The Case- Big Pharma

Case Analysis
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  Ethical Issues The case “ Big Pharma’s  marketing tactics ” talks about today’s pharmaceutical industry. The industry which provides drugs for the public is one of the largest industries with a profit margin of roughly seventeen percent. The industry has been accused of using unethical marketing and sales tactics to increase its revenue and sell more products, acting against its corporate social responsibility by spending more on advertisement of drugs than on research and development. There are various Ethical issues involved in the case. Companies use various tactics to promote their drugs while risking the public ’s  safety and hiding crucial information about their research on the drugs. These include payments to doctors and medical students, pushing the m to prescribe the company’s drugs for diseases it may not have been approved for by the FDA, spending huge amounts of money on advertisements that maybe misleading, overstating the drug’s effects on curing a disease and thus increasing sales of the products, and also causing other side effects. Overstating the price of the drugs and bribing government officials to ease the laws regarding marketing and advertising of the drugs are also issues which have been covered. Companies also try and push their drugs for off-label uses, it is legal for doctors to prescribe any drug they consider fit which is approved by the FDA but companies aren’t allowed to promote drugs which haven’t been approved   and increase sales of its products. All this is supported by their extensive lobbying in Washington and therefore big pharma goes through all its methods 4 . The case also talk about the various lawsuits these companies faced for their illegal practises, like Pfizer agreed to pay a fine of $430 million for promoting its drug for unauthorized purposes The case also brings out the point that these companies are run just to maximise profits, there is an unethical part in running these companies this way. Large companies like those in the pharmaceutical industry have great corporate power and are capable of affecting the social and economical environment to a great extent. Thus, according to the stakeholder theory, big pharma is running away from its corporate social responsibility of providing to the society and according to the charity principle where the rich provide for the needy in the society, big pharma needs to take up some social responsibility to give away. Primary Stakeholders The primary stakeholders in the case are the doctors, the government, Non- governmental organizations and the consumers. The company made payments and gave gifts to doctors, sponsoring trips and making payments in exchange for prescribing and showing loyalty to the company’s drugs. The government is a primary stakeholder for receiving bribes from the companies, like in the case of Johnson and Johnson, which was alleged to have bribed the deputy chief of the Chinese state FDA. NGO’s like the Polish charity which received around $76000 by Schering-Plough Poland to boost its drugs sales are also the primary stakeholders in this case. The consumers were targets of direct-to-buy advertising, where they were exposed to advertisements which increased their fears of diseases and informed  them about new drugs that the companies have come up with, therefore consumers are also primary stakeholders in the case as they are directly affected by the actions of the drug companies. Justification of Marketing Tactics The marketing tactics in the case include payments, gifts and other financial lures to doctors and government officials, off-label uses of drugs, overpricing of the drugs resulting in the higher costs of Medicaid and Medicare programs and false advertisement. All of these marketing tactics have resulted from the desire to increase revenue and profits for the firm. Although the main focus of a business is to maximize profits, these marketing methods have resulted in harm to the society and have resulted in unethical behaviour. The direct-to-consumer advertisements can be justified to an extent. Through this the industry educates the public about various drugs and their benefits, it could help educate the general population, and in a world full of cut-throat competition where advertisements are essential to marketing, spending on advertisements to promote one’s drugs is justified. The problem , however, arises when companies overstate the effects of their drugs, promoting them for off-label uses and for diseases which they cannot cure and hide the side effects. They advertise to such an extent that it increases health fears among consumers and makes them spend more; also companies make up maladies for which their drugs are the only cure. ( Restless leg syndrome? Try Requip) these marketing methods are by no means justified and are highly unethical. Big pharma claims it needs large sums of money to cover its research and development costs and to ensure a regular stream of innovative products. As argued by Kotlikoff in a recent Boston globe op- ed piece “ to develop each of the high-priced drugs that we buy, the pharmaceutical companies pay, on average, almost $1 billion. Like it or not, the drug companies need to recoup these costs, and we need to let them. If we don’t, we’ll be doing a grave disservice to ourselves in limiting the prospects of new cures for painful and often life threatening diseases ” 3 (para.5), but if this is actually the truth is constantly being questioned. A s stated by Marcia Angell “They spend over twice as much on marketing and administration, and they actually make more in profits than they spend on R&D ” 3 (para.6)   . Drug companies use innovation as excuse to produce drugs which are barely different from the ones already existing in the market and charge high prices for them. To quote Angella”   Independent analyses show that only about percent of the research papers that lead to new drugs come from the companies that market the drugs. So there’s no evidence that bi g pharma is putting much effort into discovering important drugs, although they’re certainly putting a lot of effort into acquiring them from others. Still, the industry insists on being rewarded as though it were the source of innovation ” 3 (para.16)   ) . So, claiming to need money for R&D when in fact the costs of R&D are exaggerated and cover only a small part of the total sales as compared to advertisements, these marketing tactics aren’t justified as a source of money for R&D.     