Ethical Perspective of John's Memo: PharmaCARE Essay Sample

Ethical Perspective of John

Ethics defines right and wrong actions in human life. Many professional bodies have a code of conduct to regulate the behavior and conduct of their members (Vitez, 2016). The essence of ethics in business organizations such as those dealing with pharmaceutical enterprises is to safeguard the interests of stakeholders:  customers and competitors. Pharmaceutical companies need ethical code to mitigate the impact of their actions on consumers (patients) and other businesses. Therefore, the essence of this paper is to offer an ethical perspective on John’s memo.

The Ethical Issues that PharmaCARE Violated

First and foremost, PharmaCARE violated the ethical compliance with truthful advertising. The truth in advertising of products or goods is the fundamental moral issue in America and other parts of the world (Ingram, 2016). Truthfulness in advertising is essential because it enables consumers to make informed decisions before buying or consuming products. Consumers have the right to appreciate the effects of medicines before they buy them. For example, a customer needs to understand the side effects of a particular drug to decide whether to buy it or resort to an alternative. The Federal Trade Commission enforces various provisions of the Federal Trade Commission Act that requires traders to engage in truthful advertising. The Business Bureau also requires that businesses avoid deceptive advertising. PharmaCARE violated the spirit of the Federal Trade Commission Act by not telling the truth about the medication. The company should have informed its consumers about the possible link between AD23 and incidences of heart attacks. However, the company only focused on the positive effects of the medication, namely, the drug’s ability to mitigate the progression of Alzheimer’s disease. Therefore, PharmaCARE raised the ethical issue of truthfulness in marketing.

PharmaCARE violated  intellectual property rights. According to De George (2005), most intellectual property rights of pharmaceuticals are unethical because pharmaceutical companies prioritize profit at the expense of human life. Pharmaceutical companies exhibit unethical behavior whenever they undermine consumers’ right to life because they want to enhance and sustain their profitability. PharmaCARE patented AD23 and marked it despite the fact that the drug was harmful to its customers. The company continued to sell the drug in bulk to ignorant customers even though the company knew that the drug was causing heart attacks. In fact, the company sold the subsidiary, CompCARE, together with its AD23 brand without informing the buyer about the side effects of the drug. For example, studies demonstrated that the drug was responsible for the deaths of 200 people, including John’s wife. Therefore, PharmaCARE’s intellectual property rights over AD23 are unethical because they undermine consumers’ rights.

PharmaCARE violated the ethical code regarding the product’s safety. The Food and Drug Administration requires that all pharmaceutical companies ensure the safety of their products. The FDA expects PharmaCARE to make sure that their medical research is conducted professionally to  prevent their products from causing side effects and mitigate the last. However, PharmaCARE’s subsidiary CompCARE resorted to innovative strategies when it worked to improve the efficiency of AD23 in reducing the progression of Alzheimer’s disease because the ideal process would have been expensive. In fact, the company broke FDA’ rules about testing drugs on mice and other animals before administering them to human beings. FDA expects companies such as CompCARE and PharmaCARE to test the effectiveness of their products and seek certification from FDA before the drugs certified as safe for human consumption (Sugarman & Califf, 2014). Therefore, PharmaCARE violated the fundamental ethical requirement regarding the safety regulations of drugs.

Why Direct-to-Consumer (DTC) Marketing Is Bad

Direct-to-consumer (DTC) marketing should be prohibited because it enables pharmaceutical companies to bypass FDA’s regulatory framework. According to Ventola (2011), DTC marketing is a controversial issue in the pharmaceutical industry because it sets the precedence where the challenges of the free market economic system meet the regulatory framework. FDA has been at the forefront of regulating the DTC marketing in the pharmaceutical industry for some time. However, FDA’s role has not managed to undermine the ability of the pharmaceutical company to deceive t its consumers about particular drugs or products. PharmaCARE and other companies exploit the DTC marketing opportunity to deceive their customers about the safety of certain drugs. The free market economy can only ensure and safeguard the interests of various stakeholders if there is a stable regulatory framework to govern the process.

