Legal and Ethical Considerations, Research Paper Example

Introduction

While the regulation of the pharmaceutical industry is one of the strongest among all, it does not cover all ethical issues and certainly not every scenario associated with making, developing and distributing drugs. The below study is designed to review the legal and ethical background of the pharmaceutical industry within the United States, focusing on a case study provided during instruction. However, the authors would like to go beyond analyzing the case; the main aim is to determine whether the legislation that covers the industry is adequate to deal with challenges, emerging trends and technologies, patent and intellectual property provision. Further, the authors would also like to determine whether the legislation is in line with Western and business ethical principles, providing protection for consumers, companies, distributors and developers of patents.

Ethical Issues of Drug Distribution and Marketing

Noordin (2012, p. 87) states ethical issues of dispensing meditation today are mostly based on patient protection principles. Focusing on patient outcomes, rights and information provided before enrolling patients to a drug therapy. Quality assurance, adequate testing and complaint procedures should also be addressed in the light of ethics and consumer protection. Ethical issues in the pharmaceutical industry have a great significance, as they have a direct and potentially serious impact on people’s health outcomes. Clinical trials should be conducted in a way that ethical principles are covered, ensuring that all potential risks associated with the marketing and distribution of the certain drug are covered and addressed during this phase of the research.

While all companies engage in commercial strategies that are focused on generating profits, health-related firms also need to ensure that the strategy of marketing and sales is in line with the initiative to benefit patients and minimize health risks.

Noordin (2012, p. 85) states that “A pharmacist should dispense drugs within the provisions of the legislation… United States Pharmacopoeia (USP).

Cousins (2009, p. 1) also states that there are some business and marketing practices that are ethically questionable. The primary concern of drug developers, marketers, distributors and pharmacists should be to provide better health outcomes for patients while ensuring that they are informed of their options, possible risks and side effects. Further, the author (Cousins, 2009, p. 6) states that the main ethical risks of marketing drugs occur in cases when the complexities of the medication are not fully addressed by the company. This can be a result of inadequate testing or simply the company not finding the information relevant. A real life case study would be a heart medicine that was developed and did not show side-effects during the 3-month trial. However, some patients start developing breathing difficulties after using the drug for four months. It is evident in this case that the risks were not properly assessed and addressed by the drug developer during the clinical trial.

Direct-To-Consumer Marketing

According to Cousins (2009, p. 5), only two countries allow direct-to-consumer marketing of drugs: the United States of America and New Zealand. The regulation of marketing by the FDA (Food and Drug Administration) was relaxed in 1997 regarding the communication of side-effects. The most common methods of direct-to-consumer marketing is through television advertisements. One of the ethical questions related to this method has been examined by the author (4), questioning whether advertising serves as a tool to “create a need” for medication, instead of connecting need with the solution. In this form, if the answer to the above question is yes, the advertisement would encourage patients to seek treatment for conditions they might not even have, creating a “hypochondriac” society. The debate, however, is not that easy to solve, as it would involve the analysis of drug consumption before and after the advertising campaign, as well as the number of “real cases”, which would be a subject to a complicated research study. Therefore, the authors have to agree that, there is a potential effect of creating “false awareness of condition” that lies within drug marketing.

Indeed, it is hard to communicate all the effects, side effects, directions and downsides of a product during a one-minute commercial. Therefore, direct marketing to patients would only work if it is coupled with expert pharmaceutical advice or doctors’ recommendation.

Regulation of Pharmacies

Pharmacy compounding is regulated by the Food And Drug Administration Modernization Act Of 1997 (FDA, 1997), which requires companies to submit an application for practicing this activity. Further, marketing is regulated by the Prescription Drug Marketing Act (1987), designed to protect patients’ interest and health. It is also aiming to prevent sub-standard and ineffective drugs’ marketing.

FDA’s Role

FDA is a regulatory body that inspects research findings, patents, clinical trials and results in order to ensure that risks for customers and patients are eliminated and the drugs developed represent the best possible health outcomes every time.

According to the FDA’s Compounding Quality Act of 2013, (2013) pharmacies need to ensure that their suppliers confirm with food and drug manufacturing practices and policies, use labels that are adequate to determine the directions to use and ensuring that all products are pre-approved by FDA for marketing, according to Section 505.

The text of the legislation created by the FDA states that “A drug may be compounded under subsection (a) only if the pharmacy, licensed pharmacist, or licensed physician does not advertise or promote the compounding of any particular drug, class of drug, or type of drug. The pharmacy, licensed pharmacist, or licensed physician may advertise and promote the compounding service provided by the licensed pharmacist or licensed physician.” (Section 127c, FDA, 1997)

Case Study: PharmaCARE

PharmaCARE, within the reviewed case did not only act negligently, but unethically as well, while endangering thousands of patients. While focusing on profitability and business performance, they neglected corporate social responsibility, ethical considerations and even the recommendations of FDA. The company also broke the law when, while knowing about the side effects of the drugs, decided to keep it on the market, instead of creating a report and withdrawing it. Further, they did not comply with marketing directives and recommendations that clearly stated that drugs were not allowed to be sold for general or bulk use. The company also encouraged physicians and hospital management to commit fraud, faxing over fake lists of patients requiring the drug. Below the authors would like to examine the above case from the view of different ethical business approaches, in order to evaluate the processes that led to poor patient protection in the case of PharmaCARE.

