Product safety, legal and ethical marketing considerations, and intellectual property

Organizations have an ethical obligation to make sure that their activities are carried out in compliance with the law. Businesses have failed in their responsibility to conduct themselves properly because the majority of them have turned to prioritizing the realization of profits over the wellbeing of their customers. Individual pharmaceutical firms have been vindicated for their increased focus on profits at the expense of consumer health. The case study presented at PharmaCARE is an example of how organizations in the modern world are defined by their avarice. The first ethical issue regards the need to recall a flawed product from the market. Organizations must ensure that they are able to recall back products that are deemed not to meet the safety standards or are likely to put consumers at harm (Liu, & Zhao, 2015). PharmaCARE failed in this ethical mandate since, despite reports that the product was causing heart attack, the executive and management failed to recall the product.

The second ethical issue regards the full disclosure of information regarding the product. Firms have the ethical mandate to see to it that the information about the product is provided so that consumers have a better understanding of the product they are about to purchase. In the case depicted, PharmaCARE failed to inform the patients of the side effects of the drug including the potential to cause a heart attack. The effect was manifested in the deaths reported arising from the heart attack. Finally, with regards to intellectual property, ethical issues are of critical concern if the product in question involves life-saving medicine (Oppenheimer, LaVan, & Martin, 2015). Indeed, this is applicable to the case depicted at PharmaCARE because the product in question is a drug for the treatment of Alzheimer’s disease. The pharmaceutical company violated the ethical issues that have been identified.

Argument against Direct-to-Consumer

Direct-to-consumer marketing focuses on the advertisement of pharmaceutical products to patients instead of the healthcare professionals. The focus is on the promotion of the product directly to the consumers by eliminating the middlemen leading to the creation of a direct relationship with the customers. The approach has adverse effects on the end-users of the product. Notably, pharmaceutical companies advertising the benefits of a particular drug to customers may be putting the lives of customers in danger if they are not safe for use (Prainsack, & Vayena, 2013). The companies need to understand that consumers lack the knowledge base to determine whether the pharmaceutical product being sold to them is safe or not. The ignorance can result in patients being duped into purchasing products that are not safe for their consumption. As depicted, pharmaceutical companies have focused on profit making. Therefore, the companies would go to whatever length to ensure that they make profits even if the lives of consumers was at stake. The concept of direct-to-consumer marketing should be prohibited because of the impact that it has on the well-being of the customers (Doran, 2016). For the case depicted, it is evident that the advertisement of the product directly to the consumer results in misinformed decision-making. For example, the customers ended up purchasing the drug thought to help in the treatment of Alzheimer’s disease without the knowledge that it could cause a heart attack. Health professionals should be involved in deciding to sell pharmaceutical drugs to ignorant consumers desperate to regain back their health.

Parties Responsible for the Regulation of Compounding Pharmacies under the Regulatory Scheme

Compounding pharmacies are those involved in the manufacture and distribution of drugs considered dangerous. The pharmacies are engaged in the preparation of drugs considered expensive for local pharmaceutical stores but opt to do so with a focus on making profits. A range of agencies has been mandated with the need to regulate the compounded pharmaceuticals through established legislation (Minghetti, Pantano, Gennari, & Casiraghi, 2014). Both the federal and state established agencies help in the process of regulation. State boards have established laws which govern the overall preparation, assembly, packaging and labeling of the drugs (Brown, & Tomar, 2016). The state boards come up with regulations and enforce the same when it comes to the entire process of pharmaceutical compounding. The Food and Drug Administration is the other organ that has the mandate to regulate the compounding pharmacies.

The State boards and the FDA could have taken measures against this unethical practice undertaken by PharmaCARE. The first approach could have been to issue an order stopping further operations by both PharmaCARE and CompCARE. The role out of the drugs to desperate patients should have been stopped to prevent many lives from being exposed to the possibility of suffering from a heart attack. Secondly, the two agencies could have instituted investigations into the issue to confirm the claims. Through this, it would protect the high number of people who were at risk of losing their lives for the sake of treatment of Alzheimer’s disease. The actions by PharmaCARE evidently subjects them to legal action. The organization failed to take action to address the concerns regarding the ability of the drug to cause a heart attack. As an ethical organization, the first step that they ought to have taken was to halt further production of the drug and resort to an immediate investigation. The focus would have been to identify what components are causing the occurrence of the heart attack and what needs to be changed. The organization equally failed to inform the patients of the side effects meaning the focus was on the profits that would be made. The establishment of a side company to proceed with the manufacturing activity of a different drug is a confirmation that the organization was not engaged in honest business. Further, the establishment of a different firm to conduct their operations of manufacturing the same drug for a different course is subject to investigation. Consequently, the chances are that the organization is likely to face legal consequences.

