This paper examines ethical and legal considerations in marketing, intellectual property, and product safety through the lens of the fictional PharmaCARE corporation and its drug AD23. It evaluates PharmaCARE's violations of marketing ethics, argues against direct-to-consumer pharmaceutical advertising, and analyzes the regulatory framework governing compounding pharmacies. The paper also addresses intellectual property claims by scientist John, explores compensation options for his contributions, reviews a real-world intellectual property theft case, and assesses PharmaCARE's legal liability for consumer deaths. Finally, it outlines the whistleblower protections available to John under G20 anti-corruption principles.
Business ethics have become an increasingly essential requirement for firms, especially given the ongoing globalization of the world economy. In the long run, corporate ethical standards of suitable behavior influence business success in a positive way — or, when absent, have the power to cause significant harm. As a consequence, high-profile ethical failures have appeared in both Europe and the United States. Important lessons can be learned from these corporate ethical downfalls, which vividly reveal the need and significance of business ethics (Perry-Green, 2013).
According to standard definitions, ethics relate to issues associated with the general nature of morals and the particular moral choices made by an individual. Simply put, ethics are derived from an individual's moral values. Personal values and beliefs constitute a considerable part of any debate concerning ethics. Ethics can be altered, shaped, and/or influenced by an individual's family values, social upbringing, educational background, religious practices, personal necessities, and professional activities. In the case of pharmacists, the major motivation for ethical conduct should be professionalism. There may be no universal standard code of ethics for pharmacists, but every country possesses a set of regulations governing the code of ethics or conduct for its pharmacists. Every nation's pharmacy expert board or council has, or will, implement a code of ethics or conduct to protect the profession (Noordin, 2007).
Both ethical and legal considerations are relevant components in marketing, intellectual property, and product safety. However, there remains one unpredictable and difficult-to-manage element in every organization: the individual employee. Ethical or unethical conduct is not entirely a function of a worker's character; it is influenced by several factors. Workers are shaped by the forces that surround them — their colleagues, their managers, the compensation system, company values and policies, and group norms. This paper revisits the PharmaCARE organization and examines how both ethical and legal considerations influenced its decision-making in marketing, intellectual property surrounding AD23, and product safety.
Each aspect of a firm's marketing and advertising activities is subject to various laws and restrictions. Marketing directors routinely face challenges in dealing with legal and ethical issues. It is likely that every marketing director recognizes that clear-cut solutions to emerging ethical matters in the ordinary course of business are not easily found (Lamb, McDaniel, & Hair, 2010). A particular ethical issue related to marketing is how to be socially conscious. In the process of marketing and advertising a product to a specific group, there must be ethical consideration of how this will affect the individuals being targeted. Will the advertisement be perceived as stereotyping? Is it insulting to a particular group? Is it culturally sensitive? A marketer or advertiser should address these and other ethical questions (Lamb, McDaniel, & Hair, 2010), including: What are the possible outcomes, and how far-reaching might they be? What is the probability of a harmful result? What is the overall nature of the company's response to potential and ongoing ethical issues? Each of these is a legally and socially expected question that must be considered in terms of social accountability in marketing and advertising (Perry-Green, 2013).
A familiar type of intellectual property is the copyright, which applies to works such as movies, books, and musical recordings. To copy a work and profit from the sale of that copy is analogous to shoplifting. An individual who creates an original work automatically holds a copyright to it. Copyright ownership refers to the specific work and the definite rights of the owner. Research has identified the following categories of works eligible for copyright protection: sound recordings and musical compositions; printed works such as books, articles, and lecture notes; audiovisual works including movies, online videos, and television shows; computer software and video games; dramatic works such as musicals and plays; and visual works such as advertisements, posters, and drawings (Brown, 2014).
Ideas, procedures, and events are not covered under copyright law. For copyright protection to apply, both creative and tangible components must be fixed in a physical medium. Titles and names alone are not subject to copyright protection. Ethical matters concerning product safety regulation are especially relevant in the pharmaceutical industry. A significant historical example occurred in 1938, when 107 children died as a result of an incorrectly formulated drug product. Following that tragedy, product safety became a mandatory obligation for pharmaceutical organizations. In the current regulatory environment, it is increasingly possible to safeguard consumer rights through rigorous product safety management (Eroglu, 1996).
The primary ethical obligation of all businesses is to ensure that they provide quality products and services while practicing social responsibility toward the consumer. Product safety engineers are responsible for establishing the safety of products, obtaining agency certifications, and inspecting and evaluating products against established standards. This is where an individual's or a company's ethics can be tested. As was demonstrated in the CompCARE situation, safety engineers became aware of problems involving the product; however, management dismissed the potential risks in favor of large monetary rewards and corporate gains for PharmaCARE. This situation underscores the need for stronger product safety standards — including, for example, prohibiting the production of goods in facilities whose conditions cannot be adequately monitored (Perry-Green, 2013).
