CSR has a significant impact on the pricing decisions in some markets. An extreme case is the pricing of life-saving drugs in developing countries; industry critics have pointed to price as a barrier to treatment and a factor in the deaths of millions of AIDS victims. Examines socially responsible pricing in the form of differential pricing across markets, taking into account the ability to pay and social welfare. An analysis of AIDS drug prices between 1999 and 2003 proposals … Read more »

CSR has a significant impact on the pricing decisions in some markets. An extreme case is the pricing of life-saving drugs in developing countries; industry critics have pointed to price as a barrier to treatment and a factor in the deaths of millions of AIDS victims. Examines socially responsible pricing in the form of differential pricing across markets, taking into account the ability to pay and social welfare. An analysis of AIDS drug prices between 1999 and 2003 shows that suboptimized in fact, the high price of AIDS drugs in developing countries premiums in these markets. In the 1990s, multinationals could make greater contribution in developing countries by lowering prices, but have also earned save thousands of lives. However, the result could be at risk in developed countries, and this, together with other factors, created barriers to socially responsible pricing. Neither multinationals nor the governments of developing countries alone to rule the conditions for socially responsible pricing. Identifies the role of different actors in addressing barriers to socially responsible pricing, including multinationals, governments, NGOs and multilateral institutions like the World Trade Organization and the World Health Organization. Also offers lessons for managers in industries with characteristics similar to the pharmaceutical industry, where socially responsible pricing is also needed, if not required.
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Sushil Vachani,
N. Craig Smith
Source: California Management Review
29 pages.
Release date: 01 November 2004. Prod #: CMR300-PDF-ENG
Socially Responsible Pricing: Lessons from the pricing of AIDS drugs in developing countries HBR case solution

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