Legal And Ethical Considerations In Marketing, Product Safety, And Intellectual Property- Pharmacare/Compcare Case Research Paper Sample
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The case of the PhramaCARE and its subsidiary CompCARE revolves around greed for money in pharmaceutical business, and its consequence as business downfall. Initially, PharmaCARE had been an established company, renowned well for its high quality products and ethics. As an upcoming company that was establishing itself in every aspect of corporate responsibility, it had even started green initiatives to encourage friendly environments. In this regard, with its breakthrough in its diabetes drug, the company was seen as god-sent to provide the solution to the terrible infringement of Alzheimer’s disease. However, over the course of few years, the PharmaCARE Company set up CompCARE, a sister company, to be a compounding pharmacy to the manufacture of its new drug, AD23. In this manufacture, its methods went beyond those in the scope of a compounding pharmacy. Further, its internal business practices were pushed beyond the satisfactory limits, as employees’ health deteriorated, with some even dying. However, the major end-result for its downfall was the deaths of 200 people due to cardiac complications resulting from the drug.
Legal and Ethical Considerations in the PharmaCARE/CompCARE Case
Ethics are rules based on ideas that define what is morally wrong or bad to govern behaviours of individuals. They differ depending on a community’s social code and morality. However, with the globalisation of business, business firms are becoming obliged to adhere to universal principles of business ethics. Most ethical issues in business arise from personal selling, advertising, contract maintenance, pricing and supplier treatment, market research and market audience. The flaws in ethics for this company has resulted from the fact that, as a business, it has not taken important precautions to provide physicians and patients relying on its medication with important information address the latter’s concerns. Although the business is required by its shareholders to maximise profit and expand its scope, it is not ethically correct for it to market a medication that has not received a formal approval; it should be noted that the compounding was done on large scale for commercial purpose, as opposed to compounding for an individual patient. For the regulation of the product safety, especially in mass production, the company has to get approval from a relevant national regulatory body or rely on valid and reliable empirical evidences that show that its medication can address the patient’s concern without deteriorating his wellbeing. This was contrary to the company: it avoided the open scrutiny of the FDA to establish a compounding pharmacy that could sell new the reformulation en masse (American Pharmacists Association, 2013). Moreover it colludes with unscrupulous physicians to list fictitious patients, as witness to the functioning of the drug, as a matter of product promotion or advertisement, so that it could sell more drugs in bulk than the level authorised by the law. This leads to the death of 200 customers with its shares plummeting to the lowest level. In this way, the company was not becoming also ethical to its stakeholders. Moreover, the company is not becoming ethical to its employees when it does low cost- renovation on its premises; this obviously leads to bad air quality in the labs, to result in respiratory problems and deaths. Intellectual property in this capacity regards patents, trademarks, copyright, design protection and trade secrets. It has been noted that the business used the good reputation of the previous medication to override the market for its new drug. However, use of the trademarks, patents and other intellectual properties can only be appropriate if they are used on the same product that had previously received a formal approval from another country or the same country. In this regard, the company did not use its intellectual properties ethically (Haque, 2013).
Direct-to-Consumer (DTC) marketing by pharmaceutical/ drug companies
Direct-to- consumer marketing of medication refers to marketing of medication for a certain disorder when it has not received a formal approval from a national regulatory body like the Food and Drug Administration (FDA). If the DTC is done correctly, by obtaining viable and reliable empirical evidence about a drug, it can help to inform the public about certain illness and disease, as well possible treatments that are currently available. It can improve the doctor-patient relationship due to the fact that when a patient notices a certain drug advertisement for a disease; he may begin conversation with the doctor on the new or best possible course of treatment. DTC advertisements have also been noted to remove stigmas surrounding illnesses that are not openly discussed like erectile dysfunction (Haque, 2013).
However, there have been many cases that show how negative exercises of DTC arise. For instance, there have been complains that the companies may overcharge prices to cover-up the amount of direct promotion. They could also change the doctor- patient relationship, whereby patients are likely to start diagnosing themselves instead of receiving counsels from doctors. The DTC advertisements are also prone to resulting in overuse or overdose of the drug. Nonetheless, the manufactures are likely to overstate their benefits and understate their limitations like side effects. As already noted in the PharmaCARE/CompCARE case, they can collude with unscrupulous doctors to hide their shortcomings and harmful effects. In fact, due to the rising numbers of such cases, professors of top medical schools and civilian associations like Stop Drug Ads, have come up to call for the end of such advertisements (Haque, 2013).
