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Three Ethical Issues in Marketing/Advertising, Intellectual Property, and Product Safety Marketing/Advertising
Deceptive advertising remains one of the primary issues facing modern pharmaceutical industry. Pharmaceutical manufacturers apply to deceptive advertising, as they are looking for enormous and fast profits. The problem with law is that pharmaceutical companies are not obliged to submit their advertising ideas for premarket approval; as a result, legal actions against deceptive advertising are always made post-factum (Abood, 2010). In case of PharmaCARE, the company began to advertise its diabetes drug as an effective treatment for Alzheimer's disease. However, real effects of the discussed drug on the progress of Alzheimer's disease were not officially supported. Moreover, PharmaCARE never informed its customers of the risks of using their diabetes drug to slow down the progression of Alzheimer's disease. The company was not aware of those risks, thus making its advertising campaign for AD23 inherently deceptive.
The most problematic is the use of Colberian intellectual property without providing any compensation to the locals. It is no secret that PharmaCARE exploits local shamans, who share information about indigenous cures with the company. The source of indigenous knowledge is kept in secret, and PharmaCARE presents this knowledge as the product of its own research. Instead of compensating the indigenous population for their contribution to the drug research, PharmaCARE further damages the local environment and deprives local people of an opportunity to improve their lives.
When the company's profits and stock prices skyrocketed, reports started filtering that AD23was responsible for the alarming number of heart attacks. However, despite the growing concerns over the safety of AD23, the company never sought to explore the problem in more detail. Rather, it kept manufacturing and supplying its product in huge amounts, thus placing more patients with Alzheimer's disease at risk of dying from the heart attack.
Arguing Against Direct-to-Consumer (DTC) Marketing for Drug Companies
Direct-to-consumer advertising has become one of the most widely used instruments to promote pharmaceutical products. Yet, at present, DTC is legalized only in the United States and New Zealand. The fact is hardly surprising, given the negative implications of DTC for the global consumer community. The biggest problem with DTC marketing is its adverse impacts on patient’s health. DTC advertising should not be allowed to pharmaceutical companies on the premise that it can be highly inaccurate and even misleading (Liang & Mackey, 2011). Advocates of DTC marketing claim that this type of advertising benefits patients, as it provides relevant information to inform their pharmaceutical choices. However, only a small percentage of regular consumers has enough medical knowledge to distinguish real benefits of a particular drug from the misleading information provided by the manufacturer. This is why it is possible to conclude that DTC's educational benefits are limited, while the risks of misleading patients in their choices remain particularly high (Liang & Mackey, 2011).
DTC should not be permitted in the pharmaceutical industry, because “little information is given on medical costs, risk factors or populations that may benefit from treatment whereas drug benefits are overstated and the impact of healthy lifestyles minimized” (Liang & Mackey, 2011, p. 398; Mackey & Liang, 2012). Additionally, many pharmaceutical manufacturers initiate their DTC campaigns before the product becomes mature and its potential risks to health are perfectly understood; consequently, DTC often puts the target consumer at risk of developing unusual side effects and unexpected complications. Last but not least, most DTC campaigns are developed for the pharmaceuticals that treat long-term or chronic conditions, and unregulated DTC can result in growing prices for medical products (Mackey & Liang, 2012). DTC has proved to lead to overutilization of expensive medicines, which places a huge burden of costs on the developed and developing countries.
FDA and Regulating Compounding Practices in Pharmacy
Pharmacy compounding practices have long been a matter of legal debates in the U.S. Despite its long history and enormous benefits brought to patients, compounding has recently turned into a source of major health dangers and a convenient instrument of legal and ethical manipulations. With a strong desire to avoid regulatory complexities with the FDA, PharmaCARE has set a new division that is claimed to simply compound the existing pharmaceutical products. In reality, the decision allows PharmaCARE to avoid licensing hurdles that are required for every new drug. At present, it is the FDA that regulates and monitors compounding practices in the U.S. However, under Section 510(g) of the FDCA, compounding practices do not have to register and obtain the license, if they "do not manufacture, prepare, propagate, compound or process drugs or devices for sale other than in the regular course of their business or dispensing or selling drugs or devices at retail" (Abood, 2010, p. 133). By contrast, businesses that repackage prescription drugs for sale must be registered as manufacturers.
