Introduction
Pharmaceutical organizations have a legal and ethical obligation to manufacture and sell products, which cannot damage the health of people. This role calls for compliance with regulations on product safety and intellectual property. Fully aware of these requirements, PharmaCARE developed AD23, a diabetes drug, through its team of pharmacist. PharmaCARE’s research indicated that AD23 could slow the progression of Alzheimer’s disease. John and his team of pharmacists began reformulating the drug to maximize that effect. To limit the scrutiny by FDA, PharmaCARE established a fully owned subsidiary, namely CompCARE, to operate as a compounding company.
The company marketed AD23 through DTC advertising while being fully responsive that this step was prohibited in the US. When complaints revealed that AD23 had led to 200 deaths that were associated with cardiac arrest, CompCARE ignored this concern and continued making huge profits by selling a product that had safety issues. Using this case, this paper discusses legal and ethical considerations in marketing and advertising, product safety, and intellectual property.
Marketing and Advertising, Intellectual Property, and Regulation of Product Safety
Marketers should possess the capability for placing their products with success in the market. However, it is a violation of marketing codes of ethics to deceive people in the attempt to make a sale. All marketing efforts must then ensure that the target audience gains the greatest good from the products sold. Simon (2007) defines ethics in marketing as “principles and standards that define acceptable conduct in the market place” (p.128).
Some of the marketing practices that are considered unethical entail attempts to deceive and take advantage of a given situation for individualistic or group gains. When marketing prescription drugs in nations such as Canada and/or nations that form the EU, pharmaceutical organizations violate marketing and advertising ethics when they engage in direct-to-consumer advertising of drugs (DTCPA) (Ventola, 2011). However, Netherlands and the US permit advertisements, which include any claims of a product (Abel, Penson & Joffe, 2006).
FDA has different regulations that address the issue of advertisement of pharmaceutical products. In case of ads, which are meant for products that have some claims attached to them, an organization must make fair balance in the advertisement through the inclusion of the likely risks in “major statement’ and ‘adequate provision’ for access to ‘brief summary’” (Ventola, 2011, p.682). PharmaCARE violated the legal requirement that guides ethical DTCPA. AD23 advertisement did not incorporate perspectives of potential risks of the drug. Even after 200 people suffered cardiac arrest after using the drug, its compounding company (CompCARE) ignored the claims and continued to advertise the product.
State and federal laws protect intellectual properties (IP) for individuals and organizations. Thus, one of the ethical issues that relate to IP entails its theft and infringement of copyright. IP constitutes both national and international perspectives. National laws and regulations control and protect patents. International conventions ensure that patents possess specific rights while also ensuring that laws exist for enforcing rights when contracting relationships.
Legal litigation that involves IP resolves the questions of whether the defendant has copied the claimed work or invention and/or whether the plaintiff actually owns the claimed work (Simon, 2007). John did not patent his AD23 invention to seek a contracting relationship with PharmaCARE. The product remains an invention of PharmaCARE. Hence, the company did not violate any IP rights that were owed to John.
An important ethical issue that relates to product safety is proper product labeling and description of packaged contents. In the US, ingredients that are described in the product label should not only match the contents, but also be composed of substances that have been permitted by Foods and Drug regulation Administration (FDA). The FDA inspects mass-produced drugs to ensure that a pharmaceutical organization meets this ethical requirement. However, two years ago, AD23, which is produced by a compounding company, did not have to go through FDA inspections. The fact that PharmaCARE created CompCARE with the intention of evading scrutiny by FDA, it remains potentially guilty of intentionally evading the ethical responsibility of examining its drugs to find out any potential health risks and/or whether such risks are indicated on the product description segment.
Direct-to-Consumer (DTC) marketing by drugs companies
CompCARE engaged in an illegal direct- to-consumer (DTC) marketing of a compounded drug (AD23). DTC refers to any marketing and advertising effort that targets the public through periodicals, reporter, acoustic, audio-visual means, or any other medium (Frosch, 2007). Since 1962, DDMAC (Department of Drug Marketing, Advertising and Communications) began to regulate prescription drugs ads in the US. Before the regulations began, many of the ads were placed on medical journals to target medical practitioners. CompCARE replicated this situation by advertising AD23 directly to consumers whilst marketing the drug directly to hospitals, clinics, and physician offices. Amid the inadequacy of supporting evidence, DTC has potential benefits and possible negative effects on public health (Ventola, 2011).