Analysis of how PharmaCARE used U.S Law to protect its own Intellectual Property

PharmaCARE worked under the knowledge that John failed to register the invention. Technically, it would have been prudent for he had registered the invention the moment that he had noticed the possibility of it working against Alzheimer’s disease. PharmaCARE took advantage of the fact that the invention had not been registered. Therefore, it did not belong to anybody. The U.S law requires that any innovative ideas be registered under the relevant structures (Boudreau, & Lakhani, 2015). In the case depicted, PharmaCARE resorted to engaging in the manufacture of the drug as it was not claimed by anyone. Further, there is the aspect that John was working in the organization. It could as well be argued that he used the organization’s resources hence his claim for the invention may not be justified. Therefore, John cannot claim to be the inventor of AD23 considering that he failed to register. Had he registered the invention with the intellectual property rights office, then it would have been possible to file a suit. Finally, according to the United States, employees who come up with an invention while working are obligated to provide the patent rights to their employer. Consequently, PharmaCARE was protected by law considering that John was an employee of the organization.

Compensation for John’s Invention

The first method of compensation that can be in terms of monetary terms. John can sue the company and state the sum that he would wish to be compensated for. However, it may be a challenge to calculate the exact amount that can be offered as compensation. Nevertheless, through his lawyers and under the watch of the courts, John can be compensated upon an agreement with the company.

The second form of compensation can be in terms of royalties. The court has the mandate to determine the percentage of royalties that John can be compensated. The royalties can range from 0-33% depending on the agreement between the affected parties. The amount agreed upon will depend on various factors, but that can be decided upon by the court (Steensma, Chari, & Heidl, 2015).

The other form of compensation that John can be provided is the provision of the entire profits that the organization may have made out of the product. In this case, John can have the company hand over all the profits that were made after the introduction of the innovation. However, the established channels must be followed before such compensations are made.

Summary of Intellectual Property Theft and its Effect on Company Brand

The most recent case of intellectual property theft regards that which involved Ford and a Texas Software Company. According to the company, it was instrumental in helping Ford Motor Co. in the reduction of the warranty costs hence causing the vehicles to market faster (“Ford accused by software maker of intellectual property theft”, 2017). The company claimed that Ford began using the software in the year 1998 but terminated the contract they had with the organization in the year 2014 after developing a program in-house based on its proprietary software. The company in question, Versata, claimed that the patent received by Ford in the year 2014 was based on the software that they had developed called the Automotive Configuration Manager. The software operated on the fact that it had the capability of identifying the parts of a vehicle that were not compatible hence making it possible to recall the automobiles before causing harm. Further, the submitted patent according to Versata’s lawyer was a code that had been stolen hence the need to nullify the same. Versata was, therefore, demanding that Ford stops using the software that was developed internally since it was based on their own innovation (“Ford accused by software maker of intellectual property theft”, 2017).

The case of the intellectual property theft based on Versata and Ford had an adverse impact on the organization’s brand. Specifically, there is the aspect of the image of the company in the public eye. Initially, Ford relied on Versata’s product to help reduce accidents. However, with the case at hand, it is evident that customers would have an adverse opinion regarding the organization’s products. Intellectual property theft is an issue of critical concern and has adverse impacts on the operations of the organization.

Potential Issue Surrounding Death of John’s Wife and other Potential Litigants

The death of John’s wife and other litigants against PharmaCARE started with the reformulation of a drug, initially meant for the treatment of diabetes but turned for use in Alzheimer’s disease. The company ventured into the manufacture of drugs which would help in the treatment of Alzheimer’s disease. Unfortunately, the compounding pharmaceutical company failed to enact adequate tests that would result in a determination of the suitability of the drug for the treatment of the condition.

