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Name: ANH CHUNG Class: BETH 351 Quarter: SPRING 2012 Student ID: 1610851

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Introduction: As we all know, AIDS/HIV is one of the most dangerous disease for human race. The number of people infected and dead because of AIDS is increasing year by year. Estimated there was 3 million people had died, 5 million people had infected with the disease, but that number was just within the United States. Meanwhile, at the sub-Saharan Africa areas, where 28 million humans being were living with AIDS, make it becomes the areas have largest number of infected people. Hundred thousand of families were destroyed by the epidemic, which left more than 11 million of orphans fend for themselves. Later, it is resulted in increasing in crime and decreasing in the agriculture. Before then, it was almost impossible for human to cure it. However, with the developing in technology and science, a treatment has been found. It is called the cocktail; it is a combination of three AIDS antiretrovirals drugs. The antiretrovirals medicine was researched and developed by big drug companies such as GlaxoSmithKline (GSK) and Bristol-Myers Squibb (BMS). GlaxoSmithKline is a British pharmaceutical company where Bristol-Myers Squibb is an American pharmaceutical company. According to the reported, both of the companys revenue and profit are from 10 digits and up. Yet, a cure for HIV/AIDS is found, but the cost for treatment is expensive. It cost around $20,000 for a year of medicine. It also requires the doctors and nurse carefully monitored the patient, due to the complexity of the treatment. Furthermore, the patient has to take the medicine for the rest of their life. With such high cost, the patient from the sub-Saharan countries would never be able to afford it, because the mean annual income per person in these countries is only around $500. Even though, the cure has found, it was not applicable for people in sub-Saharan countries,

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where millions of people were dying because of AIDS. However, the drug companies did not want to lower the price to meet the needs of these low-income countries. They argued that, the treatment was too complicate for these countries to catch up with, especially with their limited clinical resources. Also, the pharmaceutical companies suggested that these countries should use the money to develop the educational program to prevent the disease, instead of spending on expensive treatment. Furthermore, they said it cost them tons of million to research, develop and bring the medicine to the market. If they have to lower the cost, they would not be able to produce any new medicine. Plus, they afraid that once they lower the price of the drugs, it will be transferred back to the developed country in an illegal way. However, many doctors who volunteer to work in the poor countries and critics were not persuaded with the drugs companies. According to the study, it was showed that the pharmaceutical company inflated the estimated investing cost by double the actual amount. Furthermore, the average return rate on equity of these companies is unusually high, compare to other in Fortune 500 companies. Such as the big drugs companies had total profit about $36 million in 2002, which accounted more than half of the total profit of Fortune 500 companies. Also, it was showed that: the ten big drugs companies made 17 cents for every dollar in revenue. Whereas, other companies in Fortune 500 made 3.1 cents. Overall, the critics have concluded that the big drugs company had the capacity to lower the AIDS medicine price for developed countries in need, regardless the amount of drugs will be smuggled back. In 1997, World Trade Organization (WTO) accepted an agreement, which is called TRIPS Trade-Related aspects of Intellectual Property rights, to strengthen the protection to the patent of major drugs companies. However, developing countries had until 2006 to activate the

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TRIPS agreement. As the epidemic became a globally crisis, United Nation establish a program called Accelerated Access Program, to encourage the major pharmaceutical companies to lower their AIDS drugs for countries in need. Even though both GSK and BSM participate in the program and did lower the cost for their drugs, the discount was not significant. In 2001, a drug company name Cipla from India launched a copy version of antiretroviral cocktails AIDS medicine cost $350 for a year supply. Later on, another three drugs company, also from India introduced the same antiretroviral combination as Cipla, but for much lower price ($295, $209 and $201). Since the TRIPS agreement was not effected India until 2006, and based on Indias patent law. It is allowed to produce the medicine as long as it used a new process. Therefore, GSK and BSM as well as other major drugs companies could not sue these companies. The CEO of GSK branded the Indian companies as pirates and asserted that what they were doing was theft even if they broke no laws (article pg.4). After that, GSK and BSM decided to discount the medicine down to $931; however, it was still nothing compare to the India companies price. In 2002 and 2003, they lower the cost again to $727. Yet, it was still too high for AIDS patients in the sub-Saharan and other developed-countries to purchase. Due to the slow process and high cost in treatment, the numbers of people infected with AIDS keep increasing. It is reported that only 300,000 infected people in developed countries were receiving the treatment. Meanwhile, in the sub-Saharan countries, there were only 50,000 over 4.1 million infected people received the antiretroviral drugs. Would this number of infected people as well of dying people changing if GSK and other major drug companies act differently?

