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Burroughs Welcome Company Retrovir: Central Decision Problem

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Though not mentioned in the case, there is an inherent stigma associated with AIDS infected individuals at the time of the case. AIDS is a disease largely attributed to:

*Homosexual intercourse

*IV drug users through sharing of needles

Burroughs Welcome is viewed by the ACLU, patient advocacy groups, and gay rights groups as exploiting AIDS-infected individuals through its pricing of Retrovir.

The patient advocacy groups, and gay rights groups protest against Burroughs Wellcome have stirred the United States Government to threaten action in the form of Revocation of exclusive licensing for Retrovir

The ACLU is considering a lawsuit against Burroughs Wellcome

Two previous price reductions by Burroughs Wellcome have not quelled the public dissent

It is largely an issues management decision for Burroughs Wellcome. Should they continue along and reap the profits of Retrovir, a pioneer drug in the treatment of AIDS or succumb to a vocal minority and again lower its price of the only drug currently on the market that has FDA approval to treat AIDS? Do they consider the bottom line in the short run or attempt to head off issues that in the long run could significantly affect the public’s perception of Burroughs Wellcome?

The case against the price decrease:

*Limited life of Retrovir as only approved drug effective against AIDS since other competing drugs will most likely be approved in the near future

*With all the trouble Burroughs Wellcome has faced with the sale of Retrovir, pharmaceutical companies’ incentives to develop pioneering drugs that save lives may be diminished in the future

*Aside from the free market, who is to determine when a company profits “too much?”

*As public awareness of AIDS decreases, there is the possibility that less people will be infected by HIV

The case for the price decrease:

*The potential revenues lost through prolonged legal battles may offset the cost of a price decrease

*The public perception of Burroughs Wellcome as an insensitive large corporation that profits through the suffering of an already downtrodden population could severely damage the company’s image

*The threat of further governmental action against the corporation in response to public outcry may subside with another price decrease. Governmental regulations could drastically alter the way the company conducts business in the future.

Strategic Marketing Problems: Cases and Comments 10th Edition, Roger A. Kerin and Robert A. Patterson

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