Good Legal And Ethical Considerations In Marketing, Product Safety And Intellectual Property Term Paper Example

Type of paper: Term Paper

Topic: Business, Drugs, Commerce, Products, Law, Advertising, Ethics, Property

Pages: 8

Words: 2200

Published: 2020/12/16

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The business world is dynamic. Modern developments in technology and information have brought remarkable improvements in companies. However, production and trade comes with ethical considerations. Not surprisingly, physicians also face serious ethical issues. Indeed, codes of professional and ethical conduct inform the medical activities. Proper practice is vital in the manufacturing, marketing, and selling of drugs inter alia. This paper provides an analysis of ethical issues surrounding PharmaCARE. As well, it discusses various issues facing the American Superconductor Corporation (AMSC) about intellectual right theft.

Ethical issues relating to marketing and advertising

Marketing and advertising go hand-in-hand in the product promotion and market penetration. Certainly both involve creating awareness of products among the public. As such, commercialization must consider significant ethical concerns. Marketing must confine itself to the tenets of proper practice. The marketing of substandard and falsified drugs led to the WHO move to develop international codes for global health in 1981. Certainly, this measure was in response to the intense marketing of infant formula for breastfeeding mothers (Gostin & Buckley, 2013)
Ethical issues relating to advertising are diverse. Firstly, advertisements must consider the rules outlining the codes of professional publicity. For instance, they must consider the age of their audience. To illustrate, it would not be appropriate to advertise contraceptives to children below ten years. Secondly, advertisements must use appropriate messages that confine to basic morality. As such, they must desist from unsavoury techniques that brainwash the audience. For instance, the appeal to sexual urges continues to soar in most advertisements. Precisely, pictures of nude and scantily dressed men and women are rife in many advertisements.
Advertisements should not overstate the efficiency of their products. For example, companies, which make skin products such as soaps, should not exaggerate the efficiency percentages of their products beyond the factual figures.

Ethical issues relating to intellectual property

Intellectual property rights help to safeguard the ideas and inventions of individuals and companies. Most of the intellectual property ethical considerations emerge from the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of 1945(Gostin & Buckley, 2013). Apparently, TRIPS was a multilateral agreement that sought to protect the people’s inventions. According to this agreement, users of someone’s innovations must acknowledge the owner of the innovation. Thus, it is vital to safeguard the product patents (Gostin & Buckley, 2013).
Another ethical issue involving patent rights is how to waive the cost of patented medicines. Certainly, patented drugs tend to be costlier than the unpatented ones. Accordingly, there have been tussles between governments and copyright holders on the prices of drugs. For instance, particular governments have resorted to issuing compulsory licenses in order to waive the cost of some patented drugs. For example, Indian Drug companies were excused for TRIPS patent regulations until 2005 to make antiretroviral more accessible to its poor (Gostin & Buckley, 2013).

Ethical issues relating to the regulation of product safety

Ethical issues related to product safety include the clinical trials before the approval of use of a given product. Particularly, this involves the investigation and documentation of the drug’s safety profile before its release into the market. A case in point was the withdrawal of rofecoxib also known as Vioxx from the US market due to its association with myocardial infarction and stroke (Ventola, 2011).
Certainly, product safety involves both post and pre-marketing safety surveillance of a new product before its release into the market. Thus, this helps to identify potential benefits and harm of the product (Ventola, 2011)
Also, product safety involves the education of physicians as to the proper use, storage and handling of a drug. Mainly, this form of product safety intervention helps to ensure security in handling of a new product (Ventola, 2011).
As well, product safety also involves the distinction between high-quality genuine drugs and substandard and fake ones. Global and national regulatory processes assist in distinguishing real drugs from the counterfeit drugs (Gostin & Buckley, 2013).

Examination of PharmaCARE in relation to the ethical issues

PharmaCARE case undoubtedly relates strictly to the ethical concerns. One of the primary concerns involves the matter of intellectual property. John raised a claim as to being the rightful owner of the AD23 diabetes drug. Prima facie, the argument seems to put PharmaCARE in violation intellectual property rights. Particularly, John’s right to informed consent not only to the use, but also of the distribution and subsequent modifications to the product is a point of concern.
Secondly, PharmaCARE faces a bad reputation as to the advertising of AD23. Incidentally, PharmaCARE continued to advertise the compounded AD23 in spite of its connection to 200 cardiac deaths. Surprisingly, PharmaCARE continued to allocate huge bonuses to its managers and executives. Thus, it was reaping by circumventing the FDA regulations governing advertisements of such products.
Additionally, PharmaCARE case reveals lack of keenness in establishing the safety of the products. Apparently, PharmaCARE released AD23 into the market without conducting a thorough study on its effects.
Further, PharmaCARE sale of CompCARE to wellCom was ill-willed. Apparently, it not only shifted the blame to wellCom but also discredit it. Certainly, this was a move to evade the legal sanctions it was bound to face due to the cardiac deaths.