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To determine whether the GSKs effort to protect its intellectual property rights is ethical or not, I will apply the five ethic theory Utilitarianism, Right, Justice, Care and Virtue to examine this case.

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Utilitarianism Theory To analyze the case using Utilitarianism theory; first, I will start with the definition. Utilitarianism is a general term for any view that holds that actions and policies should be evaluated on the basis of the benefits and costs they will impose on society (pg. 78). According to the utilitarianism, it is a theory that says that we should strive to do what is best for everyone in society, and that we do what is best for everyone when we take into account all the benefits and harms that everyone will bear as the result of our action (pg.78). The utilitarian principle has three steps in analyzing an issue. First, identify the probable alternative actions or policies. Second, find the direct and indirect benefits and costs of each option for all affected parties. Last, subtract the costs from the benefits for each action and pick the best net result. The Utilitarian principle is easy to understand in term of theory. However, when apply the theory to a certain issue, it shows up some weakness that makes it hard to define and compare between the costs and benefits in present and future. The theory does not really give us the guide of how to measures and compares the action as utilitarianism requires. It also assumes that all human issues and concerns can be traded into an equivalent measurement. Despite of the fact that ones happiness is hardly measured by the money value, the utilitarianism defends that they have standard measurements that can determine relative value. Some of these criterions are instrumental goods vs. intrinsic goods and needs vs. want. Instrumental goods are known as: things that are considered valuable because they lead to other good things (pg. 85). Whereas intrinsic goods are: things that are desirable independent of any other benefits they may produce (pg. 85). Hence, it is clearly that instrumental goods have a higher value than intrinsic goods.

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Another issue with the utilitarian is it not always reflects the accurate decision in term of justice and fairness. In a utilitarianism point of view, it is ideally to maximize the utility. And in some certain action it is ethical toward the Utilitarianism. But in fact, it violates peoples right. Therefore, the utilitarian principle gives the idea of as long as the majority group has the utility; it is morally right when it violate peoples right. Application: For this case, there are two parties involved for the ethical issue: GSK, the patients from the developing countries. According to the guide line steps of Utilitarianism, we need to define the probable alternative then find the costs and benefits for each alternative, then use the net benefit to decide which alternative to choose. In this case, the alternative is GSK agrees to lower the AIDS antiretrovirals drugs price to meet the demand of the patients from the sub-Saharan areas and other developing nations. From the standpoint of GSK, by deep discounting or giving away the drugs to unwealthy countries could harm GSKs profit. According to the article, GSK claimed that the company had to spend $100 million to $500 million for the cost of doing research, development and bring the drugs to the market (pg.2). Therefore, they said that it would cost them so much that they will have to stop producing new medicine if they have to give away the AIDS antiretroviral drugs to the poor nations. However, by doing so it could actually benefits GSK by having no potential of heavy criticism from the society. Furthermore, GSKs public image would be polished and honorable because of their public responsibility. Obviously, AIDS infected people from the sub-Saharan countries and developing countries would benefit directly when GSK deeply discount the drugs price. Millions of lives

