Pharmaceutical Industry and the Society, Research Paper Example

Pharmaceutical companies manufacture products that may be more appropriately classified as needs rather than wants. Thus, pharmaceutical companies have a social responsibility to ensure that there are ways for less privileged members of the society to have access to expensive and often life-saving medicines irrespective of their income levels. In addition, pharmaceutical companies get access to government funded studies(Woods, 2010) as well as research grants whose funding comes from taxpayers.

The primary stakeholders of a pharmaceutical company in order of importance are shareholders, management and employees, customers, general public, and the government. Shareholders are the most important because they are owners of the company and like any other for-profit organization, they have a right to earn maximum return on their investment. Management and employees come next because without leadership and the employees many of whom are scientistscarrying out research, the organization’s very existence may be threatened. Customers come next because they pay for those drugs and keep the company in operation. Without a source of profit, the pharmaceutical company will have little incentive to stay in operations. The general public comes next because pharmaceutical companies manufacture life-saving medicines and thus, have an ethical responsibility towards less well-off members of the society.The government is the last one because even though it should not interfere in the affairs of private corporations but it has a responsibility towards maximizing the overall welfare of the society and ensuring that private corporations engage in ethical business practices.

Pharmaceutical companies are justified in charging high prices due to their high overhead costs. When Businessweek surveyed 25 companies in 2009 that increased their research budgets despite a tough economic climate, 13 of those were pharmaceutical and biotech companies (Thornton & Jespersen, 2009). In addition, there are significant risks in the pharmaceutical sector and economic principles dictate that higher risks can only be justified by higher returns. Thus, higher expected rate of returns are essential in order to keep pharmaceutical companies engaged in research in order to discover new cures. Moreover, it’s expensive to bring a new drug to the market and the total cost of a single drug sometimes exceeds $1 billion (Harris, 2011). Thus, instead of just looking at high profits of the pharmaceutical companies, one should also look at the risks they take and their contributions towards finding new cure.

References

Harris, G. (2011, January 22). Federal Research Center Will Help Develop Medicines. Retrieved September 30, 2011, from http://www.nytimes.com/2011/01/23/health/policy/23drug.html?pagewanted=all

Thornton, E., & Jespersen, F. (2009, August 27). Drug, Biotech Research Spending Hangs Tough. Retrieved September 30, 2011, from http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090827_362578.htm

Woods, T. (2010, August 3). Drug Studies are Biased if Funded by Pharmaceuticals Companies. Retrieved September 30, 2011, from http://www.emaxhealth.com/1357/drug-studies-are-biased-if-funded-pharmaceuticals-companies