Law
Introduction
Criticism of present-day medical ethics is seen as fallout of the relationship between stakeholders in theory and practice. While efforts continue to re-establish the relationship, the conflicting interest of the two stakeholders continues to create a perception of increased risk of bias or poor judgment. Again, when it comes to researchers in the healthcare sector, they should have a professional and ethical interest in what they do, but sometimes, these interests are compromised by the lure of financial gains. It is such a case that PharmaCARE has been guilty of.
The aim of the law and the common good are not the same thing. When determining how the legal system should be used to promote the common good, philosophers may differ in the weight they give to factors such as the value of autonomy, the manner in which harm and benefit are defined, and the role that morality should play. There are a number of legal theories and contract laws that can facilitate the development of business relationships. A law can be a guiding bond that enforces business partners to plan, negotiate, and consummate their business, but complete reliance on these laws can at times become costly in terms of time and resource, and erode buyer-seller interdependence (Gundlach & Murphy, 1993). It must be said that laws can have a positive and negative impact on how businesses are run, but given that this particular business involves healthcare, it is important that the laws governing it is followed.
There are a number of key issues that have to be assessed when dealing with healthcare, and one of them is the integrity of a research being undertaken; what is being researched, how the research is being conducted, and who is paying for the research and so on. For each of these questions, the ethical considerations can differ, and so, it must be carefully thought out as to what law governs what, and what its impacts. Also, it must be considered that a number of ethical issues covering healthcare does not have clear boundaries and thus there are many grey areas that healthcare businesses should be aware of. Singer (1998) believes that when it comes to managed health care delivery, there are inherent complexities in medical treatment and care because of which, it is hard to interpret laws defining it. Singer goes on to say that in the late twentieth century, healthcare organizations and other managed care organizations brought about changes in how healthcare should be financed and delivered. A number of ethical issues arise when it comes to insurers cover; there has to be a clear definition of experimental, custodial, cosmetic and medical treatment, which is not available; appropriate medical care should be delivered only to fully insured enrolee, and so, if treatment is meted out to someone not covered under the insurance enrolment, financial liabilities occur.
Issues
When a person is hospitalized and receives nursing and medical care, they are protected by insurance coverage, but once they leave the hospital and continue to receive nursing services at home, they are not under insurance (Singer, 1998). In the case of PharmaCARE and CompCARE, there are far too many issues that are unethical and liable for prosecution. PharmaCARE cheated FDA by avoiding the scrutiny of its AD23 for Alzheimer’s disease treatment; PharmaCARE gave CompCARE access to its database and other marketing networks to take advantage of its product; it marketed its product without clinical trials mandated by FDA, and it sold CompCARE to another unsuspecting company when the product marketed by it had proved to be detrimental to one’s health.
When CompCARE began advertising AD23 directly to consumers and marketing the drug directly to hospitals, clinics, and physician offices, even though compounding pharmacies are not permitted to sell drugs in bulk for general use, there is every possibility that the drug could reach patients under home care. While in hospitals, the patients were under the supervision and care of medical practitioners who knew the physical and medical condition of the patients to prescribe medicines. Therefore, while CompCARE products could have been used by doctors to treat patients in hospitals, there is no provision for patients or home care personnel to prescribe or use CompCARE products without medical supervision. PharmaCARE’s AD23, a drug prescribed for diabetes, was also being sold to fight Alzheimer’s disease, a common medical condition common among elderly people. AD23 could have been administered in hospitals under medical guidance and supervision. As patients are covered under insurance when treated in hospitals, if any complications did arise due to the drug, any cost for treatment would come under insurance coverage. However, if the same drug is administered at home without medical supervision, and complications did arise, patients won’t be covered under the insurance coverage, and CompCARE can be taken to court for making available AD23 in the public domain.
PharmaCARE’s AD23 is one of the company’s top-selling diabetes drugs, and while the drug has met all the required approval for controlling diabetes. However, when PharmaCARE’s research indicated that AD23 might also slow the progression of Alzheimer’s disease, it was reformulated to maximize that effect and sold to Medicare, Medicaid, and Veterans Affairs patients. In order to avoid the Food and Drug Administration’s (FDA) scrutiny, PharmaCARE established a wholly-owned subsidiary, CompCARE, to operate as a compounding pharmacy to sell the new formulation to individuals on a prescription basis.
