Business
Ethical Issues
Ethical Issues in Marketing
Ethical frameworks within the ambit of marketing would relate to practices that emphasize ‘transparent, trustworthy and responsible’ personal and organizational marketing policies and actions that exhibit ‘integrity and fairness’ to consumers and stakeholders (Parilti, Demïrgüne, & Özsaçmaci, 2014). Marketing ethics enjoins that a marketer should act in a way that he does not harm anyone and follows rules and regulations (Al-Nuemat, 2012). PharmaCARE circumvented the FDA’s scrutiny by creating a subsidiary, CompCARE, as a compounding pharmacy. PharmaCARE was aware of creating a fresh drug, and yet did not take FDA approval. Because PharmaCARE relied on legal loopholes to promote its product, the company stands guilty of not adhering to the spirit of the policies in place. Seen in this context, the marketing of the drug was unethical.
Ethical Issues in Advertising
Advertising stands at the blurry edge of ethics, as it is generally accepted that slight exaggeration of facts would occur while advertising a product (Singal & Kamra, 2012, 692). However, hiding information while advertising a product would count as being unethical. CompCARE did not highlight the fact that consumers were getting heart attacks as a side effect of consuming the drug AD23. This neglect in providing pertinent information during advertising merits being labeled as unethical.
Ethical Issues Related to Intellectual Property
Intellectual property rights are granted to inventors, producers and manufacturers to facilitate them to monopolize sales of products uniquely developed by them for a limited period of time. This arrangement helps in the functioning of the capitalist economy, and ensures capital and resources are ploughed into research and development. In the framework of pharma companies, a major ethical obligation associated with intellectual property rights is the ‘production obligation’, which enjoins the pharma companies to ‘develop and produce beneficial drugs’ (De George, 2005, p.471). PharmaCARE had the Intellectual Property Rights of AD23 as a drug for diabetes. However, when the company reformulated the drug, they created a product that was actually harmful for the patients. Further, PharmaCARE did not approach the authorities for approval of the reformulated drug. Thus, PharmaCARE stands guilty of unethically using its IPR for illegal gains, exposing patients to suffer from the unintended consequences of heart attacks.
Ethical Issues related to Product Safety
The pharmacist code of ethics is to ensure that consumers receive the highest quality drugs with the assured safety and reliability (Noordin, 2012, p. 84). Pharmaceutical companies should not allow a hazard to patients’ health and welfare due to drugs dispensed to them (Noordin, 2012, p. 87). CompCARE had established itself as a compounding pharmacy. Therefore, it was incumbent on CompCARE to ensure that the drugs it dispensed did not cause a hazard to patients. Even after CompCARE realized that AD23 caused heart attacks, it continued to sell the drug. Therefore, CompCARE was guilty of being unethical in the matter of ensuring product safety, jeopardizing the health of consumers.
Direct-to-Consumer Marketing by Drug Companies
‘Direct-to-consumer pharmaceutical advertising’ (DTCPA) refers to modalities adopted by pharma firms to promote medicines straight to patients, without the intermediary chains of physicians. Such promotional activities invariably occur over mass media such as television and print media, and more recently over the Internet. There are different types of drug advertisements: a ‘help seeking’ ad that provides knowledge about a medical condition, thereby prompting patients to refer their condition to their physicians, a ‘reminder ad’(Ventola, 2011) that indicates product name, strength and dosage but does not make any claims, and a ‘product claim ad’(Ventola, 2011) that mentions the product, besides mentioning its efficacy and claims about safety. The USA and New Zealand the sole two countries in the world allowing DTCPA that include product claims. Canada is the only other country allowing DTCPA in a modified form (Ventola, 2011).
Direct-to-consumer marketing of drugs has remained an object of controversy for long. Proponents argue that such advertising apprises and enables patients. They mention that once patients are informed directly about a medicine, they are able to contact their physicians for medical advice. Further, such advertising results in a more robust dialogue between doctors and patients, as they are better informed about the drugs prescribed. Therefore, proponents claim that DTCPA strengthens a patient’s relationships with a doctor. There is also small, yet significant statistical evidence highlighting better patient compliance with taking their medicines, probably because of better awareness. Direct to consumer marketing is also credited with reducing under-diagnosis and under treatment, and with removal of shame associated with some maladies (Ventola, 2011).
However, the arguments against direct-to-consumer marketing far outweigh the purported benefits of the practice. These arguments are discussed below.
Misinformation of Patients. While direct-to-consumer marketing may advise patients, it invariably misinforms patients by omitting important information. This is substantiated by a study that found that while a large majority of advertisements made some genuine claims about the drug advertised, a significant proportion omitted describing the risks, and merely a minority mentioned the prevalence of the complicating conditions (Ventola, 2011). Resultantly, patients are invariably led to understand that the medicine was more beneficial and that the disease was more prevalent than the reality (Ventola, 2011).