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could be saved. For sub-Saharan countries, most of the families were destroyed by the AIDS epidemic, which leaves millions of orphans have to survive for themselves. Result in increasing in crime, decreasing in agriculture production, which leads to the destruction of these nations. If GSK reduce the drugs price to the affordable amount, 50% of the labor productivity in the subSaharan areas would regain and that would lift up the living standard as well as the annual income per-person more to than $500 a year. The only cost that the patients have to pay is the expense for their drugs. However, once GSK accepted to deep discount or giving away the drugs for these nations, it would not be a major problem for the patients. As the alternative and the analysis of benefits and costs are done, all left is the determining the best net result of the alternative. For the cost that the GSK has stated, critics argued that these numbers are not accurate: the figure of $500 million that drug companies often cited as the cost of developing a new drug was based on a study that inflated its cost estimates by doubling the actual out-of-pocket costs companies invested in a drug to account for so called opportunity costs (what the money would have earned if it had been invested in some other way) (article, pg.3). With the inaccurate cost, GSKs loss would be less than what they claimed to be. Therefore, upon weighing the costs and benefits for both parties, the best result for the society is to lower the cost of AIDS antiretrovirals drugs for the sub-Saharan countries. Yet, in reality, that was not GSK action. Therefore, GSK violated the Utilitarianism theory.

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Right Theory For Right theory, I choose to use Kantian rights to examine the issue. Kantian rights have three elements, which are the maxim, and two categorical imperatives. First we develop the maxim, then using the maxim to apply for the two categorical imperatives. According to Kant, A maxim is the reason a person in a certain situation has for doing what he or she plans to do (pg. 99). It is crucial for people to be honest and consistent with the determination of the maxim. If not, the ethical value would not be valuable. After established the maxim, it will apply to the two categorical imperatives. The first formulation of Kants categorical imperatives includes two criteria in examining moral right or wrong: universalizability and reversibility. For universalizability, it means: The persons reason for acting must be reasons that everyone could act on at least in principle (pg.99). Whereas reversibility is explained as: The persons reason for acting must be reasons that that person would be willing to have all others use, even as a basis of how they treat him or her (pg.99). In other words, universalizability means the reason for acting could apply for everyone. Also, as Kants golden rule: Do unto others as you would have them do unto you, it implies that the reason for acting must be reversible. Moving to the second formulation of Kants categorical imperative, it is known as: Never use people only as a means to your ends, but always treat them as they freely and rationally consent to be treated and help them pursue their freely and rationally chosen ends (pg.100). In doing so, we allow people to develop their own capacity and recognize their dignity as a human being. Also, according to Kant, the two formulations weight the same in term of consideration.

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Application: With the given frame work, I will begin my analysis for the case base on Kantian rights. First of all, I will attempt to develop the maxim of the case. According to GSK, they have four reasons that they did not lower the drugs price. The first one is because GSK argued that its better for the poor countries to use the limited resources on develop the education program to prevent the chance of getting infected with the virus. Secondly, they said that the treatment requires an advance medical technology and special care from the nurses and doctors to prevent the development of drug resistant. Thirdly, GSK argued that the cost to develop the drugs was too much. And if they have to lower the current antiretrovirals drugs price, they wouldnt be able to produce new drugs. Last but not least is because they afraid that once they discount/give the drugs for free to the developing countries. An amount of these drugs will be transferred illegally back to the U.S and developed nations. Hence, my maxim for GSK is: In order to stay in business and protect their intellectual property rights of AIDS antiretrovirals drugs formula, it is acceptable for GSK to withhold the live-saving drugs from the patients in sub-Saharan countries. With the maxim is developed, I will start to apply to the first categorical imperative. The maxim must be universalizable, as a requirement of Kants categorical imperative. The question is: is it acceptable for anyone to withhold the live-saving medicine from one that directly needs it, in order to protect their benefit? Not very likely, according to the critics in this case, they did not agree with GSKs point of view. At least, the critics did not persuaded with the purpose to prevent the development of drugs resistance, and the incapable to produce new drugs of GSK. Research showed that only 6.6% of AIDS patients had developed drugs resistance, which is not a major problem when compares to millions of lives living in the edge because the drugs supply is limited. Therefore, GSK maxim cannot apply to universalize.