Utilitarianism. The utilitarian principle of ethics states that companies should be doing most good and less harm for stakeholders. In the case of PharmaCARE, stakeholders identified can be patients, doctors and shareholders of the company. It is evident that PharmaCARE did more wrong for customers short term by illegally marketing AD23 directly. Further, long term damage was caused for stakeholders, as the reputation of the company was in danger. Subsequently, the company contributed towards the ruin of another firm: WellCo, which was made responsible for the side effects of AD23. By ignoring reports of heart attacks associated with the use of the drug, the company also knowingly endangered several lives. However, shareholders suffered as well when the share price of not only WellCo, but PharmaCARE plummeted as well, once the reports surfaced.

Deontology. From the deontological perspective, some decisions made by leaders and individuals are inevitably wrong. An act is judged independent of its outcome in the moral world of Kant. This also means that the impact of the actions has a less significant importance than in utilitarian views. Indeed, the marketing of the product even after the reports arrived could have been explained with the uncertainty of the connection between cases, while the company had to keep on producing to keep the share price high and employees’ well-being was not relevant to production to an extent that it required action. Still, when assessing the moral character of Allen, it is evident that he followed some obligations for shareholders and the leadership, while neglected his obligation for customers and employees. He also maintained his position in the company, fulfilling his obligation to his immediate family who relied on his income.

Virtue ethics. This principle does have a great relevance on the current case. According to the theory, moral decisions can only be undertaken by virtuous people. Morally correct behavior, therefore, is a result of one’s moral virtue. In the case discussed above, there is little information found regarding the morals of the leadership, apart from Allen’s role in disputes and business decisions. Still, it is important to note that he also had his orders from higher above, therefore, it was his decision to make morally correct or incorrect decisions. The marketing of drugs for doctors, hospitals and physicians was morally incorrect. In order to serve the purpose of achieving higher profitability, the company’s leadership made morally correct behavior look unimportant. According to Kelman’s (1981, p. 35) cost-benefit theory, the company focused on potential benefits instead of acting virtuously.

Ethics of care. The principles of the ethics of care were also not followed by the company, even though the leadership believed that the firm was ethical, caring and responsible. Basic responsibilities of care were not provided for patients, employees or business partners. The company’s leadership made decisions that affected the health, career and well-being of several employees and endangered patients’ lives. By not sharing information and reports related to the drug’s possible side effects, the company did not provide care for the buyer of CompCARE, either.

Conclusion of ethical considerations. From the above ethical theory review, it is evident that the leadership of PharmaCARE did not act justly, morally correctly and in the interest of customers, stakeholders. Access to information was not provided for customers about the possible side effects, and this was not only illegal, but also dangerous for patients. Customers, further, were not provided with the right to make a decision freely, as the direct marketing of products meant that physicians were evidently prescribing AD23, recommending it over other alternative medication. Patients’ rights to fair treatment was also not provided by the conduct of the company. Fair treatment employment principles were also not followed in the case of employees complaining about the unhealthy environment and potential risks, applying discriminative measures as well as unfair treatment. Overall, legal and ethical, social responsibilities were neglected by PharmaCARE, resulting in loss of profits, reputation and possible lawsuits, legal costs.

Intellectual Property Protection in the U.S.

As the company manufactured its products in Colberia, due to the lower employee and operational costs, the risk of compromising intellectual property was present. According to the trademark policies designed for companies manufacturing products overseas, companies need to ensure that patents and trademarks are covered through international law. There is a process that involves registration with the World Intellectual Property Office that applies to patents, and one application can be submitted to cover multiple countries. (United States Patent and Trademark Office, n.d.) The registration also covers 143 countries. Still, the use of Colberian intellectual property is not covered by U.S. Law; it should have been provisioned and legally documented.

Compensation Analysis

As mentioned above, there are several areas where the company might face lawsuits due to unethical and unlawful actions. Three methods of compensation would be assessed and analyzed below regarding the damage to the environment of Colberia and the use of the country’s intellectual property.

1. Financial aid for education in universities regarding pharmaceutical research and patent development. This method of compensation would be relevant, and should be equivalent to the value the used intellectual property delivered PharmaCARE.
2. Workers’ compensation for low earnings and career support plans for the exploitation of cheap, highly skilled and knowledgeable employees in Colberia. The company should set up local programs for empowering disadvantaged intellectuals and individuals, providing free education and support.
3. Sustainable development investment plan in Colberia. This project would ensure that farm workers would have access to water, fertilizers and would not have to walk miles for supplies. This would also have a great impact on the agriculture of the country, as well as the well-being of its people.

