Stake Holder Analysis: Pharmaceutical Fraud by GlaxoSmithKline
Introduction
The question of morality and ethics in business practice around the world has in recent years come under very close scrutiny and has indeed been the subject of a lot of displeasure. there have arisen, the world over, many situations in which ethical standards of practice have greatly been compromised in the relentless search for higher profits. This has been the case for many businesses, both small and large cooperates. In the quest to ensure that ethical standards are respected in the business area and thus ensure the protection of consumers from the resultant consequences of those compromises. Countries and business practice associations have developed laws , rules and regulation that govern the production and dissemination of products as well as services to the public. Bodies have been set up to ensure that companies and businesses within specific localities and nationwide, follow the stipulated rules and regulations as to avoid breach of set ethical standards and to ensure that there are consequences for the same. National governments have also formulated legislation to ensure that such ethical guidelines are respected. Although a lot of vigilance has been observed to make sure that ethical standards in different business practices are held, there are still some loopholes that exist in different systems so as to make the perpetration of fraud possible among even large corporate in situations. In the year 2012 GlaxoSmithKline, drug manufacturing and production companies pleaded guilty to gross fraudulence in some of its practices and proved that the breech of ethical standards is not only possible but possible at a scale as large as that perpetrated by the company.
GlaxoSmithKline U.S. Drug Fraud Scandal
In the year 2012, the multi-national drug manufacturing and producing company GlaxoSmithKline plead guilty to the perpetration of mass fraud in the promotion of drugs that had not been approved by relevant approving bodies for the uses which the company was promoting them for. In the same case the company was accused and pleaded guilty to the fact that they concealed important data about he possible effect s of some of their drugs, and proceeded to market them as safe among their consumers(BBC News, 2012).
In the first case, GlaxoSmithKline pleaded guilty to having marketed two of their drugs, Paxil and Wellbutrin as antidepressants to children, when the drugs had not been approved for such uses by the relevant bodies concerned. As a matter of fact , the Food and Drug Administration (FDA)which is the body that largely oversees and ensures that proper safety standards sin food and drug products are adhered to , had disapproved the use of Paxil for that function(Drug Watch.com ).there had been noted a risk in the causation of suicidal tendencies among children and those generally under eighteen years of age with the use of this drug. In relation to the same drug, GlaxoSmithKline had marketed it as a sex drug, while the FDA had not approved it for that use. The company however went ahead to market it as such, ignoring any potential health risks to its consumers ( BBC News.com).
As relates to the second d charge, the multi-national laws accused and indeed plead guilty to the lack of sufficient disclose of research data about its diabetes drug Avandia to the FDA and indeed to the general public and specifically its consumers. The data concealed was of a nature that would have definitely proven averse to the Avandia sales( BBC News.com, 2012 ). The data contained evidences of increased heart disease risk to the users of Avandia. The withholding of the data therefore led the consumers of the drug to believe that there were no associated heart complication risks in the taking of the drug and constituted a mass deception on the part of GlaxoSmithKline to its customers ( Drug Watch.com). The company instead only focused on the beneficial side of the drug, and promoted it as safe and effective for treating diabetes –related complications. As a result, Avandia rose to become the most popular diabetes drug in the world. The deception about the drug run between the years 2001 And 2007. To the extent to which GlaxoSmithKline concealed the drug’s heart-associated risks from being recognized by its customers exposed them to great health risk(BBC News).
Over and above the basic deception of the public by the company, GlaxoSmithKline pleaded guilty to accusations that they bribed physicians, with money and other entertainment perks, so as to get them to give talks on their drug, endorse them and generally increase the number of prescriptions they wrote for those drugs (BBC News) .Some of the physicians were aware of the deception but a large number of them were not ( Holt, 2 ). Therefore, not only was the deception to the final consumer of the drug but also to some honest physicians who believed that the drug was indeed safe for use and bore no negative side effects for patients. As a result of the mass fraud, the company was found criminally liable to pay a sum in criminal settlement amounting to 3 billion US Dollars. Both the size and scope of the scandal shocked the world and reveled to what extent the flaunting of ethical standards can reach if a close eye is not kept of businesses.
Understanding the moral and Ethical Problem
Any attempt to identify and characterize the moral problem and ethical issue in the GlaxoSmithKline case must fist include an understanding of the expected moral and ethical standards in business practice.
Personal morality or ethics points to the differentiation of good and bad actions, characteristics or behaviors, and inclines itself to doing the good (Morphy,1).in a lager sense, morality may be fund within a group or a society, which sets ideals for itself that include doing good towards other and safeguarding other people’s rights and not compromising them for the sake of one’s own. Morality and ethics when applied nation-wide or world wide is articulated in moral codes that apply uniformly in different institutions and peoples. In business and other industry the moral code is usually encapsulated in codes of practice for different fields where all the actions undertaken one are in such a way that the general moral code is adhered to ( Katie & Schmidt, 2).
