Legal and ethical concerns reign in the marketing society of a product, the product safety, and the intellectual property. Ethics and law have a very close relation between them; ethics is involved with society’s concern as a whole. Marketing ethics focusing on modern or invented technologies incorporates the intellectual property ownership. The primary up-and-coming issues in ethical and legal concern are false declarations in order to gain profits for the organization. It is in this regard that the marketing and advertising, intellectual property, and product safety regulation are the main ethical principles that are captured by a company’s policy and that require to be scrutinized in the pharmaceutical industry.

Ethical issues are different depending on the daily morality and social code. The fact that there are discussions on product counterfeits, illegal marketing strategies, diverse medicinal side effects and consumer loyalty that invoke serious arguments confirms that ethical issues continue to be of significant concern and must be addressed. Nearly all ethical issues together with those in the business area spin around principles of moral consent, right, morality, and wrongful actions. Expressions of moral consent in reference to conduct principles are usually seen as correct or wrong by individuals in a specific group or profession. Within the business world, ethical issues are likely to arise from personal selling, advertising, contracts, suppliers, and pricing. This paper will focus on legal and ethical issues in marketing, how they have been applied in PharmCARE and comparing PharmCARE to a current existing company whose company brand was affected by wrong ethics practices. 

Ethical Issues Involving Advertising, Marketing, Intellectual Property, and Regulation of Product Safety

There exist numerous ethical issues regarding the marketing and advertising of products and services, intellectual property, and regulations of product safety. This paper will closely look at how these issues have a common component that ought to be incorporated for a business to possess a sturdy ethical and legal relationship and how PharmCARE violated some of these issues.

The first ethical issue is marketing and advertising. All marketing and advertising aspects are bound to laws and restrictions. Each marketing administrator is confronted with how they should deal with ethics and law. All marketing managers are acquainted with responses to ethical issues that may arise in the typical business course. A good example of an ethical issue that is probably to come about in marketing is being socially consensus. Whenever a product is being advertised and marketed to particular people, there have to be ethical considerations on how it will affect the group that is being targeted. Will the product be reflected on as a stereotype? Will it be offensive to particular people? Will it be ethnically sensitive? An advertiser or marketer is required to respond these and other ethical issues: What are the consequences potential magnitudes? What are the probabilities of a harmful outcome? What will the extent of the ethical consequences in the organization be? All these are expected and legitimate questions that are most likely to arise from the social responsibilities in marketing and advertising. Organization’s sales and marketing teams are responsible for refraining from lying and deception, warning the customers of potential hazards of their product, refraining from steering customers to purchases they have reason to believe will harm them. PharmCARE have violated this ethical issue because as much as their drug was linked to over 200 cardiac deaths, they kept marketing them and withheld information that linked them to the mentioned malpractices.


The second issue is intellectual property. Intellectual property is required to provide one with the right to own and protect their work. With the digital age arrival, it has become much more difficult to stay in control of someone’s intellectual property. The reason for this is the intellectual property rights do not exclusively protect the importance of safeguarding a trade secret anymore but they are concerned with protecting a person’s monetary gain. 

The third ethical issue is regulation of product safety. Product safety regulations majorly involve the consumers’ act that intends to provide healthy and quality products to clients. The ethical practice of any company should be to make certain that they offer quality products while maintaining social responsibilities to the consumers. A product safety engineer is expected to establish products safety, acquire organization certificates for their products together with examining and testing the products in accordance with various standards. However, this is where a company's ethics is examined. As for the CompCARE case study, their safety engineers were well conscious of the negative issues surrounding AD23 yet the management did not consider these issues for the sake of the profits and high rewards that PharmCARE received. This continues to be also ethical issue with the regulation of product safety. It is to be noted that if a company should stress top standards for their products safety, for instance, not letting a product to be manufactured in nations where they cannot regulate the facility’s conditions.

Direct-to-Consumer (DTC) Marketing

Direct-to-Consumer  marketing is a form of advertising where drug industries are permitted to market their drugs directly to the main clients. In other words, this marketing is done without having to go through different rules. Direct-to-Consumer has some advantages and disadvantages. Direct to consumer marketing has been a cause of attraction to numerous debates worldwide, especially when used by pharmaceutical companies. Various arguments on the benefits and limitations of this marketing strategy have engrossed almost equivalent claims. By promoting their prescription directly to patients, pharmaceutical companies are placed in a much better position to manipulate the decisions of their consumers. A situation that may be beneficial to both the company and the patients or may also be harmful. Research shows that when this method of marketing approach is employed by pharmaceutical firms, it permits better discussion making with patients, thus making sure they are well versed on the methods of administering a particular drug in addition to assisting the company in prescribing the correct drug. Further, DTC has been known to provide education to consumers, therefore assisting them to gain better management of their medical care, further promoting their wellbeing. Additionally, according to a research carried out by Davison, consumers are better motivated to receive prescribed drugs. Therefore, it makes DTC a better system used to encourage patients to be more submissive to drug regimens.