The parties responsible for regulating compounding pharmacies under the current regulatory scheme
Compounding pharmacies are pharmaceutical companies that create particular pharmaceutical products to suite unique needs of patients as ordered by a legally authorised prescriber or a physician. To do this, they process or combine appropriate ingredients using several tools. It is important to note that in the US, although the FDA virtually regulates all commercial pharmaceutical products, they are states that primarily regulate pharmacies. If a drug manufacturer involves in producing a compounded medication for a single patient, at one time, using a qualified person, virtually the FDA will not be involved, but the state can intervene to ensure that the compounding meet the state-regulated standards (NCSL, 2015). However, for the PharmaCARE/CompCARE case, the company involved in large scale compounding for commercial purposes which virtually demanded a formal approval of both states and federal authorities. Therefore, according to the 2013 Compounding Bill, due to the fact that the company involved itself in making large volumes of compounded drugs for commercial purposes, it is supposed to be sued by the FDA, for not following its regulations and causing the deaths of customers of its drugs. However, as additional powers to reinforce the law, any compounding procedures for individual patient, since it is unique, should be approved by a state pharmacists or physician. For commercial compounding, the FDA should be mandated to stop a drug that is not going to be beneficial to people (American Pharmacists Association, 2013).
How PharmaCARE used U.S. laws to protect its intellectual property rights and whether John can claim to be the true “inventor” of AD23 or not
Intellectual property in this capacity regards patents, trademarks, copyright, design protection and trade secrets. It has been noted that the business used intellectual properties for the good reputation of the previous medication to override the market for its new drug. However, use of the trademarks, patents and other intellectual properties can only be appropriate if they are used on the same product that had previously received a formal approval from another country or the same country. In this regard, the company did not use its intellectual properties like trademarks ethically (NOLO, 2015).
It is addressed that John and his team of pharmacists had been engaged at the PharmaCARE/ CompCARE as researchers in the reformulation of a compounded drug called AD23. In this regard, the most appropriate intellectual protection instrument will be a patent, and it will exclude other entities from using, making, selling, exporting or offering for sale or compounding its components. According to the US Laws, patents are hard to be granted due to the fact that they require inventions of novelty. Although one may be thinking that he has an invention, when it is found that another person has already placed an application for a similar work, his will be considered invalid. One should know that for his items or ideas to be patented, they should be new or novel. In this regard, one is obliged to search identical or similar patents within the US and at international level. They should also be inventive but not just obvious modifications of other items or their designs. Further, the patent is granted to an invention that people can make and use (NOLO, 2015).
For the John’s case, engagement at the workplace can be in two ways: either as an employee or as an independent contractor. As an employee, one can only claim patent rights of an invention if he did not sign an employment agreement that he would assign all his invention rights to the company. He should not have been hired particularly for those inventive skills so that the invention could be born. Otherwise if one created the invention at his own time without employer’s resources he would claim the rights to the patent. Nonetheless, if the patent does not relate to the employer’s present or anticipated business or one’s occupation in the company, it will be obviously his. Although an independent contractor’s engagement may be different from that of an employee, terms and conditions on agreement can be worded to resemble those for an employee. Deemed that way, one should also realise that if one is employed as an officer of the company, ownership of his invention is more likely to be tipped towards the employer than him, due to fiduciary duty he owes to him. In this regard, even without a written agreement on whether an employee should own an invention or not, since John was an employee and had been employed as an officer of the company to lead a team of researchers in the reformulation of a compounded drug that could slow the progression of Alzheimer’s disease, he cannot claim any patent rights towards it. This is also cemented by the fact that he was using the employer’s resources to obtain his current objective of the drug (NOLO, 2015).
Intellectual Property Theft, and Examine the Effect on the Company’s Brand
Under the current US laws on Intellectual Property Protection, apart from tarnishing the brand of a certain company, a company defrauding another’s intellectual property also stands to pay for heavy amount of damages it could have caused to the victim company. Currently, there is a big war in the corporate world of telecommunication equipment pitying Apple Inc against other firms in the industry for intellectual property violations. There are various sources noting that these will harm their brands in both short run and long run. The companies have been embroiled in legal proceedings regarding trademark and patent rights violations with competitors like Samsung, Erickson and others for years. Early this year, in 2015, Apple has been sued for $529 million by Smartflash’s LLC for intellectual property right infringement. The Apple Inc. is likely to begin being referred to as patent trolls. The company has been downloading the Smartflash’s videos, songs and games, and media for its iTunes. If the iTune, which is believed to be one of the Apple’s pivot product among the youth generation, stumbles, its brand would simply be referred to as troll brand, and customers will never regard it again as the superior one (Swanner, 2015).