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I will now moving to the next part of the first categorical imperative reversibility. Lets imagine that when the child of the executive of GSK is diagnosed positive with the deadly disease and can only be treated from an herbal tree that only grows in a dessert. There are only a few of them are found in the world. And the native in each area refuse to give the tree to the executive to cure his/her child. Because they have to protect their intellectual right and preserve it for a person that affords the price that they set. Unfortunately, the GSK executive could not afford to buy the only medicine that can cure his/her child and have to watch the kid die day by day. Cleary, the GSK executive wouldnt agree with the reason that the native gave and accept that the child cant be cured. However, he/she is now in a defensive side, they dont have enough money and rights to buy the medicine for their child. Getting back to the case, the parents of these children that infected with AIDS must have the same feeling when they cant afford to buy the medicine for their child. It is not acceptable for the GSK executive to watch their kids die, then how it is acceptable for other people. Hence, again the maxim of GSK did not meet the reversibility requirement. The last formulation of Kantian rights is to never treat people as a mean but also as ends (pg. 100). Because of their intellectual property, GSK treats patients from developing countries irrationally and give them no option to freely and rationally chosen to pursue (pg.100). Hence, GSK did not consider these patients are equally with the patients from wealthy countries. While, the second formulation emphasis that everyone is of equal value, no ones freedom to choose can be sacrificed for the sake of the interests of others (pg.101). Therefore, it is obvious that GSK violated the second formulation as well as the first formulation of Right theory.

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Justice Theory: In general, the goal of justice and fairness theory is to protect the least advantageous of a population. John Rawls theory brings up a general method we can fairly evaluate many justice principles. First of all, he asked us to imagine a group of realistic self-interested people that have to choose the principles that they want to live by and in that society, they will be administrated by these principles, without knowing how each of them are going to turn out in that society. Rawls calls that imagined situation the original position (pg. 116). And in that original position, the requirement that denies ones knowledge about their bias tags such as sex, race, religion, social standard and etc. is called the veil of ignorance (pg.116). With such conditions, we will not bias our decision in principles that based on our favor. Therefore, we have to determine principles that are good for all (midterm paper). With that in mind, Rawls first principle is called principle of equal liberty: each person has an equal right to the most extensive basic liberties compatible with similar liberties for all (pg.115). Basically, it set up standard non-compromised rights and these rights are protected from others by nature. The second principle in Rawls theory brings up an assumption that social and economic inequality is unavoidable in society. The first part of the second principle is called difference principles: the claim that a productive society will incorporate inequalities, but takes steps to improve the position of the neediest members of society (pg.115). Last but not least is the principle of fair equality of opportunity. It states that everyone should be given an equal opportunity to qualify for the more privileged positions in societys institutions (pg. 115). For instance, job qualification should only relate to the jobs requirement and not involve any kind of discrimination. Also, everyone should be given an equal access to education and training needed

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for the desired jobs. Therefore, a persons efforts, abilities and contribution would then determine accomplished (pg.115) (midterm paper). Application: With the given justice principles, I will begin to apply these guide lines to the case. As Rawls mentioned, the first principle is the most vital one and it should be consider at first. According to the case, the patients from Sub-Saharan countries could not afford to buy the medicine from GSK as well as other major drug companies. Because the cost for the medicine is too high, while their annual income is significant low compare to the cost ($20,000/year vs. $500/year). Also it stated that GSK did not want to lower the drugs cost to meet the demand in these poor countries. Hence, they only sell their medicine to countries that can afford it. It is clearly to see that GSK favors the wealthy countries, and unjust towards the unwealthy countries. Hence, it goes against the principle of equal liberty, where people must have their own rights and it is treated equally as others. Moving to the second principle, it is important to consider the second part first principle of fair equality of opportunity. Within the case context, the principle of fair equality of opportunity has the similar key problems with the first principle; which is the partial of GSK toward the rich and the poor countries. Patients from poor countries did not have the same treatment as patients in the rich countries. Even though, GSK defends that they have reason for that lower the medicine price. However, the reasons that GSK gave, it did not convince the critics. Furthermore, the critics has shown that based on a study, GSK was fully capable of discounting the drugs price for developing nations. Yet it was not GSK choice. Therefore, the principle of fair equality of opportunity is violated.