DTC can empower, inform, and educate patients to enable them take control of their own health. This strategy suggests that it creates avenues for consumers to acquire access to several sources of information on different treatment option as opposed to overlying on information from healthcare providers (Ventola, 2011). Auton (2009) confirms that DTC not only helps in initiating dialogue between patients and healthcare providers, but also encourages patients to make contacts with clinicians. This benefit is evident from a survey on 221 nursing practitioners in which 63 % of them contended that DTC was helpful in initiating dialogue between them and patients (Ventola, 2011).
Government regulates DTC advertising for drugs to manage any effects that are related to public health. DTC advertising can misinform patients. A study conducted by Frosch (2007) indicated that 82 percent of DTC drugs ads carried rational and factual information about the advertised drugs, 26 percent offered descriptions for various risk factors. In some situations, DTC advertisement may create a perception that drugs improve public health. Consumers also develop unnecessary levels of trust on DTC drug ads (Ventola (2011).
DTC advertisement emphasizes the benefits of drugs as opposed to risks. Frosch, Grande, Tarn, and Kravitz (2010) conducted an analytic study on commercial DTC ads. The study found more emphasis being made on the benefits of the drugs as opposed to their risk. Quoted by Ventola (2011), these findings on DTC TV ads in the US reveal the biggest detriment for DTC advertising, which justifies its prohibition in many nations. Therefore, the negative effect entails the possibility of promotion of a drug without identification of its potential health risks. Withdraw of Vioxx, Oraflex, Rezulin, Baycol, and Propulsid from the market, despite them being heavily promoted, provides sufficient evidence of this detriment. Increased costs for rigorous regulation and inappropriate prescriptions also comprise important detriments of advertising DTC drugs.
Parties that are responsible for regulating compounding Pharmacies under the Current Regulatory Scheme
When PharmaCARE created CompCARE in 2012, pharmacy boards within different states regulated compounding pharmacies. This move implied that FDA did not have any legal capacity to preview the issue of compounded drugs before offering them for sale in the marketplace. However, senate bill no. 959 of 2013 sought to give FDA an explicit jurisdiction to regulate compounding pharmacies whilst allowing continued execution of its traditional role of regulating drugs that were manufactured under the FDCA (Center for Pharmacy, 2014). President Obama signed Drug Quality and Security Act into law on 27th November 2013. FDA began regulating compounding pharmacies on 2nd December 2013.
Similar to the case of Vioxx, Oraflex, and Rezulin where the concerned organization were considered to have violated product safety requirements, FDA reacted by closing CompCARE (Ventola, 2011). Subsequently, the organization was compelled to remove its products from the market as investigation continued concerning the allegations of the likelihood of AD23 posing drug safety threats for cardiac arrest. Under the current regulations on compounding drugs, CompCARE faces the challenge of legal exposure for violation of the requirement of not advertising and/or marketing a compounding drug.
Evidently, the enhanced AD23 is copied from AD23 that was formally sold by the parent company. Therefore, CompCARE also faces a legal challenge for selling a copied product that is already available in the market. If evidence shows that CompCARE was the compounder of the drug that resulted in the death of 200 people, it will be liable for paying damages. The case is similar to the 2013 case where 64 people died while 750 were left sick in the US after taking compounded steroid that had been contaminated with fungus (Center for Pharmacy, 2014). This situation prompted the drafting and signing of the Drug Quality and Security Act into law.
How PharmaCARE used the US Law to protect its own Intellectual Property
Protection of intellectual property is important in the effort to protect organizations’ innovation and creativity. The US Intellectual property law provides room for copyright, patent, and trademarks as the main ways for protecting IP (Morrison, 2014). Copyright protects artistic work. Patent law protects an organization or an individual from having his invention being sold by another party for a certain legally stipulated period. It is classified into service, plan, and plant copyright regulation. Trademarks protect marks and name that identify companies or products.
Contrary to patenting, which requires documentation in the US Patent and Trademark Office, trademarks are assumed whenever an organization starts using them. PharmaCARE used this approach to protect its IP. When it created and registered a fully owned subsidiary, namely CompCARE, PharmaCARE already had an implied trademark that identified ownership of AD23. This situation nullified any possibility for John to make any claim of being the true inventor, two years later after CompCARE had ventured into selling the enhanced AD23. Such a claim would only be valid if CompCARE had registered his IP under utility patent law before availing the discovery to PharmaCARE, which then developed the trademark CompCARE that was identified with the product.
