the case- big pharma

8/10/2019 The Case- Big Pharma

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Ethical Issues

The case Big Pharmas marketing tactics talks about todays pharmaceutical industry. Theindustry which provides drugs for the public is one of the largest industries with a profitmargin of roughly seventeen percent. The industry has been accused of using unethicalmarketing and sales tactics to increase its revenue and sell more products, acting against itscorporate social responsibility by spending more on advertisement of drugs than onresearch and development. There are various Ethical issues involved in the case. Companiesuse various tactics to promote their drugs while risking the public s safety and hiding crucialinformation about their research on the drugs. These include payments to doctors andmedical students, pushing the m to prescribe the companys drugs for diseases it may nothave been approved for by the FDA, spending huge amounts of money on advertisementsthat maybe misleading, overstating the drugs effects on curing a disease and thus

increasing sales of the products, and also causing other side effects. Overstating the price ofthe drugs and bribing government officials to ease the laws regarding marketing andadvertising of the drugs are also issues which have been covered. Companies also try andpush their drugs for off-label uses, it is legal for doctors to prescribe any drug they considerfit which is approved by the FDA but companies arent allowed to promote drugs whichhavent been approved and increase sales of its products. All this is supported by theirextensive lobbying in Washington and therefore big pharma goes through all its methods 4.The case also talk about the various lawsuits these companies faced for their illegalpractises, like Pfizer agreed to pay a fine of $430 million for promoting its drug for

unauthorized purposes

The case also brings out the point that these companies are run just to maximise profits,there is an unethical part in running these companies this way. Large companies like thosein the pharmaceutical industry have great corporate power and are capable of affecting thesocial and economical environment to a great extent. Thus, according to the stakeholdertheory, big pharma is running away from its corporate social responsibility of providing tothe society and according to the charity principle where the rich provide for the needy in thesociety, big pharma needs to take up some social responsibility to give away.

Primary Stakeholders

The primary stakeholders in the case are the doctors, the government, Non- governmentalorganizations and the consumers. The company made payments and gave gifts to doctors,sponsoring trips and making payments in exchange for prescribing and showing loyalty tothe companys drugs. The government is a primary stakeholder for receiving bribes fromthe companies, like in the case of Johnson and Johnson, which was alleged to have bribedthe deputy chief of the Chinese state FDA. NGOs like the Polish charity which receivedaround $76000 by Schering-Plough Poland to boost its drugs sales are also the primary

stakeholders in this case. The consumers were targets of direct-to-buy advertising, wherethey were exposed to advertisements which increased their fears of diseases and informed


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them about new drugs that the companies have come up with, therefore consumers arealso primary stakeholders in the case as they are directly affected by the actions of the drugcompanies.

Justification of Marketing Tactics

The marketing tactics in the case include payments, gifts and other financial lures to doctorsand government officials, off-label uses of drugs, overpricing of the drugs resulting in thehigher costs of Medicaid and Medicare programs and false advertisement. All of thesemarketing tactics have resulted from the desire to increase revenue and profits for the firm.Although the main focus of a business is to maximize profits, these marketing methods haveresulted in harm to the society and have resulted in unethical behaviour. The direct-to-consumer advertisements can be justified to an extent. Through this the industry educatesthe public about various drugs and their benefits, it could help educate the generalpopulation, and in a world full of cut-throat competition where advertisements are essentialto marketing, spending on advertisements to promote ones drugs is justified. The problem ,however, arises when companies overstate the effects of their drugs, promoting them foroff-label uses and for diseases which they cannot cure and hide the side effects. Theyadvertise to such an extent that it increases health fears among consumers and makes themspend more; also companies make up maladies for which their drugs are the only cure. (Restless leg syndrome? Try Requip) these marketing methods are by no means justified andare highly unethical.

Big pharma claims it needs large sums of money to cover its research and developmentcosts and to ensure a regular stream of innovative products. As argued by Kotlikoff in arecent Boston globe op- ed piece to develop each of the high-priced drugs that we buy, thepharmaceutical companies pay, on average, almost $1 billion. Like it or not, the drugcompanies need to recoup these costs, and we need to let them. If we dont, well be doinga grave disservice to ourselves in limiting the prospects of new cures for painful and oftenlife threatening diseases 3 (para.5), but if this is actually the truth is constantly beingquestioned. A s stated by Marcia Angell They spend over twice as much on marketing andadministration, and they actually make more in profits than they spend on R&D 3 (para.6) .

