Ethics Responsibility or Sustainability in the pharmaceutical industry

3834 words (15 pages) essay in Economics

5/12/16 Economics Reference this

Disclaimer: This work has been submitted by a student. This is not an example of the work produced by our essay writing service.

You can view samples of our professional work here.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

This is a phrase I heard in my undergrad days whilst studying to be a doctor. It is evident that the hospital industry serves as a good topic for an ethics discussion, however the industry reflected in the quote above is the pharmaceutical industry. So why the pharmaceutical industry? This is something I hold close to my heart after something I learnt about breast cancer treatment in the final year of my degree program. We were told about the struggles faced by Dr. Dennis Slamon in order to get the breast cancer drug, Herceptin into the market (book and movie on this issue as well). The struggle involved lack of funding to taking really hard decisions during clinical trials. Herceptin could have been launched a few years earlier, saving millions of lives had it not been for the sudden withdrawal of funding. For more details on the Herceptin case see Appendix A. I was unaware of such practices being carried out by the pharmaceutical companies and since then these issues have always bothered me. Some more issues that I came across in the course of some research were those of marketing of drugs to physicians, expensive drugs being sold to people below the poverty line, donation of drugs to developing countries which are approaching their expiration date or crossed it. These drugs are not only harmful but are also expensive to dispose, hence adding more pressure to the developing countries economy. Pharmaceutical companies also focus on the development of drugs that would do well commercially and not necessarily focussing on drugs to cure prevalent diseases like HIV, malaria etc. Hence several questions arise concerning ethics. Why do these companies focus mainly on life style diseases which are more prevalent in the developed countries, whilst the biggest killers in this world go unnoticed? This essay however would focus on the price of the drugs and the ethical dilemma attached to the pricing and also the marketing of these drugs to physicians, which has been regulated to some extent, however, not enough for it to not be a problem. As one of the most massive and successful business sectors, the pharmaceutical industry is a potent force for good in the community, being one of the contributors to help increase life expectancy by 20 years in developed countries, this industry still has a tarnished image and its behaviour is frequently questioned.

So how did this image come to be developed? This would be covered in this essay by first addressing the one of the most important issues of the drugs being too expensive and how everything bowls done to just being a money making industry with ethics taking the back seat. With most of the population of the world in developing countries the cost of medicines has become a major concern. In the war between human life and profitability, profitability seems to be winning. $ 800 Million – $1 Billion are spent on research and development alone, in bringing a new drug to the market. (Martin, E, 2010). Due to these large amounts spent by the pharmaceutical companies and ultimately the goal being getting a return on their investment, they are ‘forced’ to charge high prices for the medicines they have developed. The word ‘forced’ has been very carefully chosen. Albeit, there may be many private companies which are only concerned with making money, pharmaceutical industry on a whole does something noble. It saves millions of lives and gives everybody a chance to lead a better life. These companies need to charge higher prices not just for profit reasons but also to be able to have the money to develop more drugs, which in turn would ultimately benefit mankind. However, these companies also use patents in order to avoid competition that would produce cheaper and more readily available drugs. The patents allow the companies to get a few years of competitive advantage where they charge a premium for the drug until the patent runs out and cheaper alternatives are available in the market. These patents run several years and the poor who cannot afford expensive medicines suffer. This was seen in South Africa when a major pharmaceutical company opened a lawsuit against the South African government to claim that their property and patent rights were put at risk when they started importing Ciprofloxacin, one of the drugs used in the therapy of AIDS, from India, which was 13 times cheaper. 27 million people are HIV positive and were exposed to a price 13 times more expensive due to the protection by patents. This lawsuit was however eventually withdrawn as the media scrutiny became such that the threat to the companies reputations became greater than the economic loss caused due to challenge to the patents. (Salek, S, 2002) This brings me to an ethical dilemma. As the companies spend the amount they do in developing new drugs the money they make gets ploughed back into development of new drugs. If they do not make profits then developing new drugs would come to a standstill. They charge the premium to recover the costs they incurred. But how far can this be justified? Agreed that some drugs can be charged a premium but what about drugs that cure cancer or other diseases. Shouldn’t these be subsidised inspite of the costs they incur? This is the dilemma. Millions of people are dying due to the drugs being expensive and people not being able to afford treatment and the pharmaceutical companies need to charge more in order to be able to develop more drugs. So, how can one find a solution to this vicious cycle? With the knowledge I have about this industry I am assuming the government should help in this matter and also the FDA must be more proactive as any delays in certifying the drug adds on to its cost exponentially. Also included in this issue is that pharmaceutical companies are keener on developing commercially profitable drugs whilst the treatment for HIV, malaria vaccines and drugs are suffering. It was estimated that only US$300 million was dedicated to research for vaccines for HIV/AIDS and only US$100 million to malaria research. These are diseases with the highest mortality and morbidity rates in the world, and prove devastating in developing countries. However companies believe it would be more profitable to develop a drug designed to enhance sexual performance for males than to develop a medicine designed to treat or prevent malaria.

