Legal and Ethical Considerations in Marketing, Research Paper Example

Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property

Within businesses, there are several ethical decisions that must be made in regards to marketing and legality. Deciphering between the two is challenging, especially for the marketing industry. The use of information and technology resources has provided executives and managers with the ability to assess and analyze the ethical and legal restraints on advertising and marketing relative to both organizations and consumers. Within this paper, the task is to evaluate and analyze the laws and regulations that relate to the liability and product safety of pharmaceutical companies. Doing this will also provide an exposition for the intellectual property rights, and copyright laws that are used in coherence within competing interests of the organizations. Presented in this paper will be three ethical issues that provide an overall case for marketing and advertising, regulation of product safety, and intellectual property rights. Provided in this analysis is a case against Direct to Consumer (DTC) marketing used in most drug and pharmaceutical companies, and who decides the regulations under the current regulatory scheme. This is particularly important in the PharmaCARE scenario, and the FDA’s authority to grant more power over compounding pharmacies.

The ethical marketing efforts and decisions should suit and meet the needs and demands of the consumers, stakeholders, and suppliers. When making unethical decisions a company’s behavior including selective advertising, deceptive marketing practices, and price wars places a negative reputation on the company that impacts company’s relationships. Consumers typically hold businesses accountable for their behaviors, that generally show a social responsibility for the environment and upholds to standards.  When companies display their sustainability to something

One of the biggest problems that marketing faces is false advertising, which considerably misleads consumers. These ethical fallacies are used in the majority of trusted companies that present their products in the marketplace. Marketing ethics issues arise often in sales related practices, where the aspects of the organization is taken from a societal point of view where the insistence of ethical practices should be mandatory. The ethical issues correlate with the moral problems of personal selling, advertising, international marketing issues, and market research.  A selling point for most companies is placing their values on Front Street, building up trust and relationships with consumers that iterates integrity throughout their business practices. The ethical problems, however, arise when marketing conflicts with the expectations from the customers. One of the biggest is false advertising. FDA recently just cracked down on diet supplement companies such as, SENSA, which claimed that only sprinkling their additive on consumer foods was clinically proven to help them lose weight.

The most outrageous claims made by the company was that people were losing 30 pounds on average in six months without the use of dieting and exercising. (Wilson, 2014) However, the Federal Trade Commission charged SENSA and three other weight loss supplement companies with deceptive advertising. “Operation Failed Resolution,” as the FTC calls it, is an effort by the federal agency to crack down on companies’ misleading claims about products that allegedly help consumers slim down.” (Wilson, 2014)  The claims of sprinkling a substance on their food, or using creams to lose weight while might fool some that are in desperate want to lose weight, however, the claims are largely unfounded. More importantly there is no science or research to prove that this is actually true. While consumers place much trust in companies like these, there trust is often broken because the follows uses unethical practices in order to market to their customers. Not only were the products useless, many were using stock photos that were photoshopped in order to make it the people in the pictures appear they have lost weight. (Sidell, 2014) The government and the federal agencies have always tried to crack down on businesses that use unethical methods in order to market to their consumers, and have implemented several laws that punish companies, much in the case SENSA and the other weight loss companies that had to pay a hefty settlement to the FTA. These companies much like others have used unethical marketing and advertising practices such as drug companies that used to depict smoking as a fun activity, until many agencies and groups voiced their outrage after millions of people were dying from smoking related deaths. The FDA had to jump in and ban the drug companies from advertising, without placing a warning label to tell of the risks associated with the products. Marketing and advertising are a necessity for most companies, and trust that companies build with the consumers translates into profits. When practices are utilized to mislead or misinform, it hurts profits and future relationships.