Because the drugs advertised contain content greater than eighth grade reading level typically suggested for reportage to the lay community, the content of the advertisements is prone to being misunderstood by most people. Consumers also tend to repose disproportionate trust in the advertisements. Surveys have revealed that most consumers mistakenly suppose that it is the government that approves direct-to-consumer advertisements (Ventola, 2011).
Overemphasis of the Benefits of Drugs. Direct-to-consumer advertising invariably overemphasizes the advantages of drugs. A 2007 study in the Journal of Health Communication determined that the mean DC television commercial devoted more time to benefits than risks (Ventola, 2011). In an analysis of advertisers being admonished by the FDA over the content of their advertisements of drugs over the period ‘1997 to 2006’ (Ventola, 2011), nearly ‘84%’ (Ventola, 2011) of the ads were found to be minimizing the risk factors (Ventola, 2011).
Promotion of New Medicines before Safety Aspects are Fully Recognized. New drugs have been discovered to possess hitherto unknown adverse effects after being introduced into the market. Such instances occur in initial medications that are marketed for combating a condition. While such drugs have FDA approval, the side effects come into prominence after substantial use. In the meantime, such pioneering drugs are promoted heavily in the mass media, resulting in their adoption by patients at a scale far more than would have occurred in a gradual and scientific roll out of the drug. Thus, direct-to-consumer advertising results in new drugs being over-portrayed for magical cure, and results in more patients being afflicted by side effects as they become known (Ventola, 2011).
Manufacture Disease and Encourage Drug Over-Utilization. Direct-to-consumer advertising also leads to the ‘medicalization’ of natural disorders and trivial ailments. For instance, such advertising targeting female menopause defines the condition as one of hormone-deficiency rather than a mere manifestation of midlife crisis. Similarly, drugs targeting erectile dysfunction overhype the prevalence, while only ‘10%’ (Ventola, 2011) of the population has been observed to suffer from total erectile dysfunction (Ventola, 2011).
Results in Inappropriate Prescribing. Patients often get swayed by such advertising and force their physicians to prescribe drugs that the physicians would normally not have done. Research has determined that during ‘40%’ (Ventola, 2011) of physician visits, patients seek medications that they have seen in advertisements, and over half the time, they are successful in getting such drugs prescribed (Ventola, 2011).
Strained Relationship with Healthcare Providers. Drug advertisements have the potential to weaken the patient-physician relationship. Traditionally, patients have reposed considerable faith on their consulting physicians. With new and half-baked knowledge from drug ads and from the Internet, patients invariably end up in adversarial relationships with their physicians. Such an apprehension is supported by a survey that found that ‘39% of physicians’(Ventola, 2011) and ‘30% of patients’(Ventola, 2011) felt that direct-to-consumer advertising interfered with the physician-patient relationship (Ventola, 2011).
Not Seriously Regulated. A major criticism of DTCPA is that it is not seriously regulated by the FDA. As drug companies do not need to obtain clearances prior to dissemination of advertisements, considerable misinformation could potentially occur even before the FDA pulls the offending ad out of the media. In addition, because the FDA does not stipulate a time period before newly approved drugs can be advertised, there is invariably a deluge of advertising of new, unproven drugs (Ventola, 2011).
Increase Costs. Manufacturers often endorse costly, copycat drugs that have no significant advantages over their generic counterparts. For instance, two extensively advertised diabetes drugs, ‘rosiglitazone’(Ventola, 2011) by Avandia, GalaxoSmithKline and ‘pioglitazone’ (Ventola, 2011) by Actos, Takeda have been found to be only as effective as erstwhile drugs, though much more expensive (Ventola, 2011).
The arguments against direct-to-consumer marketing far outweigh the possible benefits. In the interest of patients, it is important that the practice be more heavily moderated, if not altogether banned.
Regulation of Compounding Pharmacies
Under the current regulatory scheme, state boards of pharmacy have the primary responsibility for the day-to-day oversight of state-licensed pharmacies that compound drugs in accordance with section 503A of the FDCA (FDA, n.d.). Every state has laws and regulations covering all aspects of compounding pharmacies, including secure storage, recordkeeping, labeling, safety protocols and storage. There are, in addition, explicit provisions for authority being granted to mix pharmaceutical ingredients into a patient-ready product (NCSL, 2014).
In addition, outsourcing facilities that register with the FDA and comply with the requirements of current good manufacturing practice (CGMP) come under the purview of FDA oversight (FDA, n.d.).
Compounding pharmacies falling under Section 503A of the FDCA are supposed to keep only around one month worth stock of compounded drugs in anticipation of demand emanating from the population residing in a one mile radius from the facility (Rubenfire, 2016). In the current instance, CompCARE was producing the drug for a fake list of patients, thus violating Section 503A of the FDCA. Therefore, CompCARE was liable to be legally prosecuted by the state pharmacy board. The state pharmacy board could have inspected the records of CompCARE and found that the firm was engaged in compounding far more quantities of the medicine than practically feasible to be required within a one mile radius of the facility. It could have crosschecked the list of patients to establish that the list was bogus. Subsequently, the state board could have taken legal action against CompCARE for violating the provisions of Section 502A of the FDCA.