DTC marketing creates room for many pharmaceutical companies to bypass the regulatory framework because they deal with consumers directly. In fact, one should consider the fact that pharmaceutical companies’ primary objective is to make the profit or expand their operations. As such, PharmaCARE used the DTC marketing opportunity to ignore FDA regulation regarding the disclosure of information about its products (AD23). The company also used its DTC marketing platform to commit fraud by presenting fake patient information and other relevant data that would have helped the regulator to ensure the safety of its customers. However, PharmaCARE could not have succeeded in evading FDA’s regulatory framework had it been marketing its products indirectly to consumers. Perhaps, FDA would have learned about the side effects that AD23 had caused or demanded test results from clinical trials before the start of the marketing process. Therefore, DTC marketing is not appropriate for the pharmaceutical industry. Hence, it should be banned. 

The Parties Involved, Their Roles and Mitigation Strategies for the Problem

PharmaCARE’s executives are to blame for failing to fulfill their supervisory role ethically. It was PharmaCARE’s management or executives’ duty to ensure that the company’s operations were ethically and legally compliant. The management had the moral responsibility to ensure that its products were safe and would cure the intended diseases without causing adverse side effects. However, the company manufactured AD23 without following FDA’s safety regulations. This happened because PharmaCARE’s chief executives refused to allocate adequate funds to facilitate research and clinical trials of the new drug. As a result, company’s executives should be accused of negligence. The company would not have been engaged in unethical business practices if the officials had played their roles effectively. Therefore, PharmaCARE’s executives failed in their leadership role as they did not facilitate the legal and ethical compliance of the company’s operations.

The FDA also failed in its oversight role. The FDA has the legal mandate to ensure that pharmaceutical firms in the pharmaceutical industry adhere to the law. It is FDA’s duty to ensure that medical research is done professionally and ethically. The organization should have considered the limitation of its oversight role and mitigate the loopholes in the monitoring function. Apparently, the regulator should recognize the fact that a lot of companies exploit loopholes in the regulatory framework to engage in business malpractice. The pharmaceutical industry is quite sensitive because medical errors can have a negative impact on the entire population. For example, the marketing of ineffective antibiotics can lead to the formation of drug-resistant diseases. Hence, the industry needs a stringent regulatory framework. PharmaCARE’s business behavior highlights the fact that the FDA failed in its duty to the American people and other consumers across the world. The most significant issue is the fact that the FDA allowed the company to market AD23 without its approval. The FDA also granted PharmaCARE the opportunity to continue selling AD23 despite numerous complaints that the drug was causing heart attacks. In fact, the FDA should have been the first to realize that the drug was unsafe for human use. However, the FDA decided to violate the Food and Drug Act of 1906. Therefore, the FDA failed to ensure that the company followed the safety regulation, enabling PharmaCARE to abuse the weaknesses in the regulatory framework.

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PharmaCARE should be prosecuted to promote justice for the dead and to act as a deterrent to other pharmaceutical companies in the United States. The FDA provides regulatory information on what PharmaCARE should have done to ensure its compliance with the law. FDA’s regulation includes information about compounding, drug registration and listing, and unapproved medication and prescription drugs (FDA, 2016). The FDA expects all companies to comply with the regulatory framework without exceptions. However, PharmaCARE decided to ignore FDA’s rules and regulations concerning the marketing of drugs. As such, PharmaCARE violated the Food and Drugs Act 0f 1906. Therefore, PharmaCARE should face prosecution for failing to comply with the law.

PharmaCARE used the intellectual property law to secure economic benefits from manufacturing and marketing AD23. The US Patent and Trademark Office has the legal mandate to register all cases of intellectual property ownership in the country. Congress rules stipulate that an intellectual right lasts for up to 20 years since its registration. An individual or a company is required to register its invention or discovery within a year of inventing or discovering the patent. The Patent and Trademark Office assesses all the evidence of development to ensure that it records the rightful owner of the design. PharmaCARE registered the medicine on its subsidiary’s name to exclude John and other individuals from claiming exclusive rights over it. Therefore, the company exploited the intellectual law to acquire exclusive economic rights over AD23.