Direct-to-consumer (DTC) marketing by pharmaceutical companies should not be permitted. Several serious concerns have emerged from DTC advertising of prescription medications. First, this approach may drive investment in and demand for certain drugs — from federal sources, consumers, and insurers — without clear evidence that the benefits justify the expenditures. Specifically, some observers are concerned that DTC advertisements encourage broader use of particular drugs than their actual health benefit warrants. Second, DTC advertisements for newly approved medications may result in their use in circumstances, or by patients, whose potential risks were not fully known or considered during the drug approval process. These concerns have fueled proposals to suspend advertisements for brand-name prescription medications during the initial two years following FDA approval (Elmendorf, 2011; Brown, 2014).
Compounding pharmacies are pharmacies where a licensed physician or pharmacist — or, in the case of an outsourcing facility, an individual under the supervision of a licensed pharmacist — mixes, combines, or alters a drug's ingredients in order to prepare a medication tailored to the needs of a specific patient. Compounded medications are not FDA-authorized, meaning the FDA does not validate their safety or efficacy. Both healthcare professionals and consumers rely on the standard drug authorization process to ensure that medications are effective and produced according to federal quality standards (Food and Drug Administration).
As established in prior analysis of this scenario, PharmaCARE created a wholly owned subsidiary, CompCARE, to function as a compounding pharmacy and distribute a new formulation of AD23 to patients on a prescription basis — doing so specifically to evade FDA inspection. CompCARE was established in a suburban office park near its patients' location. To save money and time, the company conducted a rapid, low-cost renovation and appointed Allen Jones to manage the facility's "clean room." Compounded drugs do not receive an FDA finding of production quality prior to being marketed. For example, contamination of medications compounded under section 503A, or false statements in the labeling or advertising of such medications, may constitute a violation of federal law. Companies that register with the FDA as outsourcing facilities under section 503B are subject to FDA oversight and inspections under a risk-based program. PharmaCARE avoided this scrutiny by not registering CompCARE as an outsourcing facility and by operating out of a refurbished office park rather than a recognized pharmaceutical facility.
PharmaCARE could face significant legal exposure as a result of these practices. Because PharmaCARE registered CompCARE as a compounding subsidiary, it falls within the scope of FDA regulations governing outsourcing facilities under section 503B. Such facilities are required to comply with current good manufacturing practices (CGMP); they must be inspected by the FDA under a risk-based program; they must report adverse outcomes; and they must provide the FDA with specific information about the products they compound. Hospitals and other healthcare providers that source medications from registered outsourcing facilities can do so with the assurance of federal oversight and CGMP compliance. PharmaCARE's failure to meet these obligations exposes it to federal legal liability (Perry-Green, 2013).
A considerable advantage PharmaCARE exploited is that the intellectual property framework in the United States consists of predictable and transparent legal institutions well-suited to resolving disputes. All organizations doing business in the U.S. have access to this robust legal structure, which can help maximize the value of intellectual property assets (Laczniak, Bowie, & Klein, 2005). The development of the U.S. legal system has promoted a culture of respect grounded in legal predictability and institutional stability.
Technically speaking, John's work as a scientist in compounding AD23 was less outright invention than modification. He and his team took the original PharmaCARE AD23 drug and modified it to enhance its potential health benefits. This is analogous to adapting a recipe: starting with an original chocolate cake recipe and then modifying it with specific additions — such as nuts, whipped cream, or fruit — according to consumer preferences. The basic recipe is not fundamentally changed, only modified for particular purposes.
"IP law exploitation and John's inventor status"
"IP theft case, death liability, and whistleblower rights"
PharmaCARE has demonstrated neither strong ethical conduct nor consistent legal accountability. On the contrary, the company has shown that it is not operating ethically — it has failed to implement the principles it publicly professes, and it has shown no genuine concern for product integrity. The company was aware of the harmful and potentially fatal character of AD23 but took no meaningful steps to remove it from the market or protect the lives of patients and workers alike (Perry-Green, 2013). The fact that PharmaCARE continued operating with knowledge of deaths caused by AD23 is deeply unethical and legally indefensible.
Moreover, PharmaCARE demonstrated a disregard for its legal obligations by using its CompCARE subsidiary to evade FDA regulatory oversight of compounding pharmacies. With updated legislation now in place, companies that attempt to evade ethical and regulatory responsibility in the manner PharmaCARE did will face increasingly severe consequences.
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