In business practices the world over, there is an understood ideal, either implied or expressly stated that whatever good are produced for the public must be fit for consumption , so as not to cause any compromises in wellbeing, be it physical, mental, psychological and even moral health of the general public. With specific reference to pharmaceutical companies which are held accountable to the Hippocratic Oath professionals in the industry swear by, the stakes are even much higher. This is because of the nature of good s they deal with and supply to customers. They have a direct impact ton their health. They therefore are held to even higher ideal than other business people or corporate institutions. The Hippocratic Oath taken by all physicians and healthcare professionals, including pharmaceutical professionals expressly requires them to undertake all their actions for the benefit of the sick, swearing to protect them from harm and injustice. The oath calls them to the highest professional standards of practice, exhorting them to act honestly and ethically above all else.
The adherence to moral standards in any profession and in healthcare in particular should follow the general guidelines of belief, at the foundation of which is to do no harm to others intentionally. It involves the quest to also ensure that other people’s rights are respected, which includes their rights to freedom of choice and to be protected from harm as well as their rights to justice (Ralph, Willian & jones,25 ).
GlaxoSmithKline breeched moral and ethical standards by first and foremost choosing to knowingly and intentionally engage itself in a series of actions that directly placed their customers in danger and exposed them to risks. Their diabetes medication directly posed risks of heart disease. Their anti-depressant medication posed the risk of development of suicidal tendencies among children, to whom they exposed it to. In so doing they intentionally and in full knowledge ignored their customers’ right to health and right to protection from harm ( Drug Watch.com).
The company also fell short of ethical standards by denying their customers a right to access the truth, which in this case had great implications for their health. By withholding important information about potential health risks in their drugs, they led their customers to believe that the drugs were safe. This action amounts to public deception and is a breech of business ethics. A seller should disclose fully to his buyer the nature of the product which he I selling to them.
The concealing of data that exposed risk of using the drugs by GlaxoSmithKline also robed the customer of the right to make a decision that was for the best of their health. In concealing the data, any decisions that were made by the customers were made without the full information which possibly resulted in adverse health risk for them. This means that they were in a way denied their right to freedom of choice with full information and data presented to them ( Andre, Claire &Valesquesz,1 ).
Another moral issue in the case is the bribery that took place ( BBC News). The act of intentionally bribing physicians so as to get them to promote drugs that were either not approved for the uses they were being marketed for or others that bore inherent potential for health risks was a great compromise of ethical and moral standards. It resulted in the deception to their customers who probably bought the drug due to the faith they had in their physicians to prescribe the best drugs for them and to act in with their utmost god at heart. In the sane light the act of bribery of the physician may have compromised the ethical practice of innocent physicians who genuinely though that they were the drugs were safe for use. The company’s actions in such a case caused the physicians to go against the code of ethics either knowingly or unknowingly.
Perhaps the largest and moral and ethical issue in the drug scandal was the fact that GlaxoSmithKline, a multi-national drug company which over the years marketed it self as a custodian of health solutions for the public, and was therefore expected to have always act in the best interest of the general public, took advantage of public trust in them and exploited it for their own benefit ( BBC News). The deception of the public by the company, points to the fact that GlaxoSmithKline took advantage of the capital trust that they had acquired from the public over the years and used it to exploit them. Because they knew that they had authority to advise the public in health matters, they used the same to advise the public to buy drugs even though they were not fully approved for the uses they were marketing them for or bore health risks. GlaxoSmithKline knew that neither the public nor physicians were likely to question them.
Impacts of Compromised Moral and Ethical Standards
The fraud and ethical and moral issue it brings up point sat a weakness in society where a culture of selfishness can easily thrive. Aside from the obvious impact in potential health risks to the patients that in jested the drugs in question, the impacts are felt by the entire society in a weakened public in terms of health and hundreds of people who are indirectly affect by resultant health challenges. this has financial implications for many people and eventually affects the economy.
There is also a consequence in terms of reduced trust health institutions and compromised trust of health professionals and the entire profession. The public is likely to be much more skeptical of pharmaceutical industry. This ultimately leads to a feeling of lack of protection from harm.
The Main stakeholder sin the pharmaceutical industry are the pharmaceutical owners are senior professional, the consumers of the drugs and physicians who prescribe them. In the GlaxoSmithKline case, the consumers were the ones that were most affect e by the scandal and those who are likely to bear the brunt of the actions for the rest of their lives, in side effects from the drugs. Physicians who had their practices compromised by prescribing the drugs which they genuinely believed to be safe were also compromised. The pharmaceutical company benefited from the fraud for a lot of years in booming sales all over the world and had none of their rights abuse. However after the unearthing of the scandal, the company had to pay 3 billion dollars which has impacted its financial health.
Economic Outcomes
The concept of “Pareto Optimality” States that decisions and actions should always be taken to the extent that they will generate the greatest profits for the company because this will also generate the greatest benefits for the society, provided it can be shown that all markets are fully competitive, all customers are fully informed, and all external and internal costs are fully included ( Ralph, Wiliam & Brian, 24). However in this case , all customers were not fully informed. Although there was competition fro mother manufacturing g pharmaceuticals, information was withheld by the company therefore giving it unfair advantage over others in the industry and compromising the benefit of the consumer in terms of health. All factors reaming constant, the moral issue would have been resolved by being honest about the inherent dangers in the drugs marketed, and by the company subjecting themselves to the greater overseeing authority which in this case if the FDA, and taking seriously its approval or lack thereof on their products.This may have resulted in lower sales for the drugs in question, but would have no doubted retained the ethical code of conduct and would have saved the company from the eventual losses it suffered in criminal and civil liability settlements as well as the loss of trusts and reliability in the consumers’ eyes. These effects may be felt for along time.