Drug companies use innovation as excuse to produce drugs which are barely different fromthe ones already existing in the market and charge high prices for them. To quote Angella Independent analyses show that only about percent of the research papers that lead to newdrugs come from the companies that market the drugs. So theres no evidence that bi gpharma is putting much effort into discovering important drugs, although theyre certainlyputting a lot of effort into acquiring them from others. Still, the industry insists on beingrewarded as though it were the source of innovation 3(para.16)

). So, claiming to need money for R&D when in fact the costs of R&D are exaggerated and

cover only a small part of the total sales as compared to advertisements, these marketingtactics arent justified as a source of money for R&D.


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Overpricing the drugs, using false advertisements which put public health in serious jeopardy, pushing the drugs for other off-label uses which can have severe side effects forfulfilling the companys pecu niary needs is not justified. Risking lives in the name ofproducing new products claiming to save more lives and cure life-threatening diseases in

not justified, mainly when the main aim of the corporations is to increase their profits.

Promotional Gifts to Doctors

Big Pharma promotes it drugs by giving away free items like notepads, pens and other giftsto doctors while they are still in medical school. The companies start early to try and lurethe students in favour of their drugs and try and get their loyalty early on. These companiesalso try to influence the medical students through the Continuing medical education

schemes, here the sponsors can easily provide grants to providers with pitched in topics thatare designed to promote their marketing strategies. Although these sponsorships do help ineducating the students, it is biased and a truthful education is not received. These practisesare unethical as they take advantage of the students financial instability and make thembiased to their products. This makes them believe that there is a drug for every problem andthat new drugs can always be produced to replace the old ones. Educational institutes arealso a target of the Big Pharma as many teachers, deans and department chairs are affiliatedto companies and this influences the educational content. These practises should bestopped and serious action should be taken against them because if the doctors and

students are corrupted, there is little hope for the patients to receive a fair treatment.

Ethical principles

There are various ethical principles which are violated by the companys marketing tactics.Giving away free gifts to young doctors violates virtue and character. Such practises makethese young doctors dishonest right from the beginning, before their career has evenstarted and the oath taken to help everyone in need is broken when the doctors prescribe

wrong drugs to their patients. Bribing government officials and the excessive lobbying alsoviolates character and virtue.

Human rights are also violated through the marketing methods of big pharma. Right toinformation and right to health and safety are clearly ignored when the companies makefalse advertisements and push their drugs for off-label uses. Companies hide the truth abouttheir research and continue to use their drugs by manipulating the consumers, doctors etc.

When the companies overprice their drugs, they violate ethical principle of justice whereequality is observed. As a result of overpricing the drugs, the government pays more for theMedicaid and Medicare programs thus reducing the budget for others in need. The


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marketing and advertising methods are clearly meant to increase the bottom-line and thusbenefit only the shareholders. Other stakeholders are not given equal importance.

According to the utilitarian principle, the benefits should exceed the costs; the benefits inthe case of big pharma are an increased margin of profits and higher revenues. The costsinclude risk of public health, corruption in society, and in certain cases even death ofunfortunate individuals who were affected by the wrong drugs, as in the case of Lamisil byNovartis, which was linked to 16 lung failures, including 11 deaths, which are very high coststo bear for increased revenue. The benefits do not exceed the costs as the big Pharma, analready profitable industry for the last two decades cannot justify these tactics as a meansof survival. Thus, the utilitarian principle is violated through these methods. As a result,none of the above mentioned principles support Big Pharmas actions.

Approaches by physicians

Physicians could do a couple of things to prevent promoting off-label uses for drugs. Theycould clearly state their affiliations with companies to the customers, they could promotecompanies for drugs in which they truly believe and which are effective instead ofpromoting drugs which may harm the patients. For physicians who are against the methodsused by the drug companies could start up campaigns against these activities, like given inthe case as Jaya Agarwal launched a national campaign against payments and gifts todoctors 17. The physicians should be more honest and respect the oath taken to medicallyhelp those in needs and not prescribe wrong drugs to their patients. A good example of this

was when two hundred Harvard students grouped up to confron t the schoolsadministration against such practises and were joined by Dr. Marcia Angell, a professor atHarvard. The physicians could report to authorities against bribes which try and lure themtowards the companys drugs.

Personal Research

With its increasing influence, corporate power and extensive lobbying, the problems with

Big Pharma are increasing. Its market is increasing every year , In 2009, the worlds 12

largest drug companies made a net profit of nearly $78 billion on revenues of $434 billion.

(Seven of the 12 are headquartered in the U.S.: Johnson & Johnson, Pfizer, Abbot

Laboratories, Merck, Wyeth, Bristol-Myers Squibb and Eli Lilly.) The next three dozen

companies combined raked in $46 billion on revenues of $203 billion. By 2014, the global

market for pharmaceuticals is expected to reach $1.1 trillion. 2 ( para.7)
http://www.drugwatch.com/2012/01/19/influence-of-big-pharma/http://www.drugwatch.com/2012/01/19/influence-of-big-pharma/


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