Introduction
The research seeks to identify ethical issues relating to advertising, marketing, intellectual property, and regulation of product safety. The paper takes a position against drug companies using Direct-to-Consumer (DTC) marketing. The paper also determines who currently regulates the compounding pharmacies regulatory scheme and what the Food and Drug Administration (FDA) should have done and if they should be given more say and power over compounding pharmacies. Again, the paper determines whether the use of Colberian intellectual property by PharmaCARE’s would be ethical in accordance with Deontology or not, virtue ethics and utilitarianism. The paper analyzes how PharmaCARE protects itself using the U.S. law and how it co-opts intellectual property in Colberia. The paper offers suggestion on how PharmaCARE can compensate the citizens of Colberia for damaging their environment. The research compares PharmaCARE’s atrocities with a known company in the world, whose actions led to ethical lapses and financial loss. In addition, the paper examines the advantages PharmaCARE and WellCo shareholders would have if they sued the companies. Towards the end, the paper determines if PharmaCARE lives up to its brand. Eventually, I offer recommendations to PharmaCARE that would make them more ethical.
Ethical Issues
Business ethics exists to examine ethical and moral problems arising within a business environment. The quantity and range of ethical issues in business indicates the degree to which a business is viewed to be at odds with social and non-economic values. Presently, major companies put more emphasis on activities that promote business ethics, such as being more socially responsible.
False advertising is an ethical issue that affects the marketing of a product. False advertising misleads the consumer. Advertisement is done to make and retain customers, through selling the company brand to the consumer. Advertising wins customer trust and loyalty and influences their decision on whether to buy a certain product or not. Therefore, false advertising makes customers buy wrong or harmful products. PharmaCARE had ethical issues with the advertising, marketing and regulation of product safety. “PharmaCARE presents itself to the world as a caring company that makes products that save the lives of millions of people” (Gagnon, 2013). PharmaCARE launched a green initiative that pledged its commitment to taking care of the environment. The initiative was highly advertised and marketed and had the slogan We CARE about YOUR world. The company promised to make the world greener through packaging and recycling changes that would not harm the environment. However, the company does not care about the world or people because of its manufacturing factory in Colberia. PharmaCARE workers in Colberia work for a dollar per day and they work in deplorable conditions. The workers are required to carry heavy baskets and walk long distances. Their standard of living is low as they live in huts with no water or electricity. The existence of PharmaCARE in Colberia has endangered native species and led to the destruction of habitat.
Intellectual property refers to the product of a person’s mind. The products include paintings, songs, inventions and software. If a product is bound by intellectual property laws and another person or company tries to copy or use the same idea to have a competitive advantage, it becomes an ethical dilemma. PharmaCARE ethical issue correlated to intellectual property points to the indigenous people. PharmaCARE used the ethno biological knowledge without giving credit to them. It is very difficult for indigenous people to obtain patents and legal right of ownership to their knowledge. PharmaCARE was able to obtain a patent on the ethno biological knowledge, therefore, making the idea their own.
The ethical issue correlated to product safety is the fact that PharmaCARE established a subsidiary called CompCARE, which operated as a compounding pharmacy that sold new formulations to people on a prescription basis. PharmaCARE established CompCARE quickly to bypass the Food and Drug Administration. Compounding pharmacies are barred from directly selling drugs in bulk to clinics and hospitals. CompCARE sold AD23 drugs directly to customers that caused heart attacks. CompCARE did not respond or react to the incidences of heart attacks. Failure to record and report the cases to consumers deprives them of crucial information that would help them make informed decisions. CompCARE actions are against the Direct-to-Consumer advertising that requires a pharmaceutical company to outline the benefits and risks of a given product.
Direct-to-Consumer Marketing by Drug Companies
Direct-to-Consumer marketing refers to selling a product directly from the company to the seller without inclusion of middlemen and intermediaries such as commercials, radio and public display. Most players in the pharmaceutical industry use this method regardless of criticism. People against the Direct-to-Consumer marketing violate the freedom of speech. The Central Hudson test offers some balance where it tries weigh if a banning a misleading advertisement affects the masses.
Direct-to-Consumer marketing has both advantages and disadvantages. Direct-to-Consumer marketing gives crucial information to the customer as it educates, encourages and informs patients about a given drug and how the customer can get access to a clinician. It builds a better relationship between the patient and health providers. It also reduces under treatment and diagnosis of a health condition. Economically, it enhances competition as it facilitates competition thus lowering the prices of drugs.