The DTC's main advantage is that it aids in facilitating expediency of the drugs to the consumers mostly because Direct-to-Consumer supports the progress of many drug outlets.  Nonetheless, the disadvantage of the Direct-to-Consumer is evident when one takes into concern the quality of drugs associated with the DTC. Direct-to-Consumer Marketing supports the manifestation of dispensaries that have not been licensed. This affects the type and quality of care presented through the Direct-to-Consumer. For instance, several dispensaries may be prescribing the wrong dosage whereas others may possibly be prescribing very low-quality drugs. The primary reason for this is that drugs that are sold through DTC are not licensed by FAO.

Direct-to-Consumer Promotion sometimes also supports the misuse of the customers. However, the fact that DTC allows pharmaceutical companies to prescribe their drugs directly to customers has negative impacts. The most outstanding of these negative impacts is the unnecessary intake or over utilization of the drugs. A second negative effect associated with DTC is the very little time necessary to assess a patient. The majority of pharmaceutical companies do not perform accurate research regarding the drugs side effects before prescribing them. DTC, therefore, promotes companies negligence since this crucial stage in drug prescription is very important. Further, this marketing system promotes impediment of a physicians’ effectiveness. In most cases, some consumers find the need to hold back information from the physician and, in addition, to trying to treat them. Consequently, patients are likely to either take an incorrect medication or undergo grave side effects owing to the lack of quality care.

Parties Responsible for Regulating Compounding Pharmacies

Compounding is the practice in which licensed pharmacists, licensed physicians, or, in the event of an outsourcing ability, anybody under a licensed pharmacist’s supervision, mixes, combines, or modifies elements of drugs to generate medications customized to an individual patient’s needs. A compounded drug is not approved by the FDA. This means that FDA does not validate the safety or use of compounded drugs. Health professionals and consumers depend on the drugs approval processes to guarantee that drugs are effective, safe, and prepared in accordance with Federal quality standards.

From the PharmCARE’s scenario, it is evident that they avoided FDA scrutiny by establishing a wholly-owned subsidiary CompCARE that operates as a compounding pharmacy that trades AD23’s new formulation to an individual on a prescriptions basis. CompCARE set up an uptown office close to its parent headquarters and to conserve time and money, did a rapid, inexpensive renovation and selected Allen Jones to manage the operation’s ‘clean room’. Compounded drugs do not have an FDA verdict of developing quality prior to these drugs being marketed. State panels of pharmacy will keep on having primary responsibilities for the everyday supervision of licensed pharmacies that compound drugs in agreement with the provisions of Federal Food, Drug and Cosmetic Act section 503A, although Federal Food, Drug, and Cosmetic Act maintains some influence over their procedures. 

PharmCARE have violated so many regulations under the compounding pharmacies that are punishable by law. An example provided by the FDA is how PharmCARE had the ability to escape this scrutiny. Even though technically the company must have been validated by the FDA, they did not represent the facility as outsource, but they utilized an existing park office and did a renovation. PharmCARE also sold their drugs in bulk for general purposes, an act that is not permitted by FDA. Directly prescribing AD23 to consumers is yet another offense committed by PharmCARE that should be punishable under rules and regulations of the compounding pharmacies. Agencies that can take action against PharmCARE for violating rules and regulations include State Board of Pharmacy, Drug Enforcement Administration, Board of Pharmacy, and Joint Commission on Accreditation of Healthcare Organizations.

Intellectual Property

PharmCARE is one of the many US companies that have not succeeded to apprehend the placed laws and rules. PharmCARE is a conniver given that it breaks the laws while at the same time supporting other laws. The point is that it is working on the logical property right. In the end, it becomes difficult to chastise the business. John was among the original inventors of the AD23 drug two years ago. Together with his team of pharmacists, he discovered that the drug slowed Alzheimer’s disease progression, and thus used this as an opportunity to maximize its effect and develop the company. This led to the development of a new wholly owned company known as CompCARE. All this makes John eligible for compensation because of his intellectual property. The compensation of John’s intellectual property can be achieved through the following methods.

Financial Compensation or Damages are based on the compensatory principle. This method is ideally meant to return the Intellectual Property owner to the position he/she should have been holding had infringement not taken place. Account of profits is another method of compensation. This method looks to take from the infringer of the IP the profits made from the use of the IP and pay the owner of the IP. This is done by identifying total profits made via infringing sales and awarding them between parties. 