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Though the difference principle does not weight as much compare to the other two principles, it is the most visible violation in the case. Rawls also mentions that difference principle obliges us to maximize benefits for the least advantage (pg.115). By not lowering the antiretrovirals drugs price for the patients in sub-Saharan, GSKs action goes against the difference principle. It not because GSK was not capable of discount the drugs price due to the research and develop cost. Based on a study, it is shown that ten big drugs companies had total profit in 2002 of $35.9 billion, equal to more than half of the $69.6 billion in profits netted by all other companies in the Fortune 500 list (Article pg.3). GSK was fully capable of lower the drugs price for developing nations. Yet it was not GSK choice. Therefore, the principle of fair equality of opportunity is violated. Obviously, GSK did not obligate to maximize the benefit for the least advantage, the neediest member in the society. Beside these moral principles, Rawls also talked about the veil of ignorance. Lets put GSK in the situation In summation, the way that GSK treated infected people from sub-Saharan countries in short and other poor countries by large, has proven to be unjust. GSKs action breached all of the principle of Rawlss theory. Hence, GSK had committed an unjust act toward the patients from unwealthy countries.

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Caring Theory: Ethic of care is defined as an ethic that requires caring for the concrete well-being of those particular persons with whom we have valuable close relationships, particularly those dependent on us (pg.121). The ethic of care includes two moral demands: to nurture and develop those close bonds and relationship of dependency. The first moral demand is known as: We each exist of relationships and should preserve and nurture those concrete and valuable relationships we have with specific persons (pg.121). For the second moral demand: We each should exercise special care for those to whom we are concretely related by attending to their particular needs, values, desires, and concrete well-being as seen from their own personal perspective, and by responding positively to these needs, values, desires, and concrete well-being, particularly of those who are vulnerable and dependent on our care (pg.121). With such elements, it is safely to say that the ethic of care goes beyond Kantians right, in which treating people not just a mean but also an end themselves. Also, it is essential to distinguish the three kinds of caring. Those are caring about something, caring after someone, and caring for someone (pg. 122). The form of caring that ethic of care adapted is to caring for someone. By such caring for someone, you empower them to develop and capable of making their own choices and living their own life. Hence, they become dependent and in turn to care for others. Application: With the given analysis structure, I will begin the analyzing the case using Care theory. Even though GSK and the AIDS infected people are totally stranger. But they are all connected together because we are the same species human and live in the same planet. For the first moral
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demands of care theory, GSK did not preserves and nurture the patients from sub-Sahara areas. If GSK really care about the living condition of these patients, they would lower the AIDS antiretrovirals drugs to meet the demand of the unwealthy countries. The second moral demand of ethic of care is yet noticeable. By not giving discount or insufficient discount amount for the antiretrovirals drugs price to the developing countries, is GSK responding positively to the needs, desires, value and concrete well-being, particularly of those who are vulnerable and dependent on their care? And here, those who are vulnerable and dependent on GSKs care are the AIDS infected people from sub-Saharan countries. Hence, it is visible that GSK failed to response to their needs. Furthermore, GSK also failed to fulfill the most vital form of caring, which is caring for someone. With evidence is that in 2004, Swaziland a country in sub-Sahara areas announced that 38.6% of the adult population was now infected with AIDS (article pg. 4). Since GSK did not perform a nurture of the infected people in developing-countries, instead they care about their intellectual property rights. Such caring for objects or ideas is not the kind of caring demanded by an ethics of care (pg.122). Therefore, GSK violated the theory of care.

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Virtue Theory: It is assumed that Pincoffs statement about the virtue theory is the most applicable and relevant to the case. First, we need to understand what is the Virtue Theory is about: Virtue Theory is the theory that the aim of the moral life is to develop those general dispositions called moral virtues, and to exercise and exhibit them in the many situations that human life sets before us (pg.132). According to Pincoffs, moral virtues are dispositions that are generally desirable because they are required by the human situations with which all people everywhere must cope (pg.133). In additional, Pincoffs distinguishes between a moral virtue and a moral vice. It is based on the consistent of generally desirable disposition, where that disposition is desirable for a human being to live. Meanwhile, selfish ness, deceptiveness, cruelty, and unfairness are classified as vices. They are generally undesirable because they are destructive to human relationship (pg.131). Different from other moral principle, an ethic of virtue judges the actions base on the disposition, whereas for an ethic of principle, the action is treated as the primary not the disposition. Hence, it makes an ethic of virtue not listed as the same categorical as the other moral principle. An ethic of virtue, looking not at the actions people are require to perform, but at the character they are required to have (pg. 135). In another words, it means an ethic of virtue is a parallel scoop to look at an issue, besides the moral principles (utilitarianism, right, justice, care). Application: The major agent in this case is GSK. In consideration of whether the agent have a morally virtuous character or not, we will need to find if their disposition lead them to perform in