The Public Law 110-85 of the Food and Drug Administration Amendments Act of 2007 (FDAAA 2007; PL 110-85) gave the US Food and Drug Administration (FDA) more authority and responsibilities on drugs during the post-marketing period. This newly acquired authority and responsibility allowed FDA to mandate drug manufacturers to conduct clinical trials and other studies once a drug was approved to protect the health of the public (U.S Food and Drug Administration, 2010). This meant that PharmaCARE, which produced AD23, and had reformulated the drug to treat Alzheimer’s disease, did not get the formal approval from FDA. This was a blatant disregard of the Public Law 110-85. Therefore, PharmaCARE, guilty of selling the medicine to hospitals and clinics, and to Medicare, Medicaid, and Veterans Affairs patients, is liable for prosecution.
In addition to this, FDA also required any post-marketing of drugs to undergo randomized controlled trials, which should then be assessed by FDA before it is promoted and sold in the market (U.S Food and Drug Administration, 2010). This was also not followed by CompCARE, a subsidy of PharmaCARE. In order to avoid the Food and Drug Administration’s (FDA) scrutiny, PharmaCARE had established CompCARE as a wholly-owned subsidiary. As PharmaCARE had a reputation of producing AD23 as an effective drug for diabetes, it was able to provide CompCARE its databases, networks, and sales and marketing expertise. The company also had a very good rapport with doctors, hospitals, and clinics, and so, could easily push the product to Medicare, Medicaid, and Veterans Affairs patients. This practice is highly unethical and against the FDA rules and regulations.
PharmaCARE made full use of its reputation and goodwill with doctors to create a demand for AD23 in the market, and especially target Medicare, Medicaid, and Veterans Affairs patients. To enhance its profits, CompCARE began advertising AD23 directly to consumers and marketing the drug directly to hospitals, clinics, and physician offices, even though compounding pharmacies are not permitted to sell drugs in bulk for general use. In the U.S., every state has its laws and regulations guiding pharmacy standards and requirements for running the business. These rules and regulations cover a number of standard procedures which include the labelling of products, the kind of storage required to display and store medicines, billing and recordkeeping, and the authority to compound or mix pharmaceutical ingredients into a patient-ready product (Ncsl.org, 2014).
503A describes that certain compounded human drug products are entitled to exemptions from three sections of the FDCA, and these include FDA approval prior to marketing under section 505, compliance with current good manufacturing practice (CGMP) (section 501(a)(2)(B)), and labelling with adequate directions for use (section 502(f)(1)), and finally, pharmacies that qualify for such exemptions will be regulated by the states. However, hospitals and other health care providers with patients with medical needs can purchase compound drugs from outsourcing facilities even if they don’t meet the FDA-approved product standards or requirements, provided they meet the CGMP requirements and increased federal oversight (Axelrad, 2013). CompCARE advertised AD23 directly to consumers and marketed the drug directly to hospitals, clinics, and physician offices. Under 503A, CompCARE doesn’t have the authority or rights to market AD23 as a medicine for Alzheimer’s disease or as bulk for general use. What CompCARE did was against 503A as it didn’t meet any of the exemptions mentioned above, and so, is liable for prosecution. Also, it was unethical on CompCARE’s marketing strategy to encourage doctors to fax lists of fictitious patient names to CompCARE. Considering the above conditions, it can be said that PharmaCARE could face legal exposure surrounding its practices.
On the issue of CompCARE’s Direct-to-Consumer (DTC) marketing, and by drug companies in general, it would not be right to market such compound drugs directly to consumers. A number of people have died because of un-prescribed medication. Once products like AD23 is available easily to consumers, there will be unchecked use of the drug by consumers for the treatment of Alzheimer’s disease and diabetes; two common diseases affecting consumers today. The problem with AD23 is that it has not been clinically tested for approval by FDA and any misuse of the drug can have a serious impact on people. As CompCARE and its new parent company enjoyed record profits and PharmaCARE’s stock price approached $300 per share, there were reports that people who received AD23 suffered heart attacks at an alarming rate. The company ignored this data and continued filling large orders and paying huge bonuses to all the executives and managers, including John, whose wife recently died from a heart attack after using AD23. As mentioned earlier, AD23 is used for controlling diabetes, which is a common occurrence among people today, and when it is reformulated and sold under the banner of its sister concern PharmaCARE for Alzheimer’s, it is sure to get a lot of importance. This is precisely what happened.