Today, the FDA is quite concerned about the future of compounding. In 1990, the FDA published a warning letter regarding practices and control procedures used by compounding practices. What the FDA could do is to check the nature of CompCARE's activity against the criteria of manufacturing and compounding practices. Undoubtedly, the FDA should be granted more discretion to control compounding practices, as the latter present a serious danger to consumers’ health and wellbeing.
PharmaCARE's Use of Colberian Intellectual Property Practices
Utilitarianism is a consequentialist ethical framework, whose main principle is promoting the greatest happiness for the greatest number of people. Utilitarianism does not include any specific discussion of intellectual property. However, it is clear that intellectual property violations reduce the chances of the affected community to achieve and sustain the state of happiness. On the one hand, intellectual property frameworks were designed to allow creative people to benefit from their work. As a result, when not protected by copyright, indigenous people of Colberia may lose motivation to develop new recipes and, consequently, support their people’s health. On the other hand, when used without due legal protection and ethical response, the recipes obtained by PharmaCARE from the indigenous shamans may prove to be ineffective or even dangerous to patients in the developed world. In any case, the utilitarian perspective presents an argument against intellectual property violations in Colberia and unethical decisions in this field.
The focus of deontology is not on the consequences of actions but on the immediate context, in which these actions take place. In essence, deontology argues that, in some situations, actions cannot be justified by the best expected consequences. The Colberian community does not have any laws or regulations that could hold PharmaCARE accountable for violations of its intellectual property rights. It is even possible to assume that, by violating the right of the Colberian people to protect their intellectual property, PharmaCARE actually benefits the humanity, as it uses this knowledge to produce innovative drugs. However, the use of Colberian intellectual property by PharmaCARE violates the very essence of copyright protection, whose main intent is to help the author benefit from his/her invention. Bearing in mind the tough conditions of life in Colberia, PharmaCARE violates the ethical right of the Colberian people to improve their standards of living, by sharing their secret cures with the developed world.
Virtue ethics differs considerably from both utilitarianism and deontology in the sense that it does not emphasize the role of rules or consequences. Rather, it is focused on virtue as the ruling mechanism of ethical decision making. In the context of Colberian intellectual property, the most essential question is if PharmaCARE acts as a virtuous company, when it uses indigenous prescriptions to improve its products. The first answer may be affirmative, as the expected result is the development of new cures for Alzheimer's and other chronic diseases. Unfortunately, in reality, PharmaCARE has proved to be highly inattentive to the alarming number of heart attacks in the patients, who were using its AD23. Therefore, the company is hardly concerned about patients' health. It is not virtue that drives the use of Colberian intellectual property by PharmaCARE but a simple desire to increase its profits by all possible means. By using Colberian intellectual property, the company violates principles of virtue ethics, turning Colberian shamans into an easy source of fast profits.
Ethics of Care
Care ethics is somewhat different from virtue ethics, although the huge similarities between these two frameworks cannot be ignored. Care ethics emphasizes the importance of caring as a force of motivation. As a result, those who use care ethics to make ethical decisions are expected to care for the needs of the vulnerable and those, who need such care. In the relationship between PharmaCARE and Colberian population, the latter exemplifies an object of care. Colberian population is highly vulnerable, due to their social and economic status. They would greatly benefit from the knowledge and social/technological innovations PharmaCARE could provide. However, the company treats its relations with indigenous shamans as a favor, a chance for the Colberian population to come closer to the developed world. It does not care for the needs and problems of the indigenous population and does not seem to be interested in improving their lives and wellbeing.
My Moral/Ethical Compass
My own ethical compass incorporates the elements of all ethical theories mentioned above. I believe that the actions of PharmaCARE in relation to Colberian intellectual property and, more importantly, the people of Colberia, are highly unethical. I believe that the ethics of human relationships should be based on the principle of exchange. Thus, if Colberian people provide PharmaCARE with valuable and free information that can be used in its manufacturing practices, the company is ethically obliged to provide something in return, and it must necessarily benefit the indigenous community. For example, PharmaCARE could build a school for local children or provide an access to electricity and other technical wonders of the developed world. Such moves would confirm the virtuous nature of the company's decisions, its caring attitude towards the indigenous people, while sustaining their right to the protection of intellectual property and leading to the greatest happiness for a big number of people.