John cannot claim intellectual property rights on the AD23 because he was working for the enterprise. John was a researcher in the company; he cannot claim intellectual rights over AD23 because the company paid him for his services. John was also not working alone while researching the new drug. The research process and the clinical trials involved more than one individual. Thus, John’s employer or PharmaCARE has exclusive intellectual property rights over AD23. However, the company should consider John’s intellectual property interests in the context of copyright. That is, John and other pharmacists’ mental effort contributed to the production of the improved version of AD23 before the company conned them.

How PharmaCARE Should Compensate John for Exploiting His Intellectual Property

The company should explore various ways to avoid facing litigation with John and other pharmacists regarding AD23. One way is to entice John into accepting to be a co-owner of company’s new drug to share the proceeds accordingly. As such, John and his pharmacist colleagues will get a percentage of the proceeds from the sale of the new drug for a given period. Alternatively, the company can buy John’s intellectual property. PharmaCARE can convince John and his pharmacist researcher colleagues to sign an agreement relinquishing their intellectual property claim over AD23. Thirdly, the company could compensate John for the death of his wife. Perhaps, PharmaCARE should take into consideration the fact that John could be bitter because the company caused the death of his wife unintentionally. Thus, to comfort him, the company should pay John some money to ease the pain of loss. Therefore, the company has many options to ensure that it pays John for his intellectual property claim while mitigating any further future litigation with him over this issue. 

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An Example of a Recent Intellectual Property Case and Its Effect on the Accused Company’s Brand

In April 2014, Samsung won its first patent lawsuit against Apple in the US 2nd trial court. Apple had filed a motion asking the jury to consent to its request to demonstrate evidence to prove to the jurists that it (Apple) was implementing the patents in question (Smith, 2014). Apparently, Samsung had argued that its competitor (Apple) had copied its three patents, namely, patent numbers ‘414, ‘959, and ‘172. However, Samsung argued that there was no proof that Apple was using the four out of the five patents that the plaintiff was attacking the defendant with. Earlier, Samsung’s lawyer had accused Apple of copying up to 50 of its patents. However, the jury required the two companies to reduce the number of patents they were claiming. Samsung sought $7 million in damages from Apple while Apple demanded $2 billion. However, the Jury observed that Apple did not have a strong claim over the four patents it was suing Samsung for because it did not demonstrate their use in its phones.

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The ruling in the Apple vs. Samsung case undermined Apple’s corporate or brand image. The competition between the two technological rivals depends on the success of their brand image. Over the years, Apple has been effective in portraying itself as the best brand due to its IOS system. However, litigation has a damaging effect on Apple’s overall image because it shows company’s lack of ingenuity compared to Samsung. Therefore, the litigation has a negative impact on Apple’s market leadership and brand image.

The Major Issue Concerning the Demise of John’s Wife and Other Litigants

The death of John’s wife and other patients plus the negative health implication of using the product could have a debilitating effect on the company’s corporate image as its conduct was illegal and unethical. PharmaCARE could be sued for negligence and lack of value for human life. The litigants are likely to win their arguments before any trial court because the evidence proves the link between AD23 and deaths as well as heart attacks. Given the fact that the company’s success in the future depends on the outcome of the case, the company might use a huge number of resources to defend its image. As such, the company may decide to settle the cases out of the court of law by compensating the families of the deceased patients. The amount of money to be used in fines could run into billions of dollars. At the same time, the FDA could fine the company for its illegal and unethical conduct, thereby undermining its financial well-being. Therefore, the company is going to face a legal and ethically related challenge that would damage its corporate image. 

John as a Whistleblower

John is a whistleblower under the Whistleblower Protection Enhancement Act of 2012. The Act guarantees protection to any individual who exposes illegal activities to the police or public. John is a whistleblower because he has deeper knowledge of company’s clinical research and other activities associated with AD23. Therefore, John is a whistleblower that needs protection under the law. As such, neither PharmaCARE nor any other individual can sue John for revealing information about AD23. The government is also obliged to ensure the source (John) of the information remains anonymous.


PharmaCARE has serious ethical and legal issues to solve to protect its brand image and competitiveness. The company violated the law and acted unethically by selling AD23 because it did not protect and promote the safety of the drug. As such, the company is likely to face lawsuits that will undermine its financial status, brand image, and legal status because the regulator (the FDA) can deregister it.

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