Term 5, 2018 - WACC100 Accounting in Society Case Study: Turing Pharma

This case study analyzes the ethical issues surrounding Turing Pharmaceuticals, focusing on the company's controversial decision to drastically increase the price of Daraprim, a life-saving drug. The assignment begins with an overview of the company's background, including its establishment and the acquisition of Daraprim. The core ethical issue is identified as the significant price hike, which led to immense public and professional scrutiny. The study then examines the stakeholders affected by this decision, including patients, the company itself, the government, the biotech industry, and competitors. The impact of the price increase is explored, highlighting the negative consequences for the company's reputation and long-term success. The assignment concludes with a discussion of the author's views on business ethics, reflecting on how the Turing Pharmaceuticals case study has shaped their understanding of ethical practices in the business world. The analysis emphasizes the importance of considering stakeholder interests and the potential negative impacts of unethical decisions.

Running Head: Accounting In Society 0
Turing Pharmaceuticals
2018
Accounting In Society
Student’s Name

Turing Pharmaceuticals
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Contents
Turing Pharmaceuticals...................................................................................................................0
Company Background.....................................................................................................................1
Ethical Issue.....................................................................................................................................1
Affected Stakeholder.......................................................................................................................2
Impact of the Decision.....................................................................................................................2
Views on Business Ethics................................................................................................................3
References........................................................................................................................................3

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Company Background
The company chosen for this research is Turing Pharmaceuticals. As the name implies, the
chosen company is engaged in the business of pharmacy products. Martin Shkreli has established
the company in February 2015 with headquarters in New York and Switzerland (Brooks and
Dunn, 2017). The company is more focused to develop the products for the treatment of
hypertension. This company has acquired its rights to Daraprim in August 2015 from Impax
Laboratories.
Mainly the company has 2 marketed products. One is daraprim, for the treatment of
toxoplasmosis and the second one is Vecamyl. Vecamyl is effective in the treatment of
hypertension. Daraprim reflects a trademark of the drug named Pyrimethamine. The company
was intended to develop a better product than this drug for the treatment of toxoplasmosis
(Pollak, 2015). The subjective company is also engaged in developing medicines and treatments
in for various kinds of disorders such as toxoplasmosis, glycogen storage disorders, congenital
metabolic disorder, and many others. Now the company is also working in the US with the name
of Vyera Pharmaceuticals in the month of September 2017 (Ramsey, 2018).
Ethical Issue
In the year 2015, an ethical issue arose when the company had increased the market price of
Daraprim pill. As mentioned aforesaid that darapril is a trademark of a lifesaving drug, it was
very unethical decision of the company. The rise in the price of this drug was not a normal hike.
Before rise, it was of $13.50 per pill and after the price rise, it was available for $750 per pill. It
was almost 5000% increase (Lorenzetti, 2015). Earlier, it cost $18 but as soon as the patent of
the same was expired, Turing became the only seller of this drug in the country. It was a situation

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of monopoly and hence the company has shifted its focus towards profit building. The CEO of
the company made a decision to sell the pill on a price more than 5000 times in comparison to
earlier. By doing so, he has put many lives in danger. It was a serious ethical issue as the
subjective pill was as significant as the same could bring a difference between death and life of a
person. There was no reason to make such a huge hike in the prices of the pill but the same
happened as CEO of the company wanted to earn a benefit of its monopoly. The ethical dilemma
in the case was to consider the health of patients over the benefits of the company. There was a
conflict of interest for CEO of the company as he was not sure whether to focus on the profits of
the company or to the health of patients. At last, he took the wrong decision and chose the
unethical path.
Affected Stakeholder
Stakeholders are the people who have a certain interest in the affairs of the company (Keay,
2011). Many of the stakeholders were affected by the unethical steps taken by the CEO of the
company. Firstly, the lead stakeholders were the patients who have been directly affected by the
price rise of the pill. Due to the price hike, they were unable to buy and consume the same. This
led out very negative impacts on the health of them. Further, the same drastically increased their
cost of living. Another shareholder was the company. The faith of people in the company and
goodwill of the same diminished overnight (Business Ethics Cases, 2017). Although, in financial
terms, the company was on the positive side, yet the ethical scandal breached the trust of the
company. The government was a major stakeholder. Being a public authority, it became the
responsibility of the same to control such issues and prevent such companies who breach the
rules and principles of ethics. The whole biotech industry was also a stakeholder that has been

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affected by this activity of Turing and came under the surveillance of government and other
regulatory bodies. The other stakeholders were pharmaceutical companies, patent holders and
competitors.
Impact of the Decision
The decision taken by CEO of the company in respect to raising the price of Daraprim pill was
not ethical at all. He only developed his focus towards the profits of the company whereas being
the part of the management of the company he was required to consider the interest of all
stakeholders. Profits of a company cannot place ahead of the lives of people but Martin Shkreli,
being the CEO of the company did so as he had the powers to take decisions for the business of
the company. This decision of CEO of the company brought many negative impacts on the
business of the company.
The first and major negative impact came to the goodwill of the company. People lost their trust
from the same. The other negative impact was a long-term success of the company. The
company has earned many profits out of price hike of the discussed pill lost many of the
customers. Further, competitors of the business got a new chance to capture the market. In
addition to this, regulators became more aware of the working style and decision of the company
and therefore the surveillance level on the company has increased. In order to comment on the
results of the unethical act, this is to state that the company has received monetary benefits and
no other positive impacts can be seen.
Views on Business Ethics

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In my original views, business ethics is a professional ethics that demands a business to follow
the best practices in the area of ethics. According to the subject of business ethics, a business is
required and advised to keep the interest of all stakeholders in consideration (Business Jargons,
2018). After a review of the case study chosen hereby for this research paper, my opinions
became changed for the term business ethics. Now, my knowledge is wider and I can understand
the business ethics model in a more detailed way. Before study of this case, in my opinion,
business ethics was a subject related to all the stakeholder and now the same became clearer as in
the discussed case, the party affected was the customers and not the employee as always.
However, before reading this case, I was not aware of the negative impacts of an ethical breach
but now the same is clear that an ethical issue can bring many negative impacts to the company
in addition to positive ones.

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References
Brooks, L., J. and Dunn, P. (2017) Business & Professional Ethics for Directors, Executives &
Accountants. USA: Cengage Learning
Business Ethics Cases. (2017) Turing Pharmaceuticals: Prices Rise as Morality Falls (2015)
[online] available from: http://businessethicscases.blogspot.com/2017/04/turing-
pharmaceuticals-prices-rise-as.html [accessed on 22/10/18]
Business Jargons. (2018) Business Ethics. [online] available from:
https://businessjargons.com/business-ethics.html [accessed on 22/10/18]
Keay, A., R.(2011) The Corporate Objective. UK: Edward Elgar Publishing.
Lorenzetti, L. (2015) Doctors respond to Turing drug price hike: ' Its scare mongering'. [online]
available from: http://fortune.com/2015/09/22/doctors-respond-to-turing-drug-price-hike-its-
scare-mongering/ [accessed on 11/05/18]
Pollak, A. (2015) Drug Goes From $13.50 a Tablet to $750, Overnight [online] available from:
https://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-
raises-protests.html [accessed on 22/10/18]
Ramsey, L., (2018) 'Pharma bro' Martin Shkreli has been sentenced to 7 years in prison.
[online] available from: https://www.businessinsider.in/Pharma-bro-Martin-Shkreli-has-been-
sentenced-to-7-years-in-prison/articleshow/63239501.cms [accessed on 22/10/18]