Compensating the People and Nation of Colberia for the Use of Their Intellectual Property
As mentioned earlier, PharmaCARE could easily compensate the people and nation of Colberia for using their intellectual property. Such compensation could take different forms. Regardless of the ways in which it is delivered, it would confirm the company's commitment to ethical stewardship and its strong moral stance. The following approaches could be used to show appreciation of the Colberian intellectual efforts: (a) salary increases; (b) environmental policies; (c) strategies to improve the living conditions in Colberia. First, PharmaCARE could develop a fair compensation plan that would provide monetary rewards to people in Colberia for participating in the company's manufacturing activities. The company could raise employees’ salaries in the manufacturing facilities in Colberia: at present, local people are willing to work for as little as $1.00 per day. At the same time, PharmaCARE could finance local shamans for sharing their cures with the company. In the best case, PharmaCARE could make an agreement with the shamans and engage them in a gainsharing scheme that would let them earn regular profits from the medicines they helped to create.
Second, PharmaCARE was claimed to be an environmental steward, but the current policies adopted in Colberia can hardly be considered friendly to the environment. The company could compensate people of Colberia for using their intellectual property by investing in the development of sustainable agricultural practices, as well as implementing projects to expand and improve the natural habitat. For example, PharmaCARE could implement conservation practices and policies that have proved to be successful for preserving the biological diversity in other parts of the world.
Third, as the living conditions in Colberia leave a lot of space for improvements, PharmaCARE could compensate Colberian people for the use of intellectual property, by improving their socioeconomic conditions. People in Colberia do not have electricity and water in their houses. The company could find sponsors to develop a new socioeconomic infrastructure that would make the lives of Colberians easier and safer. Sponsorship could also be used to develop education and training courses for Colberians that would teach them to deal with the inventions of the western civilization in a safe and rewarding manner.
Comparing PharmaCARE Actions to Those of British Petroleum
The case of PharmaCARE suggests that companies are often willing to manipulate the existing gaps in law, in order to generate enormous profits and avoid legal responsibility for their actions and decisions. PharmaCARE has managed to create an image of socially responsible and environmentally-friendly company. In reality, its environmental, social, and economic practices violate numerous legal and ethical principles. Many companies adopted a similar stance, and major financial and ethical losses always followed their decisions. The truth eventually becomes public, and PharmaCARE should consider the example of BP, which faced considerable fines and legal penalties for disregarding the fundamental rules of fair business game.
In 2005, an explosion of BP's refinery resulted in 15 deaths and 180 injured workers (Woollam, 2010). The results of the investigation carried out by the U.S. Chemical Safety and Hazard Investigation Board revealed considerable organizational and safety deficiencies at all levels of the company's performance (Woollam, 2010). Unlike PharmaCARE, BP applied to the most sophisticated methods of legal and ethical deception: it even created a phony environmental law firm to pursue its commercial interests (Woollam, 2010). Eventually, the company was found guilty for violating the provisions of the Clean Air Act and had to pay more than $50 million in fines (Woollam, 2010). The Occupational Health and Safety Administration imposed the largest fine in its history on BP - $87 million (Woollam, 2010). The company was placed on probation for three years. This is a good lesson of how creativity in skirting legal technicalities can cause serious financial and image losses.
Suing PharmaCARE and WellCo: A Would-Be Failure
One of the questions in relation to the future of PharmaCARE is in whether at all the patients who suffered as a result of the company's unethical practices can restore their position in court. Evidence that PharmaCARE has violated a number of laws and regulations is rich, but shareholders will hardly be successful in their attempts to sue the company for its decisions. At the beginning of July, 2013, the Supreme Court of the United States ruled in one of the cases that pharmaceutical companies were not responsible for the adverse health reactions caused by their drugs (Whiteout Press, 2013). When Congress passed its Food, Drug, and Cosmetic Act, its intent was to set the minimum standards of quality for pharmaceutical products (Field, 2009). Therefore, pharmaceutical manufacturers are not legally obliged to go further and deeper, if it is necessary to keep patients safe. Moreover, in its recent decision, the U.S. Supreme Court confirmed that 80% of generic drugs in the U.S. are exempt from any liability for mislabeling, side effects or any negative consequences resulting from their use (Whiteout Press, 2013). The U.S. Supreme Court holds the FDA fully responsible for the quality and safety of drugs. In other words, if approved by the FDA, the drug is considered as safe, and no lawsuit will prove the opposite. In this situation, the only thing shareholders can do is file an official complaint to the FDA with a request to inspect PharmaCARE and restrict (or prohibit) the production and use of the drug, until its safety is officially confirmed.
