Burroughs Wellcome and AZT (A)

Burroughs Wellcome Co., developer of AZT, the first drug approved by the U.S. Food and Drug Administration for the treatment of Acquired Immune Deficiency Syndrome (AIDS), finds itself under siege in September 1989 by AIDS activists and various segments of the U.S. government. In spite of repeated demands over the previous two years to lower the price of AZT (trademarked Retrovie), Burroughs Wellcome and its parent company, London-based Wellcome PLC, have refused, claiming that the $6,300 annual (wholesale) cost of the drug per person is justified, based on high research, development, production, and other costs associated with the drug. The firm's opponents accuse it of using an existing chemical compound, ample government research assistance, and a cooperative regulatory system to gain a monopoly on the only approved treatment available for people with AIDS. The case gives students the opportunity to explore the economics and regulation of the pharmaceutical industry, wrestle with the ethics of drug pricing, and analyze the formulation of public relations strategies on the part of both private companies and activist groups in the age of AIDS.