Ethical Decision Making

Most business managers have a propensity to neglect integrating strong ethics into an organization’s corporate culture. Despite the fact that many business practices appear to be improving, some of them are due to laws and rules that have been established by the management or the government. In order to obtain the pharmaceuticals needed to address patient health concerns, pharmaceutical corporations are relied upon by patients, physicians, and other healthcare professionals. However, because pharmaceutical corporations are required to influence the drug-buying decisions of their clients in order to make money from the pharmaceuticals they are selling, patient requirements and the ethical goals of the company come into conflict. Decision-making based on ethics for a pharmaceutical company entails the investigation of professional ethics assumed to be propelled within professional domains that are morally neutral and where individuals deploy the personal and privately held principles and values within their particular professions. Thus, the paper seeks to provide facts on the ethical dilemma that George faces, issues around the dilemma, alternative courses of action and recommendations for the best solution that can be adopted to overcome the dilemma.

Ethical Dilemma

George Cosgrove, the Senior Vice-President for All-In-One Pharmaceuticals, Inc. faces an ethical dilemma, the question of the principle of the divided loyalty. Dealing with doctors’ loyalty to the company has led to the conflict of interest that undermines produce from sale of the company’s products. Moreover, the identification of such conflicts is not straightforward, creating a dilemma to George on how pecuniary interests, patient welfare, community welfare, research grants, advancement of careers and hospitality can be improved while at the same time securing loyalty from doctors. The dilemma presents a duality of interest, where both George and doctors will disagree on some instances. Thus, the duality of interest encompass a conflict where the company has to meet its competent obligations, which at some point undermines its primary obligations or responsibilities. Establishment of the existence of conflict of interests calls for the declaration of factual details regarding the community perception, belief and capacity to scrutinize the issue publicly (Paul, 2010).

Decision

George should make comprehensive and inclusive decisions in order to balance doctor’s loyalty with the company and at the same time counter the conflict of interest. To achieve this, several decisions can be arrived at using several theories. First is the establishment of debate forums where company agents interact with principal/doctors. The discussion is achieved such that it meets the interests of all the company’s stakeholders through inclusivity, compensations, sharing of information and agents acting in principal’s interests. The doctors should also be consulted during trials for new drugs. Second decision is for administration, using their agents in collaboration with principals/doctors to approve drugs that improve quality of life and saves life. This minimizes the conflict of interest, as both parties have to agree before any drug is manufactured and tested on participants. Third decision is for the company’s administration to refrain from disclosing all potential drug reactions that may frighten doctors and patients, which may deprive patients of an effective treatment. Moreover, the company management should ensure compliance with legal criteria and good business conduct, which is part of their moral and ethical obligations. These decisions can be made with respect to two theories, agency theory and the trust theory.

Relationship between trust and agency theory (Shyam, 2015)

Similarities

Differences

-Both trust and agency theories argue on delegation by principal to company agents and thus looks at contract designs for achieving maximum outcome for principal/patient/doctors.

-Both trust and agency theory include the idea of benefits and costs of relationships between company agents and the principal

-Both theories assume that goal conflicts exist between the company and the principal/doctors.

-Agency theory focuses on incentive structures for company agents to align their interests with those of the principal while trust theory focuses on mutual advantages that both the trusted and the trustor secure based on social capital

-Agency theory assumes that the relationship between company’s agents and the principal is short term and task specific and which ends after some time while trust theory assumes the relationship will continue for a long period, will pass several stages, and grows with time.

-Trust theory assumes that trusted and trustor base their relationships on the rational calculation of benefits and costs of trust while agency theory base its relationship on calculus of trust situation and is oriented to economic calculation

Similarities

The purpose of delegation by principal to company agents is dealing with agent’s opportunism they may pursue with respect to their own self-interest as delegated by the principal. There are the benefits and costs that accrue due to particular relationships between any two parties. A conflict will always come up between any two parties and this leads to divergent interests.

Differences

The objectives of incentive structures in agency theory is to minimize agency costs while the trust theory indicates that social capital is what both parties in play receive as their reward. Agency theory shows that the relationship only lasts when undertaking a particular task but disappears when the task is done. On the other hand, trust is a long-term entity that does not end.

Resolution of Dilemma

Countering the principle of divided loyalty dilemma will require an elaborate implementation of the first decision. This decision will seek to create a positive relationship and mutual trust between the company using its agents and doctors during mutual sharing of information and ideas. Using agency theory, self-interests of the company will be known to doctors that will avert conflicts of interest. The trust theory will guide during cooperation between all stakeholders and provide a highlight of benefits of a cooperation during such forums or debates. The ultimate result will be loyalty between parties concerned.

References

Paul, A. K. (2010). Ethical issues concerning the relationships between medical practitioners and the pharmaceutical industry. The Medical Journal of Australia, 242(8), 118-121.

Shyam, S. B. (2015). Relation between trust theory and agency theory. University of Wollongong-Research Online, pp. 1-10.