Intellectual property rights usually abound in educational institutes, where often plagiarism is utilized. LegalZoom defines plagiarism as, “If you use another person’s work and do not attribute that work to the author, including copying text verbatim, paraphrasing a phrase or summarizing an idea, you are essentially committing plagiarism.” (Paul, 2006) The problems of plagiarism in regards to intellectual property rights have certainly increased with the rise of the internet that places peoples’ work at a fingers touch. Several paper mills, and other essay companies place students’ essays on the internet creating easy access for students to use and copy their work. Although plagiarism is not a criminal offense it is considered legal, and more importantly infringes on the intellectual property rights of others. These infringements include trademark or copyrighted work, where the user fails to acknowledge the source, enclose quotes around the text, or paraphrases the work without properly citing the authors. There have been many famous cases of a person’s work being infringed on in music, film, and literary works. This includes in a more famous case of George Harrison of the Beatles song, “My Sweet Lord” was released after the group disbanded, as it quickly shot to number #1, it was strikingly reminiscent of Chiffons’ “He’s So Fine” recorded in 1962. The Chiffons soon sued George Harrison, Apple Records, and BMI and Hansen Publications. The judge found in favor of the Chiffons, although the Judge did say subconsciously, Harrison still had to pay the Chiffons. (Moriarty, 2012) In order to use someone’s copyrighted material they must first seek permission from the holder in order to not face legal ramifications.

Copyright and intellectual property rights are still a contentious debate, however, when it comes to ethical issues of regulation of product safety, drug companies are consistently warping the lines between what is ethical and unethical. The best examples and cases of this practice are with a majority of drug companies that constantly are being regulated by the Food and Drug Administration (FDA). In product safety, there is not only a moral responsibility, but also a legal responsibility to ensure that each of their products are safe for consumers. There are several strict laws and regulations that have been implemented in order to ensure this guideline. However, several drug companies still sidestep this regulation. One of the biggest cases involved the Supreme Court handing done the verdict that patients have the right to sue drug companies if they have been harmed by drugs that are not safe. Diana Levine, a Vermont musician, lost her arm after Gangrene immediately set in after being injected with ant-nausea drug. (Graham, 2009) Wyeth, the drug maker, was found at fault because they failed to sufficiently warn consumers of the potential serious risks with the intravenous injection of the medication. The company was forced to be pay Levine $6.7 million, while the pharmaceutical companies cited that the FDA is responsible for drug safety regulation, the Supreme Court found in the opposite. (Graham, 2009) From this case, it is apparent that not only the FDA is responsible, but the responsibility majority lay in the hands of the drug companies that develop and distribute the drugs to the public.

The position of this paper is in agreement that Direct-to Consumer marketing of drug companies should be prohibited. Many companies have chosen this source of marketing, by advertising directly to consumers in order to inform the public on the many drugs available. One of the first companies that chose this method was Rogaine, and since then has grown rapidly in the past several decades. While the FDA regulates this types of advertising method, many have voiced that the guidelines and rules are too relaxed or not enforced adequately. Direct-to-Consumer advertising of largely pharmaceutical companies can be both detrimental and beneficial to consumers. New Zealand and the United States are the only two countries that allow DTC, which includes claims about the products. (Ventola, 2011) Those that oppose and those the unopposed are fairly even, which many seeking to minimize the risks due to the number of people who benefit.

There are three types of DTC mainly used by drug companies. These includes, “help seeking ads” that give information only about the medical condition, and encourage consumers to contact their doctor, but do not mention the drug. Reminder ad, displays the drug name, and provides much information about the dosage, strength, and sometimes the price, but leaves out any claims made. (Ventola, 2011) The last type is the product claim ad, which provides the drug name, and claims made of safety or efficacy. DTC ads can be seen in just about every type of medium, and promotional brochures are usually provided to patients from their health care physicians. Due to the advent of the internet bringing more people together, many companies have seen the profit and  market potential in marketing to consumers, and have mobilize many social media campaigns. This creates several ethical dilemmas and problems that face the younger generation that shown the propensity to abuse prescription drugs. There is a need for regulation of Online Direct-to-consumer ads that run the risk of misleading and misinforming consumers because they go unregulated, and lead to problems in product safety, and social responsibility.

The Food and Drug Administration (FDA) are generally tasked with providing regulations and setting rules for compounding pharmacies as such in this scenario. They are also regulated by their respective state board of pharmacies. However, compounding pharmacies have found ways to get around these laws, by developing and distributing in states where they are not subject to premarket review by any regulatory body including the FDA, if it is not required. Accreditation is not mandatory nor or inspections for compliance. The FDA usually has the power to regulate drugs that are manufactured, but not drugs that are modified or tailored for the individual customer like compounding pharmacies. Congress amended the Federal Food, Drug, and Cosmetic Act (FFDCA) to pave the way for compounding pharmacies, establishing that pharmacies need not seek the FDA approval of compound or modified products, because they will be left to the state-level pharmacy regulation.

