The BetaseronDecision (A)

The United States Food and Drug Administration's (FDA) approval of interferon beta-1b (brand name Betaseron ) made it the first multiple sclerosis (MS) treatment to get FDA approval in 25 years. Betaseron was developed by Berlex Laboratories, a U.S. unit of Schering AG, the German pharmaceutical company. Berlex handled the clinical development, trials, and marketing of the drug, while Chiron Corporation, a biotechnology firm based in California, manufactured it. The groundbreaking approval of Betaseron represented not only a great opportunity for Berlex but a dilemma. Supplies were insufficient to meet initial demand, and shortages were forecast for three years. With insufficient supplies and staggering development costs, how would Berlex allocate and price the drug?

The Challenge of Multiple Sclerosis

MS is a disease of the central nervous system that interferes with the brain's ability to control functions such as seeing, walking, and talking. The nerve fibers in the brain and spinal cord are surrounded by myelin, a fatty substance that protects the nerve fibers in the same way that insulation protects electrical wires. When the myelin insulation becomes damaged, the ability of the central nervous system to transmit nerve impulses to and from the brain becomes impaired. With MS, there are sclerosed (i.e., scarred or hardened) areas in multiple parts of the brain and spinal cord when the immune system mistakenly attacks the myelin sheath.

The Impact of MS

The symptoms of MS depend to some extent on the location and size of the sclerosis. Symptoms may include numbness, slurred speech, blurred vision, poor coordination, muscle weakness, bladder dysfunction, extreme fatigue, and paralysis. There is no way to know how the disease will progress for any individual, because the nature of the disease can change. Some people will have a relatively benign course of MS with only one or two mild attacks, nearly complete remission, and no permanent disability. Others will have a chronic progressive course resulting in severe disability. A third group displays the most typical pattern, which is periods of exacerbations, when the disease is active, and periods of remission, when the symptoms recede, yet generally leave some damage. People with MS live with an exceptionally high degree of uncertainty because their disease can change from one day to the next. Dramatic downturns as well as dramatic recoveries are not uncommon.

The Promise of Betaseron

Interferon beta is a naturally occurring protein that regulates the body's immune system. Betaseron is composed of interferon beta-1b that has been genetically engineered and laboratory manufactured as a recombinant product. Although other interferons (i.e., alpha and gamma) had been tested, only beta interferon had been shown, through large-scale trials, to affect MS. Because it is an immunoregulatory agent, Betaseron was believed to combat the immune problems that make MS worse. However, the exact way in which it works was yet to be determined.

Research

In clinical studies, Betaseron was shown to reduce the frequency and severity of exacerbations in ambulatory MS patients with a relapsing-remitting form of the disease. It did not reverse damage nor did it completely prevent exacerbations. However, Betaseron could dramatically improve the quality of life for the person with MS. For example, people taking Betaseron were shown to have fewer and shorter hospitalizations. Betaseron represented the first and only drug to have an effect on the frequency of exacerbations.

Administration

Betaseron is administered subcutaneously (under the skin) every other day by self-injection. To derive the most benefits from the therapy, it was important that the MS patient maintain a regular schedule of the injections. Some flu-like side-effects, as well as swelling and irritation around the injection, had been noted. However, these side-effects tended to decrease with time on treatment. In addition, one person who received Betaseron committed suicide, while three others attempted it. Because MS often leads to depression, there was no way to know whether the administration of Betaseron was a factor. Last, Betaseron was not recommended for use during pregnancy.

The Betaseron Dilemma

FDA approval for Betaseron allowed physicians to prescribe the drug to MS patients who were ambulatory and had a relapsing-remitting course of MS. An estimated one-third of the 300,000 people with MS in the United States fell into that category, resulting in a potential client base of 100,000. The expedited FDA approval process for Betaseron took only 1 year instead of the customary. As a result, Berlex was unprepared to manufacture and distribute the treatment. Chiron Corporation had been making the drug in small quantities for experimental use and did not have the manufacturing facilities to handle the expected explosion in demand. Chiron estimated that it would have enough of the drug for about 12,000-20,000 people by the end of the year. By the end of the second year, Chiron expected to be able to provide the drug to 40,000 patients. Depending on demand, it might take about three years to provide the drug to all patients who requested it. Chiron's expanded manufacturing represented the only option for Berlex because the process required for another company to get FDA approval to manufacture the drug would take even longer.

Pricing

In addition to availability, price was a concern because successes must fund the failures that precede them. Betaseron represented years of expensive, risky research by highly trained scientists in modern research facilities. Furthermore, genetically engineered drugs were extremely expensive to manufacture. In the case of Betaseron, a human interferon gene is inserted into bacteria, resulting in a genetically engineered molecule. The stringent quality controls on the procedure take time and are expensive. As a result, the price of Betaseron was expected to be about $10,000 per year for each patient. Betaseron brought great hope to people with MS and a great quandary to Berlex. How should Berlex handle the supply limitations, the distribution, and the pricing of this drug?

Question 1: Stakeholder Identification.Who are the stakeholders in this case, and what are their stakes? Identify 10 of the most relevant stakeholders in the stakeholder?

Question 2: Stakeholder Relationships

A. Please identify one pair of specific stakeholders with opposing interests/stakes and describe briefly how they would have conflict if your recommendations were implemented. (___________________________ vs. _______________________________) Explain the nature of the conflict (100 words or fewer):

B. Please identify one pair of specific stakeholders with shared interests/stakes and describe briefly how they might benefit from coordinating efforts if your recommendations were implemented. PAIR: (___________________________ and _______________________________) Explain the mutual benefit

Question 3: Reflect on the meaning of "moral imagination" as you begin this process. What will it take to be creative in your solution, incorporate the needs of many stakeholders AND incorporate course frameworks clearly and well? Take on the voice of the LEADER of the business in question and articulate, in the terms of this course, what is your recommendation for the company's short- and long-term actions to address the issues in this case? Start by concisely answering these questions (max of 100 wrds for each dimension of CSR):

a. What are the economic responsibilities you have?

b. What are the legal responsibilities you have?

c. What are the specific ethical responsibilities you have?

d. What are the discretionary/philanthropic responsibilities you have?