exercising your ethics THE CASE OF ORPHAN DRUGS The Situation You are an executive at a major US pharmaceutical firm. A team of your employees has been conducting research into new drugs for acid reflux, a common ailment. The researchers were surprised to discover that one of the investigational pharma- ceuticals was effective at treating a rare neurological disorder, although it was completely ineffective at treating acid reflux. The research team is elated with their discovery and would like the company to move forward with clinical trials, FDA approval, and commercialization, 68 PART 1 THE CONTEMPORARY BUSINESS WORLD The Dilemma You are the financial manager for the pharmaceutical company and the CEO is asking for your recommendation about mov- ing ahead with clinical trials of this new drug. There are many things to consider. On one hand, advocacy groups have made you aware of the great suffering of children afflicted with this rare neurological disorder. They even organized a rally encour aging your company to move toward making the drug.com mercially available. Doing so could create a lot of great press for the company and could ease the suffering of those afflicted with the disorder However, despite all the arguments for moving ahead with clinical trials, you are concerned that there is little potential for profit with this new drug, Clinical trials are required for FDA approval and are extremely expensive. The costs associated with trials, FDA approval, and production of the drug are much greater than the potential revenues from sales. Although your company's mission is to produce drugs that make people's lives better, you also have a responsibility to stockholders to be as profitable as possible. From the perspective of maximizing prof its, it just doesn't make sense to go ahead with this drug. The CEO is pressing you for a recommendation and you are torn. You must recommend moving ahead with clinical tri- als with the goal of commercialization or refocusing the com- pany's efforts on new drugs that could generate profits. QUESTIONS TO ADDRESS 2-19. Putting yourself in the shoes of the financial manager, which course of action would you recommend? 2-20. Are the short-term consequences of your decision dif- ferent from the long-term consequences? Describe the short and long-term impacts. 2-21. How could the government encourage companies to commercialize orphan" drugs that treator cure rare con ditions but are not economically desirable? If you were a member of Congress, would you support or oppose gov- ernment intervention in this situation? Explain