business ethics in action, Thesis of Business Ethics

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21361779 | MS7SL82O | November 28, 2017

Business Ethics

Introduction

During the last decade pharmaceutical industry has become one of most evolved industry in the world. According to the research based on the data in 2007 to 2016 prescribed pharmaceutical revenue has grown from $549 Billion industry to $690 Billion industry with the 2.9% of compounded growth rate (Forbes.com, 2017). Overall pharmaceutical product revenue has reached over to $1 trillion industry (Facts, 2017).

The pharmaceutical industry is responsible for the development, production, and marketing of medications. Therefore, the importance of the industry is highly ranking as it directly affects to the human productivity through their health. Further availability of the medicines to the population in the world is an essential factor.

Companies which is in the pharmaceutical industry has moral obligation which needs to be carry out though entire process of their business. Therefore, in this report I will be analyzing three major identified ethical practice issues arisen in the pharmaceutical industry sector.

1. Issues in the marketing practices
2. Pricing issues
3. Issues in quality of the medicine.

Ethical issues in the marketing practices of the pharmaceutical

industry.

With a highly competitive background, most of the pharmaceutical companies spend millions of money for promotions their brands. Due to the restriction of promoting the drugs which is practiced in globally, merchandising of the pharmaceutical products is highly complex. Companies are using a direct marketing approach with medical representatives and sales representatives by directly meet professional to promote their brands and provide details about the drug and request the doctors and hospital to prescribe their brands. This direct approach opens the path to bribery and lead to an ethical issue.

The best and possible example of such incident is one of the largest global pharmaceutical company had been fined $450 million USD by the Chinese authorities. The company was accused for paying bribes to doctors and hospital to promote their drugs (BBC News, 2017).

While describe the theories and analysis this case will be taken as an example under the name of Bribery, China marketing scandal.

Pharmaceutical Companies

Companies that are involving with the research and development, production of the medicines and marketing those medication can be considered.

Governments and local Administration

Government institution and governing bodies who are relating with medicinal drugs approval process including assuring the quality in the drugs can be taken in to this category.

Public health sector (Hospital and Dispensers): in Sri Lanka 60% of the patents got prescribed by the public sector.

Medical Doctors

The doctor is the first person who directly interacting with the patient. Patients are always trust on the doctors and the doctor’s primary duty is to keep the safety and care of their patients and the public (Gmc-uk.org, 2017).

Doctors are the only acceptable party who can prescribe the medication to the patients.

Pharmacies and dispensaries

Their main responsibility is to offer medicine to the patient as per the prescription given by the doctors. In many countries the legal obligations had implemented that the medicines are not to be provided without a proper prescription due to public safety matters.

Raw material suppliers.

The supplier involving with the production of the medicinal can be categorized under this.

By supplying of those raw material and other related materials they have to satisfy the relevant requirements as per the industry standards.

Stakeholder Mapping.

There are different methods available to analyze the stakeholders. The easiest way to analyze is grouping the stakeholders in the grid based on the dimensions of power of influence and the level of interest. (Bryson 1995)

The power of involvement or influence and the power of interest are the key elements which are used in the stakeholder analysis. High power high influences are caused more ethical issues and the most effected party can be identified under high interest low power category. (crane and matten,2010)

Mapping for the marketing ethical issues

Mapping for the pricing ethical issues

Mapping for the quality ethical Issues

Ethical Analysis.

When analyzing the human history, the abstraction of the moral values into culture is the key element in mankind’s journey of a revolution to develop society.

Morality of the society was differed in different periods of the human cultural evolution timeline. Moral values in the society can be segregated in to two types. Some are integrated into the legal system while others are linked into the virtues in cultures.

In a highly globalized and rapidly changing business environment it will be a major challenge to work under these many ethical frameworks.

Theories of ethics

Ethical frameworks can be described through the ethical theories. Ethical theories are the rules and principals that govern the right and wrong for an action or a situation. For better understanding those theories can be segregated in to two main categories.

1. Descriptive
2. Normative

Descriptive theories discuss about the ethical phenomena, when applying this theory, it attempts to uncover the moral beliefs on individuals, groups and societies.

Cultural relativism, wrong and right justice, moral virtues, ethical ideals and values are the key descriptive ethics.

If a theory prescribes the morally correctness or wrongness of an actions or a situation, it can be considered as normative theories. (Gray, 2010)

Structure of the normative theories

Further there are different types of normative theories categorized under two groups.

Consequentialist Ethics

The ethical theories are based on the outcome of the actions.

Rightness or the wrongness of the action decides base on the result.

Always choose the right act for maximize the good consequences.

Non-Consequentialist ethics

The ethical theories are based on the moral judgement irrespective of the outcomes of an actions.

Rightness and wrongness of the action decides based on the morality of the action.

Always choose good action without the consequences.

Egoism.

Every human action is motivated entirely by self-interest. The ethical egoism always promotes if that action is only moral and not promoted if the action is not moral.

However individual or organizational self-interest should morally acceptable even it creates benefits for all from those actions.