PharmaCARE has found a legal loophole in the pharmaceutical oversight system by establishing CompCARE as a compounding agency to sell the reformulated drug, AD23, on a prescription basis. CompCARE, being a wholly owned subsidiary, acts as a firewall protecting PharmaCARE from legal liability. The extent of protection that PharmaCARE gets from the arrangement depends upon the extent of management interface between PharmaCARE and CompCARE. For instance, if PharmaCARE appoints its own directors to CompCARE, its legal liabilities increase.
Intellectual Property
PharmaCARE would have filed for a patent for the drug AD23 under Article 1, Section 8 of the US Constitution protecting intellectual property. The patent filed by PharmaCARE would prevent other agencies from selling the drug for a specified period of time, which would enable PharmaCARE to recoup its costs incurred in research and development.
The company would have made substantial investments in its facilities for research. John, a researcher at PharmaCARE, would have used PharmaCARE’s facilities to do the necessary research to discover AD23. To protect itself from claims that John could make to argue that he was the inventor of AD23, PharmaCARE would have put in suitable clauses in the employment agreements with John, specifying that any process or compound discovered while at the employment with PharmaCARE would remain the intellectual property of the firm, and not of the individual.
Notwithstanding, John would undoubtedly have contributed enormously towards the development of AD23. To compensate John, PharmaCARE could adopt a combination of three approaches: -
Give John a substantial bonus for the discovery of AD23.
Give John a small percentage of all profits that accrue from the sale of AD23.
Give John a stake in the company, by way of common stock.
Intellectual Property Theft
In a recent incident, two scientists of GlaxoSmithKline (GSK) were indicted for a conspiracy to steal cancer research secrets from GlaxoSmithKline and market them to Chinese companies. According to charges, Yu Xue, a senior level manager at GSK’s lab in Upper Merion clandestinely downloaded confidential research data and trade secrets concerning the development of cancer-fighting antibodies, and emailed the information from her work account to her personal email, before forwarding the information to others. Subsequently, she created a corporation, Renopharma, to market the trade secrets to Chinese companies (Mondics & Wood, 2016).
While GSK spokesmen say that no substantial damage accrued from the instance of espionage, it is possible that leakage of the trade secrets would have seriously undermined the profitability of GSK. Because cancer research is extremely expensive and any discovery is as good as a final product, GSK potentially stood to lose billions of dollars if rival companies had been able to leverage the leaked secrets into a rival drug, making any of GSK’s patents meaningless.
Potential Litigants of AD23
The side effects of AD23 have caused a large number of people, including John’s wife, to suffer from heart attacks. Even when reports of the side effects became public, CompCARE continued to sell the reformulated drug. While technically, CompCARE is a subsidiary of PharmaCARE and thus PharmaCARE has legal cover, it remains uncontested that PharmaCARE also benefits from the reformulated drug by way of increased stock prices. This indicates a financial benefit for the parent company too.
Knowing that PharmaCARE has taken recourse to a legal loophole to escape liability, and that CompCARE did nothing to educate the public about the side effects is adequate for a mass tort case against PharmaCARE and its subsidiary. The litigants would be those who consumed AD23. If doctors were able to prove that AD23 caused the heart attacks (Lykos, Gourley & Davies, 2006), there would be enough ground for punitive damages to be levied onto PharmaCARE and CompCARE.
John as Whistleblower
John can claim that when he worked to reformulate the drug to enhance its efficacy to slow down Alzheimer’s disease as a member of the regular medical innovation and experimentation process that pharma companies are engaged in. John can argue that he was not party to the decision to push the reformulated drug through CompCARE as a cure for Alzheimer’s disease, without taking FDA approval for the reformulated drug. John can, therefore, claim that PharmaCARE was defrauding the government and causing damage to patients, and thereby act as a whistleblower and file a claim under the ‘False Claims Act’ (National Whistleblower Center, n.d.), with the premise that PharmaCARE was involved in off label marketing of AD23 through its subsidiary, CompCARE.
Under Section 3730(h) of the False Claims Act, John would be protected against any retaliatory action taken by PharmaCARE, whether it be in the form of discharge, harassment or discrimination in any form. Protection would be in the form of reinstatement, double back pay and compensation for any special damages including litigation costs (National Whistleblower Center, n.d.).
References
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Mondics, C., & Wood, S. (2016). 2 GSK scientists indicted in secrets case involving China. Retrieved June 1, 2016, from http://articles.philly.com/2016-01-22/business/69964307_1_gsk-secrets-indictment
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National Whistleblower Center. (n.d.). False Claims Act/ Qui Tam FAQ. Retrieved June 1, 2016, from http://www.whistleblowers.org/resources/faq-page/false-claims-actqui-tam-faq
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