The Effect of Intellectual Property Theft on a Company’s Brand

An example of a company within the past two years that was accused of intellectual property theft and used dodging legal technicalities to con investors of their deserved money and by addition engage in unethical actions is Erytech Pharma, a biotech company from French. The company held several patent processes in extraction as well as purification of compounds with medical uses, and joined partnerships and license agreement with Farmar, a big pharmaceutical firm. This pharmaceutical firm had extensive expertise within medical appliances for substance that were linked to the patients in Erytech Pharma’s Company custody. Some years later, Erytech Pharma were forced to terminate their contract. When compared to the PharmCARE arrangement, expenses were to be split between the parties involved. The Pharmaceutical Company asked for a substantial compensation from the Biotech Company considering the fact that they had terminated their agreement before the time they had agreed. Such actions by the Biotech Company brought in huge monetary loss. This happened is because the majority of its customers dreaded the unethical conducts within the organization.

Litigants against PharmaCARE from AD23

The death of John’s wife brings to focus the ethical, legal, and social issues in poor drug manufacturing quality by PharmCARE. PharmCARE ignored the reports of users who received AD23 having had suffered heart attacks at an alarming rate and went on with marketing and advertisement of the drug. PharmCARE failed the ethics test, as it was responsible for refraining from lying and deception, warning the customers of potential hazards of their product, refraining from steering customers to purchases they have reason to believe will harm them. This was ignored as they continued with advertising and sales of their product despite their inadequacies. This is moral and policy discussion on the suitable balance between protection from potentially functional but as well possibly destructive or unsuccessful medicines. The liability of any product maker especially a drug, cosmetic or any other chemical product is affected by any incorrect information provided, failure to provide the full information concerning the dangers and risks involving the use of their products. Potential legal issues against PharmCARE would be the issue of Negligence. John and other potential litigants would argue or would use their product.  This would also lead to demanding for damages for possible bodily harm and compensation for death resulting to the use of AD23. This could also lead to enhanced legislation to grant the FDA more authority to regulate and monitor the manufacturing of drugs. The licensing of drugs that fall under the mandate of the FDA should be more stringent to ensure proven safety of the drugs.

Whistleblowers and the Forms of Protections Afforded

Whistleblowers are people who have stepped up to offer information about their employer, within the business or in public, about the organization illegal activities, for example, environmental breach or illegal office safety practices. Such a spotlight can be met with opposition by some employers, or worse, reprisal. Laws have come up to defend whistleblowers from reprisal and to give confidence to future whistleblowers to talk out when they detect illegal activity. According to Frederick, whistleblower protection regulations assure independence of communication for workers and contractors in definite situations. Under employment law, if an individual blows the whistle on their corporation, manager, or anybody at their position of employment (reveal their illegal or illegitimate practices to an open body) they will get protection. This shield involves the more evident constitutional law in relative to being illegally dismissed, but also goes an extra mile to incorporate provisions for instance not being endorsed because of whistleblowing. If an individual is brave enough to tell the truth, something that is evidently in the public awareness, the law will position them to make certain they are not penalized by their employer for doing that.

Defense of whistleblowers might also be presented with by precise provisions in diverse laws, for instance, in the criminal code, labor laws, or laws that regulate public servants. A criminal code may possibly compel a fine and custody for reprisal against a whistleblower that gives information about the charge or possible commission of an offense to law enforcement authorities. A labor law may defend workers from retaliation by employers when they testify job-related offences and in some nation’s laws regulating public workers consist of provisions intended at defending public servants who report misconduct in or regarding the public sector from retaliation. Whistleblower protection might also be given for by precise laws, for instance, anti-corruption laws, rivalry laws, accounting laws, ecological protection laws, and business and securities laws.

From the case study, John can be considered a whistleblower. Two years go after finding out their top selling diabetes drug AD23 had slowed down the development of Alzheimer’s disease, he and his team members formulated this drug to maximize its effects. They even formed CompCARE, a wholly owned subsidiary company in order to avoid FDA’s scrutiny and to sell the medicine on a basis of prescription. This subsidiary company started advertising AD23 straightforwardly to customers and marketing it directly to clinics, hospitals, and medical doctor offices, as much as compounding pharmacies are not allowed to put on the market any drug in large volumes for general use to increase their sales and profits. The AD23, however, has been linked to over 200 cardiac deaths including John’s wife, making John concerned about the drug’s potential problems and the fact that the company was still willing to sell the drug. The fact that John had enough courage to come out and report his concerns that will in the end affect the company’s sells, and reputation makes him a whistleblower.

As a whistleblower, John deserves protection under the law seeing that he has put the company he helped build in the spotlight. John is most likely to lose his job or be a victim of hostility in the company. He ought to be granted protection under the employment law that will protect him from being illegally dismissed, and additionally incorporates provisions for instance not being endorsed because of whistleblowing. He also is eligible for protection under the labor law that will defend him from retaliation by employers and fellow employees because he has testified to job-related offenses.


Legal and ethical are principles all companies should and are supposed to apply, wrong practices as seen in the above example lead to bas company morals hence spoilt company brands. Businesses ought to understand that ethical and legal considerations are vital components of any business and should be adhered to under all circumstances.


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