The categorical imperativeness: The morality is based on those actions and don’t have any option to ignore the morality.

Maxim is rule or principle which you act.

Maxim 1: An actioned could be considered right provided that all involved are able to

perform the same basic principle (Crane and Matten 2016).

Maxim 2: The utmost priority should be given to humanity thus always maintaining human

dignity (Crane and Matten 2016).

Maxim 3: Moral righteousness of an act could be agreed upon only when the same is

acceptable for every human being (Crane and Matten 2016).

Maxim 1, Application to the case of Bribery, China marketing scandal

Even though GSK has done that, not all the pharmaceutical companies had given bribes to the professionals to keep higher margins on their medicine. Hence, as per the Maxim 01 bribing the professionals is morally unacceptable.

Even though all the pharmaceutical companies has done the same practice it can’t acceptable because that practice is not accepted universally.

Maxim 02, Application to the case of Bribery, China marketing scandal

Moral intention of the GSK is to make higher profit without reducing the prices which is more unfair to the patients in the China. Due to keep the high mark-up in the medicinal prices a segment of people fails afford those medicines and those actions challenge the moral dignity of the human being.

Maxim 03. Application to the case of Bribery, China marketing scandal

The actions carried out by GSK was not accepted by all stakeholders in the industry. According to the legal framework of China bribing is a punishable offense. It gives a clear indication of universal unacceptability of the action and state it was a morally unethical action. People who lived in Chine also not allow the corruption or a pharmaceutical monopoly within the country.

Ethics of Rights and justice

Natural Right

According to the john Locke all individuals are entitled to fundamental rights

Justice

Fairness, equality and everyone’s ability to access what they deserve in given situation is an act of justice.

Fair procedure and fair outcome has been monitored in these theories.

Application to the case of Bribery, China marketing scandal

Violation of right

A patient has right to prescribe by the doctors without any unfair influences. This practise has violated the ethical theory described in the right and justice theory.

Justice

Governments should establish a strong anti-corruption framework to crack down such actions.

Virtue Ethics

Aristotle explained the four main virtues of courage, honesty, temperance, and justice by explaining the virtue of the character defined the mortality of the actions.

The virtue theory stresses that base of morality is in the person or the character rather than the act.

Application to the case of Bribery, China marketing scandal

As per the trial the former head of operation in China GSK is alleged to all this practice and it was questioned the honesty of him and the company.

Even though company had implemented a code of conduct internally, being allowing these types of incidents was questioned by public and the company’s courage to stop those practices internally.

Triple font theory

This explains the morality of an action which is based on the intention, object and the circumstances of an action.

Government and regulatory bodies

As a key stakeholder government should act proactively by implementing a strict regulations.

Facilitate to bring regulations to prescribe the medicine in scientific name except special scenarios.

Implement a monitory mechanism to check the quality of the drugs periodically.

Consumer fairs authorities should check the prices of the drugs frequently to analyze the price fixing in the market to overcome the pricing issues.

Pharmaceutical Companies.

Formulate code of conduct and ethical framework within the company to protect the morality of the actions.

Should implement a strategy to educate the company directors and top managers regarding the moral theories.

Implement an independent governing body to monitor the actions which are carried out by the company to overcome the unethical practices.

Patient and public community.

Public should always open their eyes and question if any unethical approach or inform to the relevant authorities.

Doctors.

Doctors and physician’s ethical practices should be evaluated by the country or local medical councils and if they found guilty with violation of such code of ethics should be punishable.

Educate the doctors with regards to the ethical theories and practices.

References

BBC News. (2017). GSK fined $490m by China for bribery. [online] Available at: http://www.bbc.com/news/business-29274822 [Accessed 29 Nov. 2017].

BBC News. (2017). Pharma industry gets high on profits. [online] Available at: http://www.bbc.com/news/business-28212223[Accessed 29 Nov. 2017].

BBC News. (2017). Pharma industry gets high on profits. [online] Available at: http://www.bbc.com/news/business-28212223 [Accessed 29 Nov. 2017].

Bryson, J. and Alston, F. (1996). Creating and implementing your strategic plan. San Francisco: Jossey-Bass Publishers.

Facts, G. (2017). Topic: Global Pharmaceutical Industry. [online] www.statista.com. Available at: https://www.statista.com/topics/1764/global-pharmaceutical-industry/ [Accessed 29 Nov. 2017].

Forbes.com. (2017). Forbes Welcome. [online] Available at: https://www.forbes.com/sites/bernardmunos/2017/08/29/managing-revenue-growth-and- contraction-in-big-pharma-what-have-we-learned-in-the-last-10-years/#5cd2a97e192e [Accessed 29 Nov. 2017].

Shaw, W. (2011). Business ethics. Boston, Masachuttes: Wadsworth/Cengage Learning.

The Hindu Business Line. (2017). China slaps $490-m fine on GSK in bribe case. [online] Available at: http://www.thehindubusinessline.com/companies/china-slaps-490m-fine-on- gsk-in-bribe-case/article6427524.ece [Accessed 29 Nov. 2017].