The disadvantages are numerous and evident in PharmaCARE’s actions. They misled customers as they overstated the benefits of the drug; also, there are case of inventing an outbreak to ensure the maximum sale of drugs, lack of through regulations, marketing a new drug before it is fully tested, increased cost, incorrect prescribing and poor healthcare provider and patient relationship. PharmaCARE sold reformulated AD23 to the consumers, and some patients suffered heart attacks. Moreover, lack of thorough regulation made PharmaCARE persuade doctors to create fake patient names and lie about AD23 thus helping the company avoid the Food and Drug Administration and enabling them establish CompCARE. Direct-to-Consumer marketing is advantageous but due to their numerous unethical practices I have to say that I am against Direct-to-Consumer marketing.
Compounding Pharmacies
Compounding refers to the altering of ingredients of a drug by a licensed physician or pharmacist to produce a drug for a specific individual. The Food and Drugs Administration governs and regulates pharmaceutical production. States, nevertheless, regulate large drugs stores and pharmacies. All states have specific laws relating to the regulation of drugs.
The difference between manufacturing and compounding has been an issue of concern among and whether or not a drug formed through compounding meets the state standards or if it best fits in the manufacturing category. Inspection of health facilities is another point of concern as it is not obvious who is in charge of the inspection, the state or federal, and the frequency with which the inspections should be done. It is also unclear who is in charge in the event of violations. Food and Drug Administration regulates the practice of pharmacy in a manner that differs from that of states. They have recently focused on identifying and stopping drug manufacturers pretending to be pharmacy compounders. I think the Food and Drug Administration should have done more and stopped the marketing and sale of the reformulated AD23 before it was fully approved.
Colberian Intellectual Property
In utilitarianism, the proper and right way to act is to select the alternative that produces the greatest good. Utilitarianism theory requires people to compare and contrast the advantages of a decision and who will be harmed. The theory requires people to choose a decision that will not affect others. Deontology refers to accepting and conforming to values such as fairness, honesty, respect for life and honor. Virtue ethics refers to how human beings were born well and how we innately build good character in pursuit of achieving out full potential in the world. Ethics of care refers to the idea of caring about the next person. My ethical compass is that of respect to oneself, respect to others and responsibility for all my actions. PharmaCARE should not be deemed as an ethical company because its actions are contrary to those of ethics of care, utilitarianism, virtue ethics, deontology and my moral compass. PharmaCARE did not do well to the people of Colberia. They wasted and eroded their land and overworked them without fair compensation and stole their ethno biological knowledge without crediting them. In addition, PharmaCARE acted selfishly and to their own interests as the people did not benefit at all from the company presence in their country.
U.S. Law
“In 1992, the United Nations hosted a Conference on Environment and Development in Brazil that resulted in the United Nations Convention on Biological Diversity, which commits signatory countries to conserve biodiversity and equitable share resulting from benefits. The signatories also agreed that the benefits of utilizing biodiversity, including technology, should be shared with the source country. Thus has been ratified by one hundred and sixty-eight of the one hundred and seventy-seven countries, excluding the United States” (Halbert & Induli, 2012). PharmaCARE used U.S law in matters such as patents to protect its intellectual property. A patent gives one the right to exclusively own a given idea and legally prevent it from duplication by other persons. PharmaCARE obtained the patent for biological ethno knowledge which was originally, but not legally owned by the indigenous people in Colberia. “Western pharmaceutical companies that isolate an active chemical in a plant and create a genetically engineered plant or animal can receive a patent while indigenous peoples, who use the natural form of the plant cannot” (Halbert & Induli, 2012). PharmaCARE did the same to Colberians.
Compensation
The atrocities that PharmaCARE has done to the people in Colberia are very serious and deserve more than just a mere compensation. PharmaCARE deprived the people of Colberia their dignity and respect and for that the compensation is priceless. First of all, PharmaCARE should apologize to the people of Colberia for their actions against the country. Additionally, PharmaCARE can start by increasing the wages of the workers in Colberia. Increased wage would improve and better their living standards. Increased wage would also help the people to live in better places other than the huts they dwell in. PharmaCARE should provide required services and products such as water and electricity closer to people. The people of Colberia live in places without electricity and water. PharmaCARE should ensure that all the people in Colberia have access to electricity and clean water which would improve their lives and promote better health. PharmaCARE should acknowledge and work with the ethno biologists. The fact that a big company like PharmaCARE uses the ideas of the indigenous people means the people have knowledge that could save the world. “PharmaCARE should take the best of the biologists and utilize their skills to help Colberians and the world at large” (Judex, 2011). Additionally, PharmaCARE should allow people in Colberia to use their natural resources free from bother from the legal department freely.