These instances reflect an ethical dilemma- whether to provide cheaper drugs and not make profits, hence stopping the development of new drugs or charge higher and keep the research going. To explain the ethics behind this industry one can make use of the teleological ethics theory or the consequentialist theory which states that the rightness or goodness of an action is not intrinsic to that action but can only be judged by its consequence. Adam Smith states that due to egoism, actions that these companies follow are morally right if the decision maker is pursuing his own interests. However, this industry is also involved with saving millions of lives and hence it can be safely assumed that the Utilitarian approach which holds that “actions are right if it results in greatest amount of good for the greatest amount of people affected by the action” is also being followed. (Modern definition, Crane, Matten 2004). However this definition of the utilitarian theory is quite different from Jeremy Bentham’s definition stating, ” the principle of utility approves or disapproves of every action whatsoever, according to the tendency it appears to have to augment or diminish the happiness of the party whose interest is in question: or, what is the same thing in other words, to promote or to oppose that happiness.” This definition to me has a few flaws, as it seems too subjective, the part ‘tendency it appears to have’ suggests that it refers to nobody in particular and the word ‘tendency’ shows a deviation and uncertainty in the definition. We need something more concrete to base ethics on. Also, Bentham’s definition is for a select group of people whose interest is in question, and even the modern definition depicts people affected by the action and ignores people who would have been affected if a different action had been carried out. With regards to this the most suitable definition would be the simplest one by Mill’s, “Actions are right in proportion as they promote happiness, wrong as they produce the reverse of happiness”. Utilitarian theory also assumes the quantity and quality of happiness can be weighed based on intensity, duration, certainty, extent etc. Cost benefit analysis is an important tool in this theory as it measures not only the direct costs and benefits to an organisation but also the social costs and benefits. For example it can be measured by the savings on medical treatment, the overall economic productivity due to treatment, improved quality of life. The tangibles can be measured easily as costs of drugs would be known. According to Karl Marx the theory of utility is true by definition and thus does not really add anything meaningful. For Marx, a productive inquiry had to investigate what sorts of things are good for people. Second, he says that Bentham fails to take account of the changing character of people, and hence the changing character of what is good for them. Marx argues that human nature is dynamic, so the concept of a single utility for all humans is one-dimensional and not useful. He decries the implication that society, and people, have always been, and will always be, as they are now. (Das Kapital)

In contrast to this theory a look at the virtue theory could also be interesting to understand this industry. Virtue theory does not take moral rules or consequences into account. Virtue ethics implies that morally correct actions are those undertaken by virtuous people and hence formation of virtuous character is first step towards morally correct behaviour (Crane, A, 1968). We can see how this theory contradicts the utilitarian approach, as under the latter the industry is ethical as its action amount to the greater good no matter what the action was, however according to the virtue theory the actions need to be good and this would in turn make the industry good. This is less seen in practice as many a times in order to improve profitability the industry takes the wrong action and does not remain virtuous, unlike in the utilitarian theory, where even a wrong act is justified if it leads to the greater good, which in the case of the pharmaceutical industry in particular, it usually does. (Kelman, S, 1981)

The other issue that bothers me is the marketing of prescription drugs to physicians. Medical sales representatives often visit physicians, promoting new drugs of the pharmaceutical companies. Physicians are often offered not just bribes, and kickbacks but also all expense paid trips, season tickets etc to promote their drugs. Other than this the buying groups may also have vested interests as they may hold stock in the supplying company. These decisions are sometimes taken unconsciously by the physicians, due to the relationship building that was being done. All this raises the issues of conflict of interest as the physician is not able to carry his duty with all fairness as sworn in the Hippocratic Oath. They fail to live up to their professional responsibility when self-interest bias their judgement and compromise their service to their patients. All this has an impact on professional and scientific integrity and quality of health care. It’s all about marketing. Products are meant to be sold in ‘too-good-to-be-true’ packages and physicians are persuaded by all the benefits demonstrated. Some companies do not even disclose al the potential side effects of the drug, in fear of it not being accepted by the physician. Hence, quite a lot of information is kept hidden while exaggerating the benefits. All this again leads to a vicious cycle as when a physician is convinced that a particular drug alternative is better, he might change the treatment options of his patients to this highly risky and more expensive drug than before unaware of the damage it might do. Drugs which are unsafe are being brought into the market. These led to strict regulations being laid between the relationships of these companies with the FDA.