As AD23 was directly being sold direct-to-consumers, it resulted in its large-scale usage. When PharmaCARE sold CompCARE to WellCo, a large drugstore chain, just weeks before AD23 was publicly linked to over 200 cardiac deaths, the company had conveniently passed the legal baton to WellCo. By diverting the attention of the cases from CompCARE to WellCo, PharmaCARE could absolve itself of the legal hassles associated with the large number of deaths. John, a former researcher at PharmaCARE, was part of the team that reformulated the AD23, which was one of PharmaCARE’s top-selling diabetes drugs. When PharmaCARE’s research indicated that AD23 might also slow the progression of Alzheimer’s disease, and John and his team of pharmacists began reformulating the drug to maximize that effect, it was ‘pushed’ into the market through the creation of a new firm; CompCARE. When it was found that a number of people were dying because of the use of AD23, John, who also lost his wife to the drug, was right in approaching the law firm of Dewey, Chetum, and Howe. The FDA, which was by now aware that PharmaCARE was marketing a product without its consent or authorization can sue the company for breaking the law. PharmaCARE was guilty of trying to increase its business by avoiding the rules laid down by FDA for the post-marketing of compound drugs without passing or attempting clinical tests necessary to pass 503A.
Under Note: 21 USC 353a.>> “SEC. 503A, Pharmacy Compounding, Sections 501(a)(2)(B), 502(f)(1), and 505 shall not apply to a drug product if the drug product is compounded for an identified individual patient based on the unsolicited receipt of a valid prescription order or a notation, approved by the prescribing practitioner, on the prescription order that a compounded product is necessary for the identified patient, if the drug product meets the requirements of this section, and if the compounding is by a licensed pharmacist in a State licensed pharmacy or a Federal facility, or a licensed physician, on the prescription order for such individual patient made by a licensed physician or other licensed practitioner authorized by State law to prescribe drugs (Fda.gov, 2013). Therefore, as CompCARE didn’t have the license to sell the drug as direct-to-consumers, it stands to be prosecuted.
In life, there are many social, political and technological changes that have challenged traditional practices. In the healthcare sector, the number of cases in the proliferation of codes of ethics, or code of conduct has been miniscule because of the severity of punishment associated with it. Codes give professionals an opportunity to examine the nature and goals of their work, or it offers others information about what can or should be expected from them in the course of their stay. And, if the code has disciplinary functions, it can offer protection to others who may directly or indirectly come in contact with them. When CompCARE encouraged doctors to fax the list of fictitious patients names to CompCARE, and used the database of patients to pursue its direct-to-consumers marketing activities, it had done so unethically. Also by introducing a product that was reformulated in a lab and which was not clinically tested and approved by FDA, PharmaCARE is guilty of unethical practices and breaking the law of the state. Therefore, PharmaCARE is liable for prosecution.
PharmaCARE used U.S. law to protect its own intellectual property by selling AD23 under the license it had to sell to customers of Medicare, Medicaid, and VA patients on a prescription basis. Selling the new product under the guise of AD23 for diabetes, PharmaCARE could sell its reformulated compound drug to these patients in hospitals and clinics by influencing doctors to prescribe the drug to them. John could be credited with the claim to being the ‘true’ inventor of AD23, as it was he and his team which developed the formula to create AD23. Also, when he found that AD23 could be used to control the effect of Alzheimer’s disease, it was he and his team that reformulated the existing formula to create the compound drug. As the inventor of AD23, PharmaCARE should compensate him for his intellectual property. Three ways to compensate John for his effort could be through payment of huge bonuses like PharmaCARE did, paying John royalty with a percentage of the total sales of AD23, and by giving credit to John for his discovery. John’s name can be mentioned on the product promotional instruments. Remember, even if the intellectual property is offered free-of-cost, it’s still ethical to give the source the credit for their contribution.