Why I support DTC by drug companies

I support Direct-to-Consumer Pharmaceutical Advertising (DTCPA) because they empower the patients. Certainly, they provide useful information about the drugs, thus educating the community. Indeed, consumers benefit from having a broad pool of information sources from which they can get information on treatment options (Ventola, 2011).
Secondly, DTC ads promote physician-patient dialogue. A 2004 FDA study showed that 53% of physicians reported that DTCPA improved their discussions with patients. Moreover, a study of Oncology Nurse Practitioners in America showed that 63% felt that DTCPA promoted patient dialogues (Ventola, 2011).
Thirdly, DTCPA helps to reduce stigma issues connected to particular diseases. For instance, an advertising campaign for finasteride is believed to have prompted men to discuss benign prostatic hyperplasia with doctors. Previously, many men were reluctant to discuss it (Ventola, 2011).

Why I do not support DTC by drug companies

DTCPA can have dismal effects. I object to DTCPA for three major reasons.
Firstly, DTCPA may lead to increased cost of drugs. Precisely, this is a result of the inclusion of advertising expenses in the final market price of the products (Ventola, 2011).
Secondly, DTCPA ads are not strictly regulated. According to Ventola (2011), companies doing DTCPA need not to obtain prior clearance from FDA. Thus, businesses can make a misleading advertisement as they await their eventual pre-clearance.
Additionally, DTCPA can significantly strain a client’s relationship with the health practitioner. For instance, some ads can make a patient skeptical of the competence of his healthcare provider. Indeed, this can happen when there is contradicting information (Ventola, 2011)

Parties responsible for regulating compounding pharmacies

Under the current regulatory scheme, various parties are responsible for the regulation of compounding pharmacies. The Medicines Registration Authorities play the vital role in regulating compounding pharmacies. Accordingly, they maintain the list of medical products that are eligible for marketing in a given country. Indeed, they document vital information about the name, location and other identification data for medicines and their manufacturers (Gostin & Buckley, 2013).
Moreover, the Pharmaceutical Research and Manufacturing Associations (PRMAs) are parties to the regulation of pharmacies. Precisely, they monitor the production and marketing of drugs within the country. Accordingly, PRMAs conduct studies on the nature of the drugs circulating within a given country. As well, they address issues of patents and intellectual rights for medical products.
The Department of Food and Drug Administration (FDA) of USA occupies a significant position in monitoring compounding pharmacies. Notably, FDA provides approval for the circulation of drugs. Most importantly, it conducts consumer education on drugs (Gostin & Buckley, 2013). FDA received the authority to approve the marketing of pharmaceutical products in US in 1938. Certainly, this was the result of the enactment of the Federal Food, Drug, and Cosmetic Act in 1938 (Ventola, 2011).

Steps that the regulatory agencies should have taken in PharmaCARE case

The PharmaCARE case is a typical scenario of compounding pharmacies. The regulatory agencies could have taken various measures to address the matter. Firstly, they should have investigated and documented the ownership of CompCARE before registering it. Precisely, this would help to identify its real owners. Secondly, regulatory authorities should have taken the samples of the compounded AD23 for laboratory analysis and cohort studies. Accordingly, the results would provide a picture of the benefits and side effects of the medication. Importantly, the studies should have happened before the release of the drug to the market. The discovery of the harmful effects of AD23 should have led to immediate stoppage of its manufacture by CompCARE. As well, an urgent consumer and medical practitioner’s advisory statement suspending use of AD23 should have been issued. Meanwhile, intense investigations should have been conducted. Subsequently, upon satisfactory evidence of harm, regulatory entities should have closed CompCARE and withdrawn the compounded AD23 from the market.
PharmaCARE could face legal exposure because of its practices. Certainly, it faces the matter of prescription drug advertising. According to FDA regulations, drug advertisements must provide balanced information. As such, they should inform the audience about both the benefits and risks of a drug. Incidentally, PharmaCARE continued to market AD23, despite its awareness of the potential dangers. Thus, the ads were misleading and, therefore, a contravention of FDA advertising policy (Ventola, 2011).
PharmaCARE also faces the count of violating intellectual property rights. Apparently, John was the team leader who spearheaded the discovery of the ability of AD23 to inhibit Alzheimer. The Trade Related Aspects of Intellectual Property Rights of 1994 stipulated that except in the case of national emergency, the users of patents must negotiate with the owners (Gostin & Buckley, 2013). Ideally, the negotiations should include the terms of corporation and association as well as the benefits that the owner will get. Incidentally, there is no record of such negotiations in John’s case.