A pharmaceutical company has a commercial interest in denying or playing down medical risks and in being slow in investigating these risks. These companies are wrongly motivated. Agreed all stakeholders need to benefit, but the patients are also important stakeholders who are often ignored. According to the stakeholder theory shareholders are but one of the important stakeholders. The companies get involved in agency risks in which the managers only focus on increasing shareholder wealth at the expense of the various other stakeholders. Stakeholders are “those groups without whose support the organization would cease to exist.” This is a somewhat extremist view got from the Stanford memo in 1963. According to R. Edward Freeman, the stakeholders are the ones “that can affect or are affected by the achievement of an organisations objectives.” This approach can assist managers by promoting analysis of how the company fits into its larger environment, how its standard operating procedures affect stakeholders-shareholders, employees, patients consuming the medicine, physicians prescribing them, clinical researchers, medical journal editors, health care policy makers, government etc. Hence, the most important issues that arise are the quality and cost of medical care and the integrity of medical professionals. (Weber, L.J, 2006) Again, the contrast with Friedman’s view should be evident: if the corporate manager looks only to maximize stockholder wealth, other stakeholders can easily be overlooked. (Mayer, D,) In a normative sense, stakeholder theory strongly suggests that overlooking these other stakeholders is unwise and ethically unjustified and in an instrumental sense they can check if it is beneficial to the organisation to take the stakeholders interests into account, as this is what would lead to success and competitive advantage. (Bailur, S, 2006) Hence, these companies maybe dedicated to safety of the patients (stakeholder) but there is a conflict of interest present, between safety and sale of the drug. (Weber, L.J, 2006) This was what was seen in the Merck and Vioxx case where people died due to the company being slow to act in withdrawing the drug whilst the evidence of unacceptable risks was mounting. For more details on the Merck-Vioxx case, see Appendix B.

This industry is often faced with the issues of corporate governance and trust. Due to the various drug call backs that have happened over the recent years trust in pharmaceutical industry has decreased, it is only being considered a money making machine. This has not just led to bad publicity leading to drop in revenue but also increased costs of monitoring and control processes. (Salek, S, 2002) The role of being a corporate citizen varies from active notion of citizenship to passive acceptance. In a world where managers face incredibly intense pressure regarding financial performance, it is altogether too easy to lose sight of the broader corporate citizenship agenda which places businesses firmly within the context of the societies in which they operate. (Waddock, S, 2003) . In marketing to consumers the companies should provide accurate and clear information on the benefits and risks of the drug. According to Garriga & Mele, (2005), the most recent theories to support the concept of corporate social responsibility are basically focused on four areas, meeting objectives that produce long term profits, using business power in a responsible way, integrating social demands and finally, contributing to a good society by doing what is ethically correct. 4 groups that arise out of this approach are the instrumental group, where the corporation is seen as an instrument for wealth creation and this implies its whole social responsibility. The second group is the political theory group, which emphasizes the social power of the corporation vis a vis its relationship with society and its responsibility in the political arena. The third group is the integrative theories, which emphasizes the fact that business depends on society for its continuity, growth and existence. The last is the ethical theories which postulates that the relationship between business and society is embedded with ethical values. The pharmaceutical industry falls into the political theory group as its social responsibility lies in the benefit of mankind, and this responsibility arises due to the amount of social power they have. (Theophilius, A, 2007) However, due to a few whistle blowing incidents seen in the pharmaceutical industry, many issues have been made aware to us which we would have not known otherwise. One of the most famous cases was Pfizers settlement at $ 2.3 billion in 2009. For more details see Appendix C. Had people died inspite of Pfizer knowing the drugs side effects and not informing the people concerned, it could have been sued for corporate manslaughter.

This paper hence covers various ethical issues of the pharmaceutical industry and application of various theories with an analysis of the various approaches of previous authors to the different theories. All in all, like every industry, the pharmaceutical industry also has a good and a bad side. The world today is a capitalist driven, market based economy. Pharmaceutical companies also mainly focus on their profit generation. If we view the sustainability issue from the consequentialist view, we can derive arguments that both support and condemn environmental exploitation. According to this theory environmental exploitation by the pharmaceutical industry could be justified if it ultimately leads to the larger good. However, what would happen to other industries or resources if the environment is exploited? How does the utilitarian approach explain the damage done to several lives. What would be the trade-off? The pharmaceutical industry should look at the triple bottom line which includes the social, environmental, and financial performance which involves obligations to the various stakeholders, these should be measured, calculated, audited and reported. In order for the triple bottom line reporting to drive maximum value, it is essential that the information reported aligns with business strategy and objectives and accurately reflects the focus of company activity in these particular areas. (Schubert. J, 2003) The pharmaceutical industry is an industry which is based on benefiting mankind, however the vicious cycle of R&D costs and developing new drugs is an important part in it being expensive and applying for long patents. Thinking about it, it is not ethically wrong, it becomes wrong when it limits itself to only being a money making industry, exploiting the poor when there is an option available to provide cheaper drugs to those who really need it and cannot afford them and hence forgetting the larger picture.