Among the many cases of intellectual property theft is the Sinovel wind turbines case. Sinovel is engaged in wind turbine projects across China, and recently, Sinovel Wind Group Co. of Beijing was indicted on charges of stealing technology from American Superconductor Corp. (AMSC) of Devens. Sinovel’s indictment came after four of its wind turbines, operating in Massachusetts, had software stolen from American Superconductor, read the court document (Ailworth, 2013). The legal action initiated against the Chinese company will help protect US technology and other intellectual property more secure in China. The US indictment comes nearly two years after AMSC first accused the Chinese company, once its largest customer, of illicitly replicating AMSC’s software to control its wind turbines. Before the indictment, as Sinovel had stopped placing orders from AMSC, it almost crippled AMSC, as with no major orders and less revenue, the company to lay off a number of its employees. The company’s stocks also plunged (Ailworth, 2013). With the company now faced with the task of survival, it becomes difficult for AMSC to regain its place in the industry soon. There are not too many buyers in the U.S for wind turbines like Sinovel of China, and even if there was a market for the product in the U.S, AMSC will have to fight the stiff competition it faces at home. As the company stock has crashed, it is obvious that its brand has also been hit badly. It will take some time before AMSC can regain its lost footing in the industry.
The potential issues surrounding the death of John’s wife and other litigants against PharmaCARE as a result of AD23 are the company faces civil and criminal penalties. The civil penalties would be for not adhering to the prescribed FDA rules in post-marketing compound drugs, and the criminal penalty would be for selling a product that was not clinically tested leading to the death of a patient.
John can claim that he is a whistleblower because he came forward voluntarily to expose the fraudulent practices of PharmaCARE, and he can also cite his wife’s example to show that despite his research, efforts were not made to test the drug clinically before it was launched in the market. John can also vouch for the way AD23 was being marketed by PharmaCARE, as he was a part of the company when it was launched. As a whistleblower, John can be sued for acting against the company, and disclosing business interests that could harm the company.
Conclusion
On all counts, it is clear that PharmaCARE acted irresponsibly and cared only for its business gains. The company is guilty of ignoring and wilfully causing public harm. By fraudulently starting CompCARE, PharmaCARE was well aware of the rules governing the sale of compound drugs without FDA approval, and was therefore liable for prosecution. By selling CompCARE to WellCo at a time when they were aware of the reports of deaths emanating from the use of AD23 only went to show that the company was trying to escape indictment. By all counts, PharmaCARE is guilty.
References
Ailworth, E. (2013). Sinovel case could protect US technology - The Boston Globe. BostonGlobe.com. Retrieved 6 December 2014, from http://www.bostonglobe.com/business/2013/06/29/sinovel-case-could-protect- technology/SJzQJI96mTYwOH7LH9Ey2J/story.html
Axelrad, J. (2013). Pharmacy Compounding Legislation and Implementation: National Conference of State Legislatures Fall Forum Meeting. FDA. Retrieved 6 December 2014, from http://www.ncsl.org/documents/health/JAxelradFF13.pdf
Fda.gov. (2013). Section 503A of the Federal Food, Drug, and Cosmetic Act. Retrieved 6 December 2014, from http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCo mpounding/ucm376733.htm
Gundlach, G., & Murphy, P. (1993). Ethical and Legal Foundations of Relational Marketing Exchanges. Journal of Marketing, 57(4), 35. doi:10.2307/1252217
Ncsl.org. (2014). State Regulation of Compounding Pharmacies. Retrieved 6 December 2014, from http://www.ncsl.org/research/health/regulating-compounding- pharmacies.aspx
Singer, S. (1998). Ethical Considerations in Health Care Benefits Administration. Benefits Quarterly, 14(1), 24-29.
U.S Food and Drug Administration. (2010). Ethical Issues in Studying the Safety of Approved Drugs: A Letter Report (pp. 1-6). Washington D.C.: The National Academies Press.