In case PharmaCARE stole John’s IP, the organization will be obliged to either compensate him an amount that equals to the benefit that he lost during the term it was using his invention. The jury can order for payment of fees and other expenses that he suffered in the attempt to stop PharmaCARE from infringing his IP rights. A court can also order the destruction of all AD23 stocks in a bid to prevent further infringement of John’s IP rights. However, no theft took place. John willingly availed his invention to PharmaCARE. He has been receiving benefits from the organization. This revelation implies that he had entered into an unwritten contract for his IP use.
Intellectual property theft claims in the US mainly point at China. For example, in 2013, AMSC was pursuing a case in which it was accusing Sinovel Wind Group Co. Ltd of stealing its IP. AMSC claimed that the China-based company acquired its software for controlling a wind turbine. Sinovel Wind Group Co. Ltd deployed the software in upgrading its homemade 1.5 megawatts turbine. This accusation produced no significant impacts on Sinovel Wind Group Co. Ltd brand. Rather, Morrison (2014) asserts that China procures technology without considering IP ethics to ensure local organizations acquire a competitive advantage.
Potential Issues that surround the Death of John’s Wife
Issues that surround John’s wife can be analyzed in terms of breach of duty of care. Manufacturing companies are required to manufacture products while paying attention not to neglect the duty of care they owe people who are likely to use their products. Negligence refers to the act of exercising legal duty by avoiding injuring people who use, or are likely to use products (Daller, 2010). While settling cases that involve negligence, the jury considers the duty of care that the manufacturer owes the product user based on whether the manufacturer is aware of the circumstances that lead to injury.
Perhaps, John’s wife died following the failure of the PharmaCARE to foresee the health risks that were likely to be posed by AD23. If it had accomplished this goal, it would have taken precautionary measures by testing and evaluating any short-term and long-term impacts of the drug on its target users. As such, PharmaCARE assumed strict liability for its products. Therefore, jury can compel it to pay damages to John without the necessity of a proof of proximity or fault.
John’s Major arguments and Possible Protection
John’s wife has already succumbed from cardiac arrest after taking AD23. Although John invented the enhanced AD23, he can raise the argument that PharmaCARE acted irresponsibly to the extent that it caused him to suffer damages. While advancing his claims, he can rely on two principles that are applied when granting class-action lawsuits. Firstly, the plaintiffs must establish that the product was defective (Daller, 2010). John has this information. Secondly, the product must have caused the claimed injuries. His wife died after using AD23. These claims and evidence make John an important whistleblower.
PharmaCARE can assert that John’s wife bought AD23 from retailers and that it did not have the capacity to monitor how they handled the product. This claim presents a potential challenge for John to act a whistleblower. Many states require plaintiffs to provide a proof of negligence on the part of the retailer (Daller, 2010). However, proof of defect requires an understanding of the sources of defect in a product. John has this information. Thus, resolution of the case as that of strict liability can protect John. In a strict liability lawsuit, the jury focuses on the product as opposed to the conduct of its manufacturer. Thus, any proof of wrongdoing on the part of the manufacturer is not necessary. This case eliminates any likely conflict with PharmaCARE where John has a share.
Reference List
Abel, G., Penson R., & Joffe, S. (2006). Direct-to-consumer advertising in oncology. Oncologist, 11(2), 217–226. Web.
Auton, F. (2009). Opinion: The Case for Advertising Pharmaceuticals Direct-To-Consumers. Future Med Chem, 1(4), 587–592. Web.
Center for Pharmacy. (2014). FDA Starts Regulating Compounding Pharmacies. Web.
Daller, M. (2010). Product Liability Reference Desk. New York, NY: Wolters Kluwer Law and Business. Web.
Frosch, D. (2007). Creating demand for prescription drugs: A content analysis of television direct-to-consumer advertising. Ann Fam Med, 5(1), 6–13. Web.
Frosch, D., Grande, D., Tarn, M., & Kravitz, R. (2010). A Decade of Controversy: Balancing Policy with Evidence in the Regulation of Prescription Drug Advertising. American Journal of Public Health, 100(1), 24–33. Web.
Morrison, W. (2014). China-U.S Trade Issues. New York, NY: Congressional Research Service. Web.
Simon, H. (2007). Rational Decision Making in Business Organizations. American Economic Review, 3(4), 123-129. Web.
Ventola, L. (2011). Direct-To-Consumer Pharmaceutical Advertising. Journal of Managed Care and Hospital Formulary Management, 36(10), 681–684. Web.