Analyisis of the potential issue surrounding the death of John’s wife and other potential litigants against Pharmacies as a result of AD23
For John’s wife, like others who became sick and died because of poor air conditions and safety in the laboratory, they will be covered by the law as provided by various sections of the constitution as illustrated by OSHA. OSHA mentions that everybody has a right to safe working conditions. According to the Occupational Safety and Healthy Act of 1970, no one is supposed to be killed or seriously harmed at his place of work. Otherwise it is the duty of the employer to provide employees with working conditions that are free from any danger. In this regard apart from providing protective devices or clothing, he should also ensure that the employees are well trained regarding what is required of their work. The training should cover hazardous parts of the machines or hazards in general, methods of preventing harm, and standards that will ensure safety. This should be done in the language that everybody can understand easily. OSHA also covers private sectors, and it is encouraged that the employees report their matter to it for inspection and disciplinary actions, if any. For discriminatory practices, apart from the EEOC, the discriminated employee can file her complaint to the OSHA for further actions (Cornell University Law School, 2015). However, apparently, the company is quite liable to the employees in all cases mentioned. The employees should first sue for insurance cover, otherwise a Workers Compensation Act. This law provides compensation in specific monetary terms for those who are injured, disabled or killed from work related illness. Further, some sections extend compensation to members of their families (OSHA, 2015).
For the one who is harassed or discriminated at the work place, he can forward his matter to the Equal Employment Opportunity Commission, and the employer can be liable for damages. One should note that any individual who harasses another at the work place would be held personally responsible for his behaviours. However, apart from being personally responsible for the discrimination, an employer becomes vicariously liable if decimation or any form of harassment happens at his workplace or in connection to his work (OSHA, 2015).Major arguments that John can make to claim that he is a whistleblower and the type of protections that he should be afforded
The US OSHA Act of 1970 aims to protect whistleblowers against retaliations from powerful employers. Whistleblowers are workers who report status of organisation’ safety, injuries or other protected activity. The complaints must be submitted within the time frame set by the Law. OSHA has laid out areas that whistleblowers can report as food safety, financial reforms, environment, consumer product, health insurance, work place health and safety, motor vehicle safety, pipeline, nuclear, railroad, public transportation agency, security laws and maritime. The whistleblower can also add work related injury, fatality or illness, unhealthy activities or other similar violations as provided by the statute. In the current case, John is a whistleblower and should be protected (by financial, legal and physical protection types) by the Law or Authorities and awarded monetary compensation. He has exposed a public threat which is the AD23 drug that is causing severe human health problems and cardiac related deaths. Moreover, the company has intentionally withheld information that relate to the drug’s side effects to continue making profits. Its compounding facility is also causing health safety concerns. The facility has resulted in individuals developing respiratory diseases and it will be better if the authority get informed about such matter. Lastly, the discriminatory practices, especially to members of Islamic faith, are unethical and thus he is a whistle blower (OSHA, 2015).
The case reveals that organisations should not just engage themselves in unethical practices and put the public health and safety at bay to pursue financial gains. The unethical practices also include using the existing loopholes in laws to garner the highest profit at the expense of lives of individuals. To combat these practices, both federal and state laws need to be stricter on Direct to Consumer Marketing of drugs. The DTC marketing encourages consumers to over-utilise the drug and doctors to prescribe under inducements of the companies. If the medication is harmful, with undisclosed side effects, many people who take them as drugs will die. The authorities concerned should also encourage whistle-blowing to tame such tendencies as early as possible to avoid any fatal effect to the public.
American Pharmacists Association. (2013).Compounding bill now law. Retrieved on 7
March 2015 from
Cornell University Law School. (2015).Workers compensation. Retrieved on 7 March 2015
Haque, O.S. (2013). The Ethics of Pharmaceutical Industry Influence in Medicine. Haifa:
NCSL. (2015).State Regulation of Compounding Pharmacies. National Conference of State
Legislatures. Retrieved on 7 March 2015 from
NOLO. (2015).Employee inventors: patent strategies in the workplace. Retrieved on 7 March
OSHA. (2015).Regulations, Enforcement. Retrieved on 7 March 2015 from
Swanner, N. (2015).Apple sued again by firm that just snatched $529 million from them.
Slashgear.com. Retrieved on 7 March 2015 from
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