LEGAL AND SAFETY ISSUES IN MARKETING 1
Companies use various strategies to market their products with anobjective to increase their sales. The number of brands in all theindustries continues to soar, and this intensifies competition. Somecompanies may look for loopholes in the rules that that regulatemarketing to engage in malicious marketing activities and attain acompetitive edge. The regulating bodies use standard ethics that allcompanies must comply with when marketing their products. Theintention of the regulations is to protect the consumers who may beoblivious of any illegal or dangerous products or those who mayvulnerable to unnecessary influence to buy a certain product. Thepharmaceutical companies operate under the regulation of the Food andDrug Administration that oversee the mixing and packages of drugs. Ofmuch interest to the FDA are the compounding pharmacies thatmanufacture as a prescription.
Some of the primary ethical issues that relate to the business arebased mainly regarding market research, audiences, and pricing. Themarket researchers can invade the privacy of the customers to extractthe intended information. Conducting market research without theconsent of the consumers especially for activities that require thepersonal participation of customers requires their consent(Sandilnds, 2015). Also, during the market research, there is a highchance that the researchers may choose to conduct it based onstereotypes in the community and this translates to unethicalbehavior. Some groups of people may be known to possess behaviorsthat the community perceives negatively, and market researchersshould not use them to conduct their research (Sandilnds, 2015). Itis imperative for companies to exploit the market research as a meansto receive feedback on their performance. Also, when selecting themarket audiences, market researchers can decide to ignore some groupsof consumers and it contributes to unethical behavior. There is alsothe issue of differentiation in customers relating to selectivemarketing and targeting vulnerable customers. Also, circumstancesmight lure companies to use price discrimination and predatorypricing, there is a high chance that the business can negativelyaffect that purchasing decisions of the customers.
PharmaCare failed to observe several ethical considerations whilemarketing its products to consumers. First, the researchers had notfinalized on their study on whether the drug slowed down Alzheimerdisease. It did not give the researchers enough time conduct trialson the drug and ascertain its effectiveness before presenting it tothe patients. Instead management saw a prime opportunity to makeincreased sales to specific patients in the veteran hospitals andthose under Medicaid. The company knew that the Food and DrugAdministration could scrutinize the effect of the drug to ascertainthe claims (FDA, 2015). The company sold the drug under CompCare toavoid linking it directly to the mother company. When marketing thedrug, the company overlooked truthfulness since the drug had not beentested and it was in a hurry to present it to the market and woocustomers. On the same note, the company received the names ofnon-existent patients who had allegedly used the drug successfully.By colluding with doctors to create a fictional list, the companyviolated truthfulness.
Secondly, compounding pharmacies are not allowed to sell drugsdirectly to consumers. However, CompCare, a subsidiary forPharmaCare targeted the most vulnerable groups in Medicaid andveterans hospital to sell theirs. The knowledge that a significantnumber of people seeking the services in Veterans hospitals haveAlzheimer’s disease may have led the company to overlook theregulation and presented their drugs directly to the patients. Also,the company advertised the drugs in doctors` offices, and it isagainst the ethics of advertising medical products. Direct marketingto consumers is a debatable issue across the world, especially whenused by pharmaceutical companies. The strategy allows themanufacturer to reach the consumer directly and make directprescriptions. Therefore, they stand in a better position toinfluence the decisions of the targeted patients. The position couldbe beneficial to the company since it can increase its sales and itcan also have negative effects on the health of the patientsespecially when the drug has strong side effects. The proponents ofthe method agree that pharmaceutical companies create a platform foran instrumental discussion between the company and the patient, andthey get information on the best way to administer the drug as wellas the best way to make prescriptions. Direct to Consumer provideseducation to patients, and it improves their well-being andcompliance with medication. When the drug is presented directly bythe manufacturer, the patients feel encouraged to comply with theprescriptions.
There are, however, several negative effects of the drugs on thepatients when companies present them directly to them. First,companies may encourage the overuse of drugs because they also havethe objective of making profits. The effects of the over utilizationof the drug may occur in the long-term and patients may fail toattribute them to the respective companies. Also, most of thepharmaceutical companies do not make follow-ups when they makeprescriptions to patients. They also do not conduct proper researchon the side effects of the drugs because they do not have aneffective system to monitor the effects of their drugs on thepatients. When a pharmaceutical company markets its drugs toconsumers, patients may withhold and information regardingself-treatment from their doctors, and this may impede their recoveryor correct prescription when they visit hospitals. PharmaCare,therefore, goes against this ethical consideration by targetingdirect consumers in the veteran hospitals and those under theMedicaid program.