Within this scenario, the FDA should have sought the CompCARE subsidiary because they were able to administered drugs to the public, without ensuring that the diabetes drug met the federal guidelines of product safety. PharmaCARE was able to create the wholly-owned subsidiary in order to operate as a compounding pharmacy to sell their products. The FDA needs to implement clearer regulations, in order to have the power to regulate the types of drugs used in compounding pharmacies. The safety of the public is vital, and the rise in health complications effects the economy and the general welfare of the public as a whole. FDA needs to inform Congress to amend the act again to make clear regulations in order for pharmaceutical companies to not find loopholes in order to make a profit without having any responsibility for their products.

In the case scenario of PharmaCARE they made a hefty profit from filling large amounts with drug order, while paying their executives and managers healthy bonus, while ignoring the increasing number of patients suffering complications of heart attacks. The concept of utilitarianism is that in regards to businesses, they must produce the greatest good for the greatest amount of people. In PharmaCARE use of Colberians intellectual property rights, in regards to the ethical theory of utilitarianism the company did not exercise morally good actions. The interests of the company earning a profit were more valuable than the benefits of Colberian to the patients. PharmaCARE exploited the intellectual property rights of Colberian that was not ethical in their overall good for the greatest amount of people.

Deontology is another ethical theory that mainly differs from utilitarianism in which encompasses the principles of honesty, fairness, respect for life, and keeping promises. In regards to business, the concept is if the business exercise ethics in the patient’s interest or the business. PharmaCARE would be ethically in line with this theory because they had the interest of the business in mind, while supplying a drug to the patients to help with their diabetes. In other words, they did their duty of what the pharmacy was supposed to do. The principles of practicing ethics by exhibiting fair and honest ethics, was not followed by the company in using the intellectual rights of Colberian.

As mentioned using the theory of deontology, the virtue ethics of the company that incorporate the morality in their behavior include virtues learned through community and family such as, generosity, courage, honesty, and others. Colberian intellectual property rights were exploited by the company. Aristotle who believed that happiness is given to those that follows virtues extends to the character of the individual. However, Colbarian is not aware that they were being formula was being used, and while the happiness was short term for the patients, the overall satisfaction was to the company and the shareholders. To that extent, the company was not in line with the virtue ethics of Colberian intellectual property rights. The ethical theory of ethics of care was based on the difference of gender approach to moral issues. While women were more emphatic and showed care to people, but men were more individualistic. It is clear that in this scenario, the actions of PharmaCARE to  use Colberian’s intellectual property was driven by men in their decision to have the interest of driving profit, and revenue instead of taking the time to test if their products were safe.

In regards to my own set of morals, the actions of the company are in the direct opposite behavior of what I was raised with. I was taught from a young age to be empathetic and care for the general welfare of others. I have a great respect for others, the environment, and animals. My religion in which I was raised in taught me to make good ethical and moral decisions in which I place the value of others of the value of making money. In the case of this scenario, I wound not have followed the actions of PharmaCARE; instead I would have been one of the few voices of opposition in which I would not have compromised my ethical standards in turn for a payday.

PharmaCARE found a way to circumvent the U.S laws to face regulation for their compounding pharmacies by forming the wholly-owned subsidiary. One of the major factors was the FDA’s lack of jurisdiction and enforcement over the manufacturing of the compounding pharmacies, and the pharmaceutical company that made it easy for PharmaCARE to protect their intellectual property, even using the intellectual property of Colberia. The operations of the company were not in line with development regulations of FDA. CompCARE was created in order to avoid the scrutiny of the FDA and circumvent using accredited institutions to sell compound drugs. Three ways in which the company is able to compensate the public and Colberiais by providing compensation to the nation and people of Colberia. This will be able to offer incentives and established programs for the workers which benefit the company and the community of Colberia. Secondly, the company should implement a sustainability program which helps to establish what resources are being used for the knowledge of the public. Lastly, the company should fairly compensate the people of Colberia in order to provide adequate living and medical services, since they wrongfully exploited the intellectual property of Colberia.