The researchers engaged in the design of the drug pointed out faults regarding the formulation of the drug. Despite this, the PharmaCARE failed to heed the concerns that were presented by the professionals. The issue depicted is an indication of the quest by pharmaceutical companies to engage in manufacture and distribution of drugs despite their adverse medical consequences. The companies have equally colluded with different regulatory agencies to ensure that they continue with the sale of such drugs to make profits at the expense of the health of users. The litigants suffered because of the disregard for the memo that was initially sent regarding the need to reevaluate the drugs.

The regulatory agencies failed in their mandate. The public relies on the regulatory agencies to provide insight whether or not it is safe to use a particular commodity. In the case depicted, the agencies, both at the State and Federal level considerably failed. The failure could be attributed to various factors including colluding to hide the truth from the public. The death of John’s wife and the litigants against PharmaCARE due to AD23 may be attributed to the factors illustrated.

Major Argument that John can make to claim he is a whistleblower

The case described depicts John as a whistleblower. The first characteristic that is evident regards the acknowledgment that a serious case of misconduct has occurred which is considered as grave and offensive. In the case depicted, John identified that there was a problem with the drug. The situation was aggravated by the fact that his wife died of a heart attack, an issue that was being faced by other litigants. Further, whistleblowers are known to be meticulous and keen on issues occurring in the organization (Menell, 2017). John came with an internal memo that depicted problems with the AD23. This is a confirmation of the fact that he was a whistleblower.

As the whistleblower, John can be protected from victimization. The decision to report the pharmaceutical company may result in him being vindicated including the possibility of losing his job. John can equally be protected from harm to his health or safety. If the organization was to cause any harm, John is protected from the possibility of such occurrences. This is justified by the fact that he put a halt to Pharma CARE’S profit-making activity makes him a threat to the firm. Therefore, it becomes mandatory to have him protected as a whistleblower.

Conclusion

Organizations have the mandate to ensure that they conduct their operations in an ethically responsible manner. However, some have failed to uphold such standards and have instead resorted to gambling with the lives of innocent and desperate consumers. PharmaCARE failed in its mandate by resorting to distributing a drug that was evidently harmful to the patients. The organization is liable for legal action because of the consequences of their action leading to the death of many patients.

References

Boudreau, K. J., & Lakhani, K. R. (2015). “Open” disclosure of innovations, incentives and follow-on reuse: Theory on processes of cumulative innovation and a field experiment in computational biology. Research Policy, 44(1), 4-19.

Brown, N. A., & Tomar, E. (2016). Could State Regulations Be the Next Frontier for Preemption Jurisprudence: Drug Compounding as a Case Study. Food & Drug LJ, 71, 271.

Doran, E. (2016). Trouble Spots in Online Direct-to-Consumer Prescription Drug Promotion: Teaching Drug Marketers How to Inform Better or Spin Better?: Comment on” Trouble Spots in Online Direct-to-Consumer Prescription Drug Promotion: A Content Analysis of FDA Warning Letters“. International journal of health policy and management, 5(5), 333.

Ford accused by software maker of intellectual property theft. (2017). Automotive News. Retrieved 3 June 2017, from http://www.autonews.com/article/20150604/OEM06/150609919/ford-accused-by-software-maker-of-intellectual-property-theft

Liu, Q., & Zhao, X. (2015). Corporate Product Recall and Its Influence on Corporate Performance.

Menell, P. S. (2017). Misconstruing Whistleblower Immunity Under the Defend Trade Secrets Act.

Minghetti, P., Pantano, D., Gennari, C. G. M., & Casiraghi, A. (2014). Regulatory framework of pharmaceutical compounding and actual developments of legislation in Europe. Health policy, 117(3), 328-333.

Oppenheimer, M., LaVan, H., & Martin, W. F. (2015). A Framework for Understanding Ethical and Efficiency Issues in Pharmaceutical Intellectual Property Litigation. Journal of Business Ethics, 132(3), 505-524.

Prainsack, B., & Vayena, E. (2013). Beyond the clinic:‘direct-to-consumer’genomic profiling services and pharmacogenomics. Pharmacogenomics, 14(4), 403-412.