Story behind Herceptin-

So, what was the story behind the Herceptin? Dr. Dennis Slamon, UCLA Medical Centre, LA, develops the experimental drug, Herceptin, which according to him was a big breakthrough to treat breast cancer. He needed to run trials on women with breast cancer in order to see its effectiveness and further to get the approval for the launch. He worked tirelessly on this overcoming many obstacles. I wondered how far were these obstacles ethically correct. First, one of the pharmaceutical companies stops funding for research, which was very important as it was just an experimental drug, however a few philanthropists show interest and the research eventually gets funded by drug companies. The other obstacles being the trials that the drug had to undergo. Trials were done on women with the cancer and who were explained the risks and outcomes beforehand. However, a few women were excluded out of the trials as they did not meet the ‘protocol’. Even though Dr. Slamon knew this drug would benefit even those who did not fit the protocol and inspite of all the effort put by him the women had to be rejected. Finally after 8 long years of facing the obstacles and almost giving up, the drug proved to be a success and was given the FDA (food and drug administration) approval. The questions this raised for me was- it took 8 long years to launch a drug which could have been launched in less than half that time hence saving millions of women and also the protocol issue and my ethical dilemma. I do understand as a doctor that following protocol is important, however giving those women the drug would have jeopardised the whole trial. I assumed the women could have been given the drug without involving them in the trial, again saving lives. On researching more thereafter, I came across many other ethical issues which were more prevalent and were spreading like the plague in the current world we live in.

Vioxx- pain killer or just killer??

Vioxx which was a pain killer to treat conditions like arthritis was on the market for 5 years and had reaped billions in profit already. Evidence of it increasing the chances of causing strokes and heart attacks was increasing, however, Merck was still fighting off law suits to defend the drug instead of taking the drug off. The whole story was obviously unclear as to whether Merck knew of all the side effects, as, if they knew it just means they marketed it as a ‘super-drug’ under completely false pretences.


This happened when they approached a psychiatrist, Dr. Stefan Kruszewski, to sell him an anti psychotic drug for children and an off-label use of treating dementia in adults. He did no agree to it and on further research found that the drug, Geodon, had serious cardiac side effects which were not metioned by the sales reps, who called it a safe drug. The psychiatrist blew the whistle on this and took Pfizer to court. Pfizer had to settle for 2.3 billion out of which 14.3 million were given to Dr. Kruszewski. Many such cases have been seen and the whistle blowers motivation to do this could be the ethics behind the situation or the monetary motivation of getting proceeds from the settlement. (Lowe, 2009)

Use of Kohleberg’s model-

Even according to the Kohlberg model they get away by demonstrating pre-conventional morality which means they are oriented to obedience and punishment. They follow the rules by the book in doing research, clinical trials etc. This is what law requires them to do. Again, this is where the distinction between law and ethics would come into picture. (Crane, 1985) Legally, there have been many regulatory restrictions on the pharmaceutical industry in terms of standards for quality, safety and efficacy. These have been developed over several years. There are many laws and regulation affecting the industry, concerning for example the pricing of medicines, the conduct of clinical studies, the health protection of workers and concern for the environment. In some fields it is indeed hardly possible to maintain standards through regulation. This is where the role of ethics comes into the picture. (Duke, 2005)

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Content

Featured review logo

“Thank you UK Essays for your timely assistance. It has helped me to push forward with my thesis.”

Tajeram M

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have the essay published on the UK Essays website then please.

McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams Prices from

Undergraduate 2:2 • 1,000 words • 7 day delivery

Learn More Order now

Delivered on-time or your money back

Each order includes
  • A fully qualified writer in your subject
  • 100% confidentiality, the work is never re-sold or published
  • Standard 7-day amendment period
  • A paper written to the standard ordered
  • A detailed plagiarism report
  • A comprehensive quality report
Rated 4.5 out of 5 by Logo (62 Reviews)

Our Services

We have a range of academic services including essay writing, full and part dissertation writing, and our ever popular marking and proofreading service.

You can view our full service portfolio here

UK Essays can show you how to write great academic work with our 4.5 star rated services Logo
Place an order or Learn about our services