Does PharmaCARE Live Up to Its Brand?
Apparently, PharmaCARE does not live up to its brand. Its social actions and environmental decisions do not support its advertised image of being a socially responsible company as well as an environmental steward. The essence of brand is not limited to a picture that is published on the company's documents and marketing materials. Rather, brand awareness stems from the millions positive (or negative) actions performed by the company in the pursuit of better competitiveness and higher profits. PharmaCARE has already accomplished too much to prove its lack of commitment to the fundamental ethical and moral values. The company presents itself as being ready to manipulate laws and avoid safety discussions, if these moves promise a stronger market position and faster returns. The case of BP suggests that no company can avoid the ethical and legal penalties for its violations. PharmaCARE must review its current practices to avoid the future collapse of its "ideal" brand.
Recommendations to Make PharmaCARE More Ethical
PharmaCARE still has a chance to improve its image and become more ethical. The first thing to do is to review the FDA regulations concerning compounding and manufacturing processes. Allen (2012) provides a good discussion of the difference between compounding and manufacturing. Compounding is described as the process of mixing, assembling, labeling or packaging the drug (Allen, 2012). By contrast, manufacturing entails the production, conversion, and other types of activities that result in the creation of a new drug through the extraction, arrangement, synthesis, processing, labeling, and packaging of the required substances into a completely new product (Allen, 2012). Most probably, PharmaCARE will have to obtain a license to manufacture its AD23 legally, but this decisive step will secure the company from the future ethical and financial losses.
Second, PharmaCARE will have to stop the process of manufacturing its drug, until the situation with sudden deaths is clarified. Most likely, the company will have to organize new clinical trials to explore the real impact of its drug on the risks of heart attacks. Again, the decision to discontinue the product will result in financial losses, but not as large as could possibly be caused by the safety and health violations made in the process of manufacturing the drug (e.g., fines).
Third, the company must review its Colberian practices and address the environmental and social hurdles that impede the socioeconomic progress in the indigenous community. This is one of the best ways to show that PharmaCARE lives up to its brand. Such investments will definitely make the company more competitive in the eyes of its customers and give it a strong argument in the fight with numerous regulatory agencies. PharmaCARE does not have to invest considerable financial resources to build schools or provide roads and electricity infrastructure in Colberia. It is enough to find sponsors, who will organize and realize these goals with the constant support of the PharmaCARE brand.
- Abood, R. (2010). Pharmacy practice and the law. Jones & Bartlett Learning.
- Allen, L. V. (2012). The art, science, and technology of pharmaceutical compounding. American Pharmacists Association.
- Field, R. I. (2009). When can patients sue drug companies? Pharmacy & Therapeutics, 34(5), 243-244.
- Liang, B. A. & Mackey, T. (2011). Reforming direct-to-consumer advertising. Nature Biotechnology, 29(5), 397-400.
- Mackey, T.K. & Liang, B.A. (2012). Globalization, evolution and emergence of direct-to-consumer advertising: Are emerging markets the next pharmaceutical marketing frontier? Journal of Commercial Biotechnology, 18(4), 58-64.
- Whiteout Press. (2013). Supreme Court rules drug companies exempt from lawsuits. Signs of the Times. Retrieved from http://www.sott.net/article/263713-Supreme-Court-rules- drug-companies-exempt-from-lawsuits.
- Woollam, R. (2011). Gulf oil spill: BP has a long record of legal, ethical violations.
- McClatchy. Retrieved from http://www.mcclatchydc.com/2010/05/08/93779/bp-has-a-long-record-of-legal.html#.UiGcLDa-2So.