Legal and Ethical Considerations in Marketing
You are a new associate at the law firm of Dewey, Chetum, and Howe. John, a former researcher at PharmaCARE, comes to your office. He has concerns about PharmaCARE’s use of AD23, one of the company’s top-selling diabetes drugs. Two (2) years ago, after PharmaCARE’s research indicated that AD23 might also slow the progression of Alzheimer’s disease, John and his team of pharmacists began reformulating the drug to maximize that effect. 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. CompCARE established itself in a suburban office park near its parent’s headquarters. To conserve money and time, CompCARE did a quick, low-cost renovation.
CompCARE benefited from PharmaCARE’s reputation, databases, networks, and sales and marketing expertise, and within six (6) months had the medical community buzzing about AD23. Demand soared, particularly among Medicare, Medicaid, and Veterans Affairs patients. Seeing the opportunity to realize even more profit, 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. To circumvent this technicality, CompCARE encouraged doctors to fax lists of fictitious patient names to CompCARE. PharmaCARE sold CompCARE to WellCo, a large drugstore chain, just weeks before AD23 was publicly linked to over 200 cardiac deaths.
As CompCARE and its new parent company enjoyed record profits and PharmaCARE’s stock price approached $300 per share, reports started surfacing that people who received AD23 seemed to be suffering 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.
John has come to you with an internal company memo describing the potential problems with AD23, and information describing the company’s willingness “roll the dice” and continue to market the drug.
Your senior partner has asked you to write a memo outlining the following issues for review by the senior partners.
In preparation for this assignment, use the Internet or Strayer Library to research examples of intellectual property theft that occurred within the past two (2) years.
Write an eight to ten (8-10) page paper in which you:
Research three to five (3-5) ethical issues relating to marketing and advertising, intellectual property, and regulation of product safety and examine whether PharmaCARE violated any of the issues in question.
Argue for or against Direct-to-Consumer (DTC) marketing by drug companies. Provide support for your response.
Determine the parties responsible for regulating compounding pharmacies under the current regulatory scheme, the actions that either these parties or the FDA could / should have taken in this scenario, and whether PharmaCARE could face legal exposure surrounding its practices. Support your response.
Analyze the manner in which PharmaCARE used U.S. law to protect its own intellectual property and if John has any claim to being the true “inventor” of AD23. Suggest at least three (3) ways the company could compensate John for the use of his intellectual property.
Summarize at least one (1) current example (within the past two [2] years) of intellectual property theft, and examine the effect on that company’s brand.
Analyze the potential issue surrounding the death of John’s wife and other potential litigants against PharmaCARE as a result of AD23.
Specify both the major arguments that John can make to claim that he is a whistleblower and the type of protections that he should be afforded. Justify your response.
Use at least three (3) quality resources in this assignment. Note: Wikipedia is not an acceptable reference and proprietary Websites do not qualify as academic resources.
**this assignment will be graded based upon the rubic that is attached**
Assignment 4: Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property
Name
Institution
Memo Outlining the Issues Surrounding PharmaCARE for Review by the Senior Partners
With the advanced technological revolution currently experienced in the world, the pharmaceutical industry is one of the sectors that have greatly benefited. The industry is experiencing enormous growth and development owing to the huge profits it enjoys every year. With the many emerging diseases such as cancer and diabetes among others, the demand for drugs designed to mitigate such diseases has skyrocketed. Consequently, pharmaceutical companies have strategically positioned in order to reap maximum profits from the highly costly medicine. Owing to the attractiveness of the pharmaceutical business, many investors are entering the industry causing more competition among the players. Accordingly, the companies are forced to spend large amounts of funds to promote research and development of new drugs as a way to gain competitive advantage that is necessary for survival in the highly competitive market (Huber, 2010). The fierce competition among the players in the pharmaceutical industry sometimes results in issues of legal and ethical considerations in the competition tactics. In some situations, the issues of product safety and matters of intellectual property pertaining to their medical products raise some concern. Some companies are occasionally caught violating some vital ethical and legal matters governing their operations, which can be detrimental to their wellbeing in the market. In the pharmaceutical industry, the violation of ethical and legal code of conduct may have a huge implication of exposing a company to possible litigation owing to the company’s irresponsibility that exposes the consumers to the impending dangers associated with the products involved.