How PharmaCARE used US law to protect its intellectual property

PharmaCARE used US law to protect its intellectual property by selling its rights to CompCARE. Under TRIPS, there is the notion of the compulsory license or statutory license of collective management. Precisely, this provision allows the use of someone’s innovation without payment in the case of an urgent need arising from an arbitration or a legal enactment. As such, under the statutory license, an individual or company may use someone’s invention without prior consent from the owner. Ideally, in such a case, the user will only be required to pay the owner a set fee for the license (Gostin & Buckley, 2013).

The validity of John’s claim to being the true inventor of AD23 (100)

John’s claim to being the real inventor of AD23 is somewhat flimsy. John’s team reformulated AD23 after PharmaCARE’s discovery of its potential to inhibit Alzheimer. John was in the follow-up team that developed the compounded AD23. Hence, it was not a personal discovery but a joint effort. Also, the scenario does not reveal the person who invented the initial diabetes-treating AD23. Most likely, this may have also been a joint effort. Therefore, the invention of AD23 requires in-depth investigation before making any significant conclusions.

Ways in which PharmaCARE could compensate John for using his Intellectual property

PharmaCARE can take several steps towards paying John. Firstly, it can cover all the pertinent legal fees involved in the litigations of the compounded AD23.
Secondly, PharmaCARE can revisit its terms of negotiation with John and give him a percentage of money for every sale of the initial AD23.
Thirdly, PharmaCARE can shoulder the burial costs of John’s wife and cover the imminent family expenses. For instance, PharmaCARE could cater for the upkeep of John’s children. Ideally, PharmaCARE can take up their educational, medical, housing, travel and food costs.

An example of intellectual property theft and how it affected the company’s brand

Hart reports of a case involving a contravention of IP rights. Sinovel had allegedly stolen the trade secrets of American Superconductor Corporation (AMSC). Sinovel allegedly sold AMSC’s high-end technology to customers in Massachusetts. AMSC had first entered into a partnership with Sinovel Wind Group in 2005. Five years later, Sinovel colluded with one of the AMSC’s engineers and had him send them the AMSC proprietary source codes. Subsequently, Sinovel used the codes to establish its subsidiary to manufacture AMSC’s technology in 2010. A year later, Sinovel cancelled all the current and impending AMSC shipments of technology on allegations of them being substandard. Apparently, this step had significant effects on AMSC since Sinovel was its primary customer. Indeed, Sinovel accounted for 60% of the total technology sales of AMSC. Consequently, the AMSC stock values fell drastically by around 90%. Total damages including the lost revenue from cancellation of its supply contracts amounted to around $1 billion. Eventually, AMSC had to lay off close to 60% of its workers. AMSC has continued to fight legal battles with Sinovel since 2011. Apparently, its attempts at legal redress have been dampened due to China’s loose intellectual property right legal framework. Additionally, the influence of political entities in China’s courts has further prevented appropriate legal intervention to AMSC case. Incidentally, the US Department of Justice has filed criminal charges against Sinovel Wind Group (Hart, 2013).

Issues surrounding the death of John’s wife and other litigants against PharmaCARE’s AD23

Several issues surround the death of John’s wife and other litigants. To begin with, the direct link of the compounded AD23 with the fatal cardiac arrests is a case in question. Claimants can file claims demanding compensation for the loss of their loved ones.
Moreover, the medical practitioners and hospital authorities can enter into legal suites with PharmaCARE for putting them into disrepute in the medical circles. Indeed, they must have faced colossal amounts of losses upon the discovery of the harmful effects of the compounded AD23.As such, they could also demand proportionate compensation from PharmaCARE.
The company registration bodies could file petitions regarding the fictitious and secretive registration of CompCARE. As well, the WellCo could sue PharmaCARE for selling of CompCARE to it.. Certainly, this hurried selling off was malicious. The sell-off also damaged the reputation of WellCo.

Arguments supporting John’s claim as the whistleblower

John is the whistleblower to AD23 scam. One point that supports this is that he came with the memo that apparently reported the harmful effects of the drug. Undoubtedly, he helped to bring the fatal impacts of AD23 into the limelight.
As well, John was party to both the initial invention and the subsequent modification. Therefore, it stands that he must have probably had a better understanding of the issues surrounding the product.

Possible protections for John

PharmaCARE should accord John the patent rights. Indeed, these would safeguard against wrong use of AD23. In addition, it should exempt him from liability as to the compounding of AD23. The reason for exemption is that it was not his idea to compound AD23.Certainly, this idea came from PharmaCARE. Thus, PharmaCARE should take up the responsibility.


Ventola, C. L. (2011). Direct-to-consumer pharmaceutical advertising: therapeutic or toxic?. Pharmacy and Therapeutics, 36(10), 669.
Gostin, L. O., & Buckley, G. J. (Eds.). (2013). Countering the problem of falsified and substandard drugs. National Academies Press.
Hart, M. (2013).Criminal Charges Mark New Phase in Bellwether U.S.-China Intellectual Property Dispute. Retrieved March 10, 2015 from

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