Legal Requirements
The law in a democratic society represents the combined moral standards of all of the people within that society. The legal requirements in this case stipulate that pharmaceuticals acts in a manner as to always ensure the safety of their consumers ( Ralph, Wiliam & Brian, 24). There Is set up an organization to ensure the same, under which pharmaceutical should operate, GlaxoSmithKline should have operated under the same, disclosed all necessary information concerning the drugs to them and adhered to FDA’s approvals of lack thereof. Because of the disregarding of these laws, the next consequence which is legal prosecution took place and penalties were incurred. There is however a problem with the legal resolution of this particular case in that the patients who are likely to be affected the most were not compensated for possible risk.
Ethical Duties
Hosmer’s Comprehensive Method (Citation here) outlines ethical duties to be observed in conduction of business or other practices. The principle of distributive justice was broken because GlaxoSmithKline did not act in a way as to ensure equitable distribution of benefits in their transactions with customers. The company retained all the financial benefits from sales while exposing the customer to risk instead of providing the promised benefits
The second principle broken was the principle of contributive liberty where companies should ensure greater liberty of choice for all stakeholders. Customers were denied liberty of choice by the fact that important information abut the product was withheld from them as well as potential risks, therefore any decision made were made with lack of full information which is an infringement of that liberty of full information .
Solutions and Conclusion
In the face of increasing social and business crises in the world, it is necessary for companies to begin to take seriously issues of moral and ethical standards. Organizations such as the FDA which monitor quality should be respected and their approval or the lack of it taken seriously with legal implications for the same. Regulations on ethical and moral conduct should also be taken amore seriously. Legal implications moral and ethical compromises should be stiffer so as to act as a deterrent factor for such cases.
Stake Holder Analysis and Power Interest Grid
Business are allowed to Operate Unethically
Stakeholder: Benefits Harms Rights expanded Rights ignored
Big Pharmaceuticals and Multinationals – Potential for huge new advertising campaigns
– Can bring in many new customers
-larger profit margins due to high sales.
– maintain the power and control – rights to communicate freely
Consumers of drugs -Potential health risks
-Psychological & emotional unwellness and fear
-robbed of control and power in the industry. -Rights to receive information
-Right to be told the truth about products
-Right to make informed decisions
Society – The economy grows as a result of more buying and selling – more sick people
– robbed of confidence in multi-nationals and health care system.
-robbed o f power and control in the industry Right to be protected from harmful corporate practices
physicians -Get robed of decent and honest practices Right to make informed decisions concerning prescriptions
Government – more tax collected from these big companies
-robbed of power to control industry effectively – costly for the medical system
Businesses Operate Ethically and Adhere to Moral codes
Stakeholders: Benefits Harms Rights expanded Rights ignored
Big Tobacco executives and owners – operate without worrying about negative effects to society
– save a lot in avoided settlement fees
– retain trust by the society
– retain power in the industry They don’t make as much profit as before –
Employees of companies -work in honest environment – less profit for the company means downsizing which leads to less job security
Society – increased trust in pharmaceutical companies
-feeling of well being
– less tax dollars go towards medical problems caused by cigarettes
– retain power & control in the industry – less government taxation money from pharmaceutical companies – right to protection from harm safeguarded
Government – retain power and control in the industry – less government taxation money from tobacco companies
physicians Maintain Decent practices Right to make informed decisions concerning prescriptions
– Protect right to operate ethically
Works Cited
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BBC News.GlaxoSmithKline to pay $3bn in US drug fraud scandal.July2,2012. web 24th
Feb,2013.. http://www.bbc.co.uk/news/world-us-canada-18673220
Drug Watch.com. Paxil – Antidepressant Drug with Dangerous Side Effects.10 dec, 2012.
Web,24 feb 2013. http://www.drugwatch.com/paxil/.
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case. Wednesday, July 04 2012.Web 24th Feb,2013. .http://www.naturalnews.com/036385_GlaxoSmithKline_criminal_fraud_bribery.html#ixzz2Lu7SbAil
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Concept. Emerald Group: Bingley,2012.print.
“Business, Society and Stakeholders.” Ethics, Social Responsibility and Sustainability in
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<http://www.stakeholdermap.com/stakeholder-analysis.html>.
Thomas Katie and Schmidt. New York Times.Glaxo Agrees to Pay $3 Billion in Fraud
Settlement.July 2, 2012.Web 24 Feb, 2013.www.nytimes.com/2012/07/03/business/glaxosmithkline-agrees-to-pay-3-billion-in-fraud-settlement.html?pagewanted=all&_r=0
