will entail the analysis of the concepts of "desperation" "exploitation," and "fair price." Economically, this will involve an assessment of the nature of competition in pharmaceutical markets. In the end, we will argue that public policy must take into account both the moral and economic principles that govern relationships between pharmaceutical corporations and their most desperate customers. DESPERATION The health care industry, and particularly the pharmaceutical industry, can be distinguished by the fact that its primary customers are, at least to a certain degree desperate. This factor has had a profound impact on both the moral and economic relationships between consumers and providers. Therefore some account of the normative concept of desperation is essential to both kinds of relationships. The concept of harm is an essential part of the philosophy of desperation. Feinberg has predicated harms to interests. "It is only in virtue of having interests that people can be harmed,