This scenario is an example of several US companies that exploit the labor of lower industrialized countries. Such as in the case of Apple, where they produce much of their products in China. They allowed the workers to work for lower than average wages, while working longer hours in less than adequate working conditions. Many activist groups have criticized the company along with several other major corporations that allow for the unethical working conditions of workers while benefiting from their work. Apple had to admit that there were using child labor to manufacture their products, a law in which they exploited in China. When the public found out they faced considerable backlash, and had to closed down factories that using the underage children. (Moore, 2010) Other major corporations such as Nike, Neiman Marcus, H&M, and several drug companies that have used the labor of foreigners in other countries to manufacture their products for the benefits of the company.

PharmaCARE shareholder were protected from any lawsuits brought against the company, because weeks before AD23 was linked to the death of over 200 people dying from cardiac arrest, they sold CompCARE to WellCo, a large drugstore chain weeks before. The stock plummeted as the reports were made public, the success of lawsuits would not be successful. To the public PharmaCARE cares about their patients, with the reputation of being ethical and caring, having saved millions of lives with their drugs. However, the company used unethical means in developing the drugs and distributing to the patients. The people of Colberia were overworked, and they were exploited for their hard labor. Hundreds of people lost their lives, and hundreds or maybe thousands more were harmed taking the drugs. One of the most important factors that PharmaCARE can take away from their unethical behavior is that they must practice ethical behavior in regaining the trust of the public and with major shareholders. In recommending changes the company can make being more ethical going forward, is first with efficiency in the commercial and industrial operations, by implementing ethical policy throughout the company without exceeding the limits. Companies such as PharmaCARE should not practice misleading and deceiving mechanisms to customers, shareholders, and employees. Applying a policy where they practice integrity in their decisions and choices. More importance should be placed on consumer and product safety. By continuing to develop products without first testing or regulating drugs, then they place great harm on the environment, the patients, and the company.

PharmaCARE needs to learn to be more respectful of their customers, employees, and their stakeholders. Ethical practices in advertising, marketing, copyright and intellectual property rights, and product safety are critical in the success of the company. Not only is the company complying with the laws and regulations set for them, they also build trust with the public. Trust in the company is essential for turning profits, longevity, and exercising their moral responsibility to the community to practice ethical behavior. This scenario is a real life case for several major corporations who practice or who have practiced unethical practices by participating in misleading advertising, disregarding product safety, and exploit the rights of others.

References

Graham, Judith. (2009). Patients can sue drug companies, Supreme Court rules. Chicago Tribune. Retrieved from http://newsblogs.chicagotribune.com/triage/2009/03/patients-can-sue-drug-companies-supreme-court-rules.html

Moore, Malcolm. (2010). Apple admits using child labour. Telegraph. Retrieved from http://www.telegraph.co.uk/technology/apple/7330986/Apple-admits-using-child-labour.html

Moriarty, Joe. (2012). 7 Famous Plagiarism Cases – and How to Avoid Being a Business Plagiarism Victim. Content Raven. Retrieved from http://raven.contentraven.com/blog/bid/187344/7-Famous-Plagiarism-Cases-and-How-to-Avoid-Being-a-Business-Plagiarism-Victim

Paul, Stephanie. (2006). Plagiarism: What is it, exactly? Legal Zoom. Retrieved from http://www.legalzoom.com/intellectual-property-rights/copyrights/plagiarism-what-is-it-exactly

Siddel, Misty White. (2014). Revealed: How weight-loss companies fake those before-and-after photos. Pictures are airbrushed, borrowed and stolen. Daily Mail. Retrieved from http://www.dailymail.co.uk/femail/article-2572529/Its-easy-fake-photos-How-weight-loss-companies-airbrush-stock-images-steal-pictures-personal-blogs-promote-diet-products.html#ixzz2vbvIiVn0

Wilson, Jacque. (2014). Weight-loss companies charged with false advertising. CNN. Retrieved from http://www.cnn.com/2014/01/08/health/weight-loss-companies-fraud/

Ventola, C.Lee. (2011). Direct-to-Consumer Pharmaceutical Advertising. P.T. Oct 2011. Vol. 36(10). Pg. 669-674. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278148/