The compounding pharmacies are under the regulation of severalbodies. Local and international pharmaceutical companies are easy todifferentiate due to their levels of production and market share. Thecompounding companies do not fall into the category of these twosince their activities revolve around the distribution of unusual orspecified drugs for certain ailments. The drugs they prescribe caterfor the individual prescriptions issued by a licensed medicalpractitioner. They mostly produce drugs for patients with allergiesor those required in specific concentrations per tablet or solution.Although they do not fall under the category of the generalpharmaceutical companies, compounding companies have to operate undera license and abide by the drug production standards set by the Foodand Drug Administration. The body inspects the mixing, preparation,packaging and labeling of drugs. The heart attacks that patientssuffered after using the AD23 puts the Food and Drugs Administrationof the spotlight on its capacity to inspect the safety of drugsdistributed by the Compounded pharmacies. However, there may bepowers restricting the inspection by the FDA due to the huge numberof pharmacies in the country FDA, 2015). The inspection conducted oncompounded drugs may not be comprehensive, and this puts the safetyif patients at risk. Patients rely on the information given by thecompounding pharmacies assuming that they are operating in compliancewith the FDA regulations. The number of pharmacies in the countryshould not be a scapegoat to put the lives of the patients at risk.It is the duty of the government to provide enough personnel in allits agencies to enhance their work effectiveness. Those who losttheir family members have an opportunity to sue the body for its lackof correct inspection and assessment of the side effects of the drugsbefore allowing the company to present the drugs to the consumers.The Food and Drug Administration should hire enough officers toinsects the processes in all the pharmaceutical companies to avoidputting the lives of people at risk (FDA, 2015). Most of thecompanies may not comply with the regulation without supervision. Thecompetition in the market should keep the FDA on it toes to seal allthe loopholes in drug compounding.
PharmaCare has intellectual property rights that need protection. Thecompany uses the United States law to protect its rights. To seek theUnited States legal protection on patents, the company comes up witha protection strategy by involving the services of a legal counsel tofacilitate the process. Also, an industry with many players islikely to infringe the patents of the companies if it does notobserve diligence when developing a new product. Therefore,PharmaCare monitors all the rights of the foreign partners. Also,individuals have patents that may be used by companies if given therights (Kreps, 2015). An individual can sue a company that uses aninvention without getting permission from the owner. As for theownership of the rights, John is the rightful owner although he is aformer researcher for the company. When an individual creates aninvention while still in employment, he becomes the rightful owner ofthe invention unless he the company had hired him specifically tocreate the invention (Kreps, 2015). Innovators work tirelessly tocome up with new methods and processes and they deserve protection.Also, a company may own the patent if the inventor agrees to sign theinvention to the company. The employer does not present anyinformation on whether John allowed them to use the invention to makeincreased profits. The company can compensate John is several ways.First, it can give John monetary compensation. Both parties can agreeon a certain amount of money for John to transfer his invention toPharmaCare. If John accepts the payment, he will lose all the controlappertaining to the invention. Also, the company can rehire John andlet him work on his invention for the advantage of the company. Itcan be an appropriate action since the company is already compoundingthe drug while using John’s invention.
A prime example of a tussle that involved the loss of an intellectualright was between Microsoft and Changhong. Microsoft accusedChanghong of using its product keys that include a series of numbersand letter that a user enters into a computer to activate theMicrosoft software (Tu, 2013). Microsoft gives other companies theirright to use the product keys but only after paying the agreed amountof money. The company accused Changhong of disregarding the legalprocedure and acquiring the product from another company without theknowledge of Microsoft. The case of these stolen product keys has hada very negative impact on the brand name and image (Tu, 2013). Withthe free product keys available, companies that have opted to use theproduct with these keys do not have access to all the upgrades, andthis can hence have a direct impact on the user experience. With thecompromise of the right of the product key, the product suffered agreat loss in the market in terms of sales and business image. Lossof intellectual property can have a direct influence on the user`sexperience and it can care way potential customers. The final resultis a reduction of the sales and negative attitude towards thebusiness image (Tu, 2013).