Overpricing the drugs, using false advertisements which put public health in serious  jeopardy, pushing the drugs for other off-label uses which can have severe side effects for fulfilling the company’s pecu niary needs is not justified. Risking lives in the name of producing new products claiming to save more lives and cure life-threatening diseases in not justified, mainly when the main aim of the corporations is to increase their profits. Promotional Gifts to Doctors Big Pharma promotes it drugs by giving away free items like notepads, pens and other gifts to doctors while they are still in medical school. The companies start early to try and lure the students in favour of their drugs and try and get their loyalty early on. These companies also try to influence the medical students through the Continuing medical education schemes, here the sponsors can easily provide grants to providers with pitched in topics that are designed to promote their marketing strategies. Although these sponsorships do help in educating the students, it is biased and a truthful education is not received. These practises are unethical as they take advantage of the student’s financial instability and make them biased to their products. This makes them believe that there is a drug for every problem and that new drugs can always be produced to replace the old ones. Educational institutes are also a target of the Big Pharma as many teachers, deans and department chairs are affiliated to companies and this influences the educational content. These practises should be stopped and serious action should be taken against them because if the doctors and students are corrupted, there is little hope for the patients to receive a fair treatment. Ethical principles There are various ethical principles which are violated by the company’s marketing tactics. Giving away free gifts to young doctors violates virtue and character. Such practises make these young doctors dishonest right from the beginning, before their career has even started and the oath taken to help everyone in need is broken when the doctors prescribe wrong drugs to their patients. Bribing government officials and the excessive lobbying also violates character and virtue. Human rights are also violated through the marketing methods of big pharma. Right to information and right to health and safety are clearly ignored when the companies make false advertisements and push their drugs for off-label uses. Companies hide the truth about their research and continue to use their drugs by manipulating the consumers, doctors etc. When the companies overprice their drugs, they violate ethical principle of justice where equality is observed. As a result of overpricing the drugs, the government pays more for the Medicaid and Medicare programs thus reducing the budget for others in need. The  marketing and advertising methods are clearly meant to increase the bottom-line and thus benefit only the shareholders. Other stakeholders are not given equal importance. According to the utilitarian principle, the benefits should exceed the costs; the benefits in the case of big pharma are an increased margin of profits and higher revenues. The costs include risk of public health, corruption in society, and in certain cases even death of unfortunate individuals who were affected by the wrong drugs, as in the case of Lamisil by Novartis, which was linked to 16 lung failures, including 11 deaths, which are very high costs to bear for increased revenue. The benefits do not exceed the costs as the big Pharma, an already profitable industry for the last two decades cannot justify these tactics as a means of survival. Thus, the utilitarian principle is violated through these methods. As a result, none of the above mentioned principles support Big Pharma’s actions.   Approaches by physicians Physicians could do a couple of things to prevent promoting off-label uses for drugs. They could clearly state their affiliations with companies to the customers, they could promote companies for drugs in which they truly believe and which are effective instead of promoting drugs which may harm the patients. For physicians who are against the methods used by the drug companies could start up campaigns against these activities, like given in the case as Jaya Agarwal launched a national campaign against payments and gifts to doctors 17 . The physicians should be more honest and respect the oath taken to medically help those in needs and not prescribe wrong drugs to their patients. A good example of this was when two hundred Harvard students grouped up to confron t the school’s administration against such practises and were joined by Dr. Marcia Angell, a professor at Harvard. The physicians could report to authorities against bribes which try and lure them towards the company’s drugs.   Personal Research With its increasing influence, corporate power and extensive lobbying, the problems with Big Pharma are increasing. Its market is increasing every year ,”   In 2009, the world’s 12 largest drug companies made a net profit of nearly $78 billion on revenues of $434 billion. (Seven of the 12 are headquartered in the U.S.: Johnson & Johnson, Pfizer, Abbot Laboratories, Merck, Wyeth, Bristol-Myers Squibb and Eli Lilly.) The next three dozen companies combined raked in $46 billion on revenues of $203 billion. By 2014, the global market for pharmaceuticals is expected to reach $1.1 trillion. ”  2 (  para.7)  
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