Comparison of PharmaCARE and Bayer.

Both companies used unethical marketing behavior in the pharmaceutical industry in different ways. Bayer, accused of collaboration in price-fixing between 1997 and 2003. (Lieff Cabraser, 2013) The company paid competitors not to enter the market with similar drugs, therefore, they were proven guilty in antitrust violations. Similarly to PharmaCARE, the company focused on profits, while neglecting patients’ interest. The creation of monopoly on the drug Ciprofloxacin, sold as Cipro in the U.S. disadvantaged customers, while possibly making them pay more for the product than they would have if there was a real market competition. In both cases, stakeholders were disadvantaged, and in the Cipro case a settlement of $74 million was ruled by the Superior Court.

Lawsuits Possible Outcomes

PharmaCare could face legal actions and compensation claims from various stakeholders. The nation of Colberia could file an international court settlement case for the damage made to the natural habitat, environment and the effects of the pollution caused by the company’s activity. Further, the country could identify the traditional herb healing method as a national property and claim a settlement amount for unlawful use. Workers could file a lawsuit based on unfair dismissal, discrimination and health damage due to unhealthy environment. It is likely that if the reports are documented, workers’ compensation settlement would be ruled by the court. Hospitals and doctors could also claim that they were encouraged to commit fraud by the company in order to get a compensation for submitting bulk orders. Finally, and most importantly, the state or the representatives of patients affected by heart attacks related to AD23 could file a lawsuit that would result in millions of dollars of settlement to be paid for those who were endangered by the company. In this case, there is a need for proving that the leadership of the company was aware of the reports on heart attacks.

Living Up to the Brand

As stated in the beginning of the case study, the company PharmaCare was committed to patients and their rights to access suitable and effective drugs. The organization’s values included sustainable development, research and improving people’s lives. However, the actions that followed the development of AD23 did prove that these values had no meaning any more for the leaders of the company; they went against their own principles and moral considerations, exploiting the workforce and natural assets of Colberia, while taking advantage of a free patent that led to billions of dollars in profit. Taking responsibility for stakeholders was also not a principle that was followed within the company. Employees’ well-being and health was neglected, as well as their rights to a healthy, balanced work environment. Discrimination, unethical blackmailing were used to eliminate those who did not agree with the directions of the leadership. The sustainable projects of the company started before the development of AD23 became meaningless in the light of the damage the company’s activities in Colberia caused. The care for customers principle through making medication more affordable for disadvantaged patients and the development of the foundation for research was also not in line with the fact that the leadership endangered lives of people who were not aware of the possible side effects and health risks of the drug.

Changes to Make the PharmaCARE More Ethical

After the loss of reputation and trust on the pharmaceutical market, the company needs to take a new approach and direction. The previously mentioned methods of compensation are providing a good starting point, however, according to the Virtue Principle, there is a need for changing the company’s leadership, as well as their attitude. Returning to the original missions and values is necessary, as well as the development of plans to compensate the damage made to stakeholders.

On the employment policy side, the company needs to adapt a non-discrimination policy alongside with an open culture that encourages employees to speak out without negative consequences. Further, the company should implement a minimum wage and work condition policy not only on the national, but the international level as well.

On the patent protection side, the company needs to implement an internal policy, based on international law to ensure that governments and inventors overseas are compensated for their intellectual property rights before the company starts using them. Legal collaboration and patent agreements would be required beforehand.

Further, internal imperatives should be issued by the company’s leadership to ensure that managers are responsible for reporting any possible links of newly developed drugs to adverse effects. Clinical trials and documentation policies would need to be reviewed, as well as the monitoring process of drugs, after FDA approval. The new policies would also cover which action should be taken when side effects are discovered and when should FDA be notified and the drug withdrawn.

References

Cousins, C. Pharmaceutical Marketing: The Unethical Reform of an Industry. Gatton Student Research Publication. Volume 1, Number 2.Gatton College of Business & Economics, University of Kentucky. 2009

Kelman, S. Cost-Benefit analysis-An Ethical Critique. Regulation, January 1981

Lieff Cabraser Heimann & Bernstein. Case Center. Cipro Price-Fixing & Exclusionary Drug-Pricing Agreements. 2013. Retrieved from http://www.lieffcabraser.com/Case-Center/Cipro-Price-Fixing-Exclusionary-Drug-Pricing-Agreements.shtml

Noordin, M. Ethics in pharmaceutical issues. In: Contemporary Issues in Bioethics. 6. Edited by Clark, P. (ed) p. 83-102. InTech. 2012.

Office of Policy and International Affairs. Protecting Intellectual Property Rights (IPR) Overseas. Web. 2012. Retrieved from: http://www.uspto.gov/ip/iprtoolkits.jsp

U.S. Food and Drug Administration. Regulatory Information. Retrieved from http://www.fda.gov/regulatoryinformation/ (n.d.)