The issue surrounding the Death of John’s wife and other patientswho suffered heart attacks after using the drug may have adverseeffects on the image and the company’s future. The image of thecompany will likely suffer from the negative attitude that people candevelop towards its products. People prefer procuring essentialcommodities like the drugs from companies with a good history and aclean record. Although most drugs have negative side effects on theuser, the effects are not supposed to stretch to the extent ofresulting in death. Furthermore, the company had not indicated thatthe users were likely to experience heart attacks after using thedrug. Secondly, the doctors who prescribe medicine to patients willreconsider their position towards the drugs from PharmaCare due tothe obvious assumption that even the other products manufactured bythe company may not be safe for use. The prescriptions they make fortheir patients may try as much as possible to exclude products fromthe company. Also, the Food and Drug Administration is likely to facepressure from various groups due to its incapacity to assess theeffects of the AD23 that resulted in the deaths of users. Also, theFDA and the federal laws that govern the manufacturing process, therewill intensify their inspection and will and conduct a closemonitoring regarding all the stages of production and packaging aswell. The FDA will help in ensuring a comprehensive inspection of thecompound drugs and ensure that only licensed pharmacists to focus onthe development of these drugs (FDA, 2015).
A whistleblower faces various risks both in their career and personalsecurity. Most companies have a political structure that cansabotage the career of an individual who acts as a whistleblower tounearth its misconduct (United States Security and ExchangeCommission, 2013). John may lose his job since the company mayattribute its loss and tainted image on his action of bringing tolight that the company had knowledge that the drug causes heartdisease to the users. He may also face unfair treatment in theworkplace, and the employer might subject him to discriminativemeasure when it comes to promotion, training, and rewarding exemplaryperformance. The whistle blower protection act prohibits theemployer from discriminating individuals who expose unsafe practicesin an organization. The enforcer of the whistle blower rights shouldkeep a constant check on John to ensure that he receives completeprotection in terms of his rights as well as the performanceappraisals and management within the organization. The same shouldalso extend to the whistleblowers family members as well as otherclose individuals might also be at risk. Hence covering for all therisks and ensuring that a person is not wrongly punished for theiractions. The employer should not act in a way that leaves theemployee uncertain of the next move likely to affects their career.
According to the above discussions, the actions of PharmaCare haveseveral implications for its image and future sales. It also puts theFDA on the spotlight over its non-intensive methods of scrutinizingdrug processing and compounding. It will also have to compensate Johnfor his invention since there was no prior agreement between him andthe company indicating the passing of the right to the company. Theresponsibility Food and Drugs Administration is under scrutiny afterfailing to assess the implications of the drug resulting to the deathof those who consumed it. When making claims for compensation fromthe company the body can also face legal suits for its laxity. It wasunethical for PharmaCare to continue selling the drugs even afterrealizing that it had strong side effects resulting in heart attacks.The incidents affirm that most companies may not honor the outlinedbest practices without being supervised by the relevant authorities.The competition in the industry drives them to end some rules andtake advantage of loopholes. However, the profit gained in theshort-term translates into detrimental effects on the company in thelong-run.
FDA. (2015). FDARoles and Responsibilities. U.S Food and Drug Administration.Retrieved fromhttp://www.fda.gov/ForFederalStateandLocalOfficials/FoodSafetySystem/RetailFoodProgramsOperationsandSupport/ucm142991.htm
Kreps, L. (2015). Employee Innovation Company: Own your Inventions.Simply Legal. Retrieved from http://www.shakelaw.com/blog/employee-inventions/
Sandilnds, T.(2015). Marketing Issues that have Ethical Implications. DemandMedia. Retrieved fromhttp://smallbusiness.chron.com/marketing-issues-ethical-implications-24089.html
Tu, J. (2013). Microsoft’s cybercrime unit files first case.FairFax Media. Retrieved fromhttp://www.stuff.co.nz/technology/digital-living/30008175/microsofts-cybercrime-unit-files-first-case
United StatesSecurity and Exchange Commission. (2013). Information onWhistleblower Protection Act and Whistle Blower ProtectionEnhancement. Office of the Special Counsel. Retrieved fromhttps://www.sec.gov/eeoinfo/whistleblowers.htm