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a way that improve and enhance the human life as well as relationship around them. Throughout the case, I notice that there are two major actions GSK took. First is they did not lower the AIDS antiretrovirals drugs for the poor countries. Second is when they have to lower the price of the drugs due to the price competition with the Indian drugs companies. Even though, GSK had given reasons why they could not discount the medicine cost for developing countries, thousand doctors who contributed their service in these poor countries and critics strongly disagree with GSK. According to a study, The ten big drug companies made 17 cent for every dollar of revenue, while the median earnings for other Fortune 500 companies was 3.1 cents per dollar of revenue (article, pg. 3). Furthermore, it also reported that GlaxoSmithKline itself had a 2003 profit margin of 21 percent, a return on equity of 122 percent, and a return on assets of 26 percent (article, pg.3). With these given number, critics argued that GSK was more than capable of lower the drugs price, without concern about the small number of these drugs will smuggle back. Given that the sub-Saharan areas where AIDS epidemic is at its worst, millions lives could be saved if GSK had such a disposition. Likewise, GSK and other major drug companies pushed the WTO to establish the TRIP agreement, where itll protect GSK AIDS antiretrovirals drugs patent. However, for some certain developing countries, the agreement wont be activated until 2006. During that time, many Indian drugs companies had successfully copied and produce the AIDS antiretroviral drugs with much lower price, compares to GSK. Since the act of the India companies were backed up by the India laws and the drugs were produce before 2006, GSK cannot sue them. Hence, in order to compete and take back the market, GSK decided to deep discount the drugs price. However, it was not as low as the India drugs companies. But the issue here is, again it presses that GSK could lower their drugs price back then. However, as discussed above, GSKs action is

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a clearly example of unfairness of the disposition. It does not very seem like GSK disposition is to help the patients from developing countries, especially when these patients is on the edge of live and death. In consonance with the virtue theory, GSK is not found to have the character of morally virtuous. Hence, GSK action is considered as unethical.

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Judgment & Conclusion: In my opinion, it is unjust and unfair for GSK to treat the patients from the developing countries in such way. It seems that GSK favors the rich countries and leaves out the less fortune nations. The huge profit that GSK have from selling the drugs sees to outweigh the rights for the patients in sub-Saharan. Even though, these patients are still the same specie human being with the patients in the rich countries, their life was not as appreciate as the others. In addition, I do not agree with GSK philosophy, in which they only support countries that have money and afford to buy the antiretrovirals drugs. In other words, it sounds like we only serve customer who have money. That is just wrong. I agree that in business, a company need to make profit, in order to maintain in the business industry. However, with GSK their profits goal not only to aim for continuing their business, they just want to have as much money as they could, regardless people who in needs. Furthermore, when GSK gave out the reasons that they couldnt lower the drugs price, it was not persuasive and convinces the critics. Because in reality, GSK was fully capable of lower the price or giving the AIDS antiretrovirals drugs away. Therefore, they could help the infected people, but they chose not to. Many lives could be saved; many children would have their parents back if GSK did not choose to act this way. Throughout the analyzing process for this ethical issue, I think Right theory is the most useful one. What I really like about this theory is we have to develop a maxim first then apply it to everyone and yourself in a reversible situation. These elements of Right theory are quite similar to the veil of ignorance in Rawls theory. However, in Kantian right it was developed in a deeper level. Even though it is quite tricky to develop the reversibility part, but overall, the theory did a good job in pointing out the unethical act of GSK. GSK clearly violated the first formulation, which are the universalizability, the reversibility. They also breach the second

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formulation where they treat the patients of developing countries as a mean for their profit. In summations, GSK committed to the unjust act and violated the patients rights.

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