Before a pharmaceutical is granted regulatory permission for sale to the public, a proposed drug must get through detailed

phased trials. The phase trials are very expensive and with a high failure rate. Consequently, the hurdle costs to get a

pharmaceutical to market varies between half a billion to a billion dollars.

Bendova Pharmaceuticals Ltd. has a broad spectrum of pharmaceutical drugs. Furthermore, Bendova has a drug widely

used for allergy attacks (Ouchie), that Bendova has produced for many years. Ouchie is the most popular drug manufac-

tured by Bendova. The patent has long expired (meaning the exclusive right to make, use and sell or the patent monopoly)

but no one could challenge the price Bendova was charging, namely $5 a dose. The drug has a shelf life of 12 months so

users must buy replacements, even if the drug hadn’t been used. Children and young adults are the primary users of the

drug.

Steve Brenda is hired as the CEO of Bendova to address the main issue, namely increasing profits to enable research–-in

other words have sufficient profits to meet hurdle costs. His contract explicitly states that he is obliged to use his best

efforts to increase profits. To motivate CEO Brenda, his contract states that for every percentage gain in sales his salary

will increase by $100,000 and for every $100 million extra in corporate profits, he gets $1 million bonus.

Steve Brenda decides to increase the price of the Ouchie from $5 to $150 per dose. Imperiously he orders that the shelf

life of Ouchie be reduced to 6 months from 12 months. There is NO scientific basis for the latter point. All of this will hit

many users hard, especially working families or single parent families with one of more children in need of the drug Ouchie.

There are no substitutes for Ouchie. Ouchie is not included in the list of drugs that the provincial government will subsidize

or defray the costs of.

There is an outcry from the users, social media and traditional media. People start to keep Ouchie beyond the expiry date

and use it long after Ouchie has (truly) expired (meaning the drug is virtually useless in alleviating symptoms). People die.

Steve Brenda is unfazed. The company comes first and that includes its employees and shareholders. Steve Brenda is also

adamant that his kids will attend Ivy League Schools in the United States, and start their working lives with a healthy trust

fund (large bank account accessible on certain terms). He also wants a chateau in the south of France. And for that all to

happen Steve needs a substantive bonus from Bendova Pharmaceuticals.

 HOW DID STEVE BRENDA ACT IN A ILLEGAL MANNER?