The Ethical Issues Associated with CompCARE
The case study of CompCARE presents a situation in which the company, a subsidiary of PharnaCARE, is facing various ethical and legal issues pertaining to marketing and advertising, intellectual property, and regulation of product safety. Being a subsidiary company, CompCARE is exempted from obtaining an independent license to allow its operations. Categorized as a compounding company, CompCARE is required to sell its medical products to only the patients with prescriptions from licensed practitioners. Besides, the company has the obligation to educate its customers, be it patients or physicians, on its products. Accordingly, by selling its AD23 drug in bulk, CompCARE violated the FDA Compounding Quality Act prohibiting such firms from doing so, particularly selling the drugs for general use (Lee, 2011).
CompCARE also demonstrated some unethical issues in its marketing operations. As the company did with its AD23 drug, marketing drugs to clinicians is considered unethical in the pharmaceutical industry. Through such marketing campaigns, companies can influence physicians to prescribe or recommend a drug without putting much consideration on the quality and performance of the drug, as required by the pharmaceutical industry code of conduct. Besides, by encouraging physicians to use fictitious patients’ names in order to obtain the drugs from them, CompCARE violates its ethical and legal obligations. As a compounding pharmaceutical company, the law allows CompaCARE to issue drugs to only prescribed patients and not health institutions.
Another issue of concern pertaining to CompCARE operations entails the production of the AD23 drug. Normally, the production of such drugs takes a longer period than the six months it took for the company to avail the product to the market (Huber, 2010). For such drugs to be cleared as safe for consumption, they have to undergo a thorough scrutiny and tests such as clinical trials in humans to determine their safety and fit for patients. However, there is no instance where CompCARE adhered to such regulatory procedures to test the drug for Alzheimer disease on people to verify of its safety standards. Instead, the company went ahead to introduce the new drug to the market. After there were cases of patient death resulting from the use of the AD23 drug, instead of the company to take measures to recall the drug, it continue to supply the deadly drug to the market without caring the implication the drug could have on its users. By compromising people’s lives, CompCARE committed a crime, which it could be held liable for the deaths of the patients taking the drug. The company was supposed to strictly adhere to the rules and regulation governing the pharmaceutical industry. This is important as it promotes the safety of the products availed in the market for consumption thus enhancing the safety and welfare of the consumers. Pharmaceutical companies ought to carry out legal business operations.
Direct-to-Consumer (DTC) Marketing
Recent times have seen the cost of prescription drug go up to a record high , a scenario believed to have been caused by the aggressive direct-to-consumer (DTC) advertising being practiced by pharmaceutical companies in the modern market. Through the practice, pharmaceutical companies advertise new drugs and improvements on drugs using the print media, television, the internet, audio media and other effective ways through which to reach the consumers. According to reports, such advertisements are proven effective as they reach millions of consumers and physicians all over the world, which exhibits through the huge profits earned by the pharmaceutical industry. The advertisements are meant to influence the consumers’ decision on the type of drugs to take. As much an the supporters of DTC advertising would claim that advertisements helps to inform consumers about some of the treatable ailments in addition to promoting the communication between patients and physicians, others believe the practice is wrong and should be discouraged. Although DTC advertising is Although DTC advertising is useful, it poses huge risks to the public health pertaining to the rising costs of drugs among other possible negative effects, one being the truthfulness of such advertisements, which is a major concern for health policy makers.
Today, the rules guiding the pharmaceutical industry have eased up and the players in the industry have more opportunities to conduct their businesses without much fear of being accused of a crime. The FDA nowadays does not require pharmaceutical companies to include the messages of the side effects of their drugs, a situation which has allowed the companies to actively participate in infomercials (Lee, 2011). Lack of the strictness by the FDA in scrutinizing the information of pharmaceutical companies that are portrayed in advertisements has allowed the companies to hide too much necessary information pertaining to the side effects of their drugs, which could be the reason for the huge sales of drugs. According to researches, a majority of DTC advertisements provide biased information, which in return promotes the sales of drugs over other available healthy alternatives that patients can consider to mitigate their health problems (NCSL, 2014). Infact, many countries in the world do not believe that DRC advertisements are beneficial, which is the reason the practice is not tolerated in such countries. The impending potential dangers of the practice have made other countries adamant to allow the practice fearing the negative effects it could have on the public health. It is only a few countries such as...