Comparison
PharmaCARE and WellCo can be compared to Enron because both had legal technicalities, and this led to financial loss and ethical lapse. Enron was an energy company that was defunct in 2004 due to bankruptcy. Enron lied to their investors about their earnings. Investors invested with a misguided idea that Enron was making profits and that their dividends would be significantly high. Enron executives stole the money that was obtained from new investors. In 2001, Enron was adjudged to be bankrupt, and the investors lost over $70 billion resulting from a misguided stock, investment and funds. Ethical lapse was the least painful problem to Enron as they faced a huge financial loss, and they remained with only a small amount of money because they were a limited liability company. The Enron scenario resonates to that of PharmaCARE whose stock dropped from $300 after the deaths caused by AD23 were reported. In a nutshell, Enron misguided their investors while WellCo and PharmaCARE misguided their consumers.
PharmaCARE and WellCo
I think PharmaCARE and WellCo shareholders would have a great chance of winning the case if they filed a suit. A shareholder would successfully file for a suit because, under the Corporation Act, there was harm done to the corporation. The Act requires that there should be harm done to the company and PharmaCARE had tarnished the company’s name by selling formulated AD23 drug to the public. Additionally, none of the board members took measures against the culprits, so the shareholder suit is successful. The shareholder files a demand to the board and waits for 90 days if it is accepted, rejected or no action taken.
If the board of directors accepts the demand, the corporation files the suit. If the board rejects or no action has been taken, the eligible shareholder sues the company.
The Corporation Act varies in different states. If the suit is won, regardless of who filed it (the board of directors or an individual shareholder) the proceeds goes directly to the corporation and not to the board or a specific shareholder. WellCo and PharmaCARE illegal activities led to dropping of shares. The use of cheap labor, destroying the environment, selling unapproved drugs, bypassing the Food and Drug Administration are more than enough to get them sued.
PharmaCARE brand
PharmaCARE did not live up to its brand name because all that it did is the exact opposite of what it claims to represents. Their marketing strategy was that they care and want to save the lives of people across the world. They were not loyal to their customers as they did not disclose the crucial information that formulated AD23 is risky and has risky side effects which may lead to death. They pledged to take care of the environment and make it greener, but they are the reason Colberia is spoiled. The fact that PharmaCARE displays itself as an honest and respected company is difficult to imagine because they were able to bypass the Food and Drug Administration. Moreover, their mantra of caring is invalid because they did not care about the workers in Colberia. The workers were unfairly paid and had to walk for long distances with luggage. The workers survived with less than $1 per day as pay and had no electricity or water. If PharmaCARE truly cared about human beings in general, as their brand suggests, they should have tried to better the lives of their workers in Colberia. “PharmaCARE’s move to patent the ethno biological knowledge of the indigenous is evasive and shows that they have no regard to other people’s property “(Heal, 2008).
More ethical PharmaCARE
PharmaCARE should publicly accept their actions and apologize to the people of Colberia for destroying their habitat and stealing their knowledge. The company would be more ethical and would gain customer trust and respect if it acknowledges its wrong doings to the public. Apologizing will not financially benefit the Colberia people, but it would serve as a stepping stone to new beginnings. PharmaCARE should live up to its brand name by caring for the people. PharmaCARE should also reveal all the vital information concerning risks of drugs to patients. To avoid deaths and consequently create its image, PharmaCARE should inform their customers about all the information about each particular drug. PharmCARE also should revoke the CompCARE license as it was illegally obtained. To grow fully ethically, PharmaCARE should take bold decisions that might affect their financial situation. The decisions may affect their finances, but it will be a huge statement in making their company more ethical. To help the Colberian people financially, PharmaCARE should increase the wages of the workers and improve their standards of living through offering the necessary services such as electricity and clean water. The company should also be able to establish new companies nearer to the people so as to avoid the long distance traveled. The company should also conduct an appraisal on all its employees and fire all the employees involved in the illegal activities. Firing the fraudulent employees who embezzled funds will surely bring a new dawn to the management of the company. If PharmaCARE used these approaches, they would be on the way to being more ethical than before.
Conclusion
In retrospect, PharmaCARE is a company that does not strictly stick to legal and ethical considerations in marketing. The company used false advertising in the selling its products which caused deaths to the patients. It also disguises as a caring company but in reality its presence in Colberia seriously harms the people because it is endangering their habitat. The cost of its stock has considerably plummeted due to their irresponsibility and lack of ethical practices. PharmaCARE needs to be more considerate to the legal and ethical practices in marketing to survive in the industry.
References
Gagnon, M. A. (2013). Corruption of Pharmaceutical Markets: Addressing the Misalignment of Financial Incentives and Public Health. The Journal of Law, Medicine & Ethics, 41(3), 571-580.
Halbert, T., & Ingulli, E. (2012). Law and ethics in the business environment. St. Paul, MN: West Pub. Co.
Heal, G. M. (2008). When principles pay: Corporate social responsibility and the bottom line. New York: Columbia Business School Pub.
Judex, N. (2011). Taking insults on the chin: not the law reports. Without Prejudice, 11(9), 58-59.
