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Jan 28, 2019 in Analysis

Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property

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

Ethical issues in relation to marketing, advertising and intellectual property are very close to the legislation provided by the government. According to this statement, the above-mentioned issues present the ethical principles that should be obeyed. First, it is the use of one’s results of IP without person’s permission. In fact, it can be identified as corporate espionage, where one part receives benefits due to another part and does not compensate this advantage (Whaley, 2010). Hence, one can state that it is the theft of the personal information and identify this act as the violation of ethical norm. 

The second issue is connected with the promotion of the IP. When one uses somebody’s IP, he/she has to ask a permission to advertise it; in other case, the undesirable advertising may cause disadvantages to the IP owner. In this case, the ethical issue is introduced as the negative effect caused by the unplanned advertising. 

The third issue is linked with the company’s reputation. The IP may be used by other companies in order to receive profit; however, they might care less about its quality. As a result, it will create the wrong image of the company that invented this product and introduce it as one with low level of quality. 

In the case of PharmaCARE, the benefit gained by the firm was stolen by the third party. PharmaCARE experienced significant disadvantages because of this fact. Particularly, the consequences of IP loss affected the company’s reputation, its revenue and the responsibility for the negative influence of AD 23 on people’s health condition. 

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Arguments against Direct-to-Consumer (DTC) Marketing by Drug Companies

When discussing advertising of drugs on radio, television or in magazines, doctors usually say that this phenomenon has both negative and positive effect on the patients and healthcare workers. According to the results of Food and Drug Administration survey that was published in 2004, the majority of physicians believe that direct-to-consumer ads is one of the strongest factor that has a powerful impact on their practice. 

By the end of 1990s, drug-makers promoted their products exclusively to the healthcare workers. However, after the baby-boom, this tendency has changed, and drug manufacturers began targeting the ordinary consumers. Since that time, people started to pay more attention to their health: they take direct part in their own healthcare decisions. Following this fact, the drug manufacturers changed their ordinary targets, and today they use the DTC principle in order to promote their products (Anišić, Koldžin & Freund, 2013). 

Despite that many physicians state that this tendency has both positive and negative consequences, the negative aspect of DTC exceeds the benefits. One can outline several arguments to support this point of view. First of all, it is the initial goal of any advertising campaign. All advertisers are interested in achieving of one single aim: it is to sell the product to the customers. To complete this task, they use all necessary means, including exaggeration of the products’ qualities and even fake facts. 

Another perspective is that consumers try to cure themselves without visiting the physician. Each individual has his/her own unique biological demands; in other words, the same drug may be useful for one person and harmful to another. The average consumers do not have deep knowledge in medicine, and thus, he/she cannot determine the correct dosage of the drug. Hence, he/she will use medicines in wrong proportions that may lead to serious problems with his/her health or even cause death.

As a conclusion, it can be stressed that the analyzed type of advertising of drugs has more negative than positive effect on consumers. The low level of medicine knowledge of potential buyers and the advertising propaganda creates the wrong perception of the product. Consumers self-medicate, forget about the role of professional physicians, and as a result, damage their health condition. 

The Parties Responsible for Regulating Compounding Pharmacies under the Current Regulatory Scheme, the Actions that either These Parties or the FDA Could / Should Have Taken in This Scenario

In the scenario, the responsible parties are CompCARE, PharmaCARE and FDA; in other words, everyone who has a connection with AD23. First of all, the biggest responsibility lies on CompCARE; it can be explained by several facts. CompCARE uses AD23 without PharmaCARE’s permission; hence, the promotion of this drug was not controlled by PharmaCARE. CompCARE acted as an ordinary advertiser: it promoted the good and did not care about the consequences. When PharmaCARE found that AD23 is dangerous, it did not stop the CompCARE selling the drug, though the company knew about this fact. Thus, it can be concluded that the company is responsible for promoting the product that was dangerous for people. 

Despite the fact that PharmaCARE did not make any attempts to guilt CompCARE in intellectual property theft, it does not mean that the organization is not responsible for promotion of the dangerous drug. PharmaCARE had to start an investigation at the beginning, when CompCARE was established. However, the company did not do that and CompCARE continued to use the PharmeCARE’s intellectual property item. When the researchers from PharmaCARE established that AD23 is dangerous, the company stopped selling this drug, though CompCARE ignored this finding and continued its commercial activities. In this situation, PharmaCARE should ask for the help of FDA in order to stop the promotion of AD23. Nevertheless, the company did nothing to prevent further marketing of this drug to people. 

Finally, the third party which is responsible in this scenario is the FDA. The administration was created to control the safety of food and drug and provide the control over its promotion. When PharmaCARE announced about the AD23 negative effect, the FDA had to take measures to dispose this drug from the public usage. 

Following the above reasoning, it can be claimed that all three presented parties are responsible for death cases caused by AD23. The role of each of the actors in the case is different, but all they are guilty for their actions or rather non-acting in order to prevent the consequences that occurred. 

Manner in Which PharmaCARE Used U.S. Law to Protect its Own Intellectual Property and If John’s Claim to Being the True “Inventor” of AD23

PharmaCARE used the U.S. legislation to claim the company as the inventor of AD23. In fact, it is not absolutely true because another medicine composes the base of the drug. PharmaCARE clarified that one of these components has a positive impact on suspension of Alzheimer’s disease from progressing. John’s team started studying this element in order to improve the drug and make it more effective against the aforementioned disease. Drawing upon this fact, John and his team are not primary but secondary inventors of the drug, whose achievement is improvement but not innovation. 

Nevertheless, John could prove that his contribution in the study of the initial drug led to the creation of a new medication which is called AD23. For this reason, John has a right to demand compensation from CompCARE company, which uses the results of his intellectual property for its own purposes (“Stop Corporate Espionage,” 2009). The above-indicated organization did not ask a permission to use AD23; John and CompCARE did not sign any contracts that could justify the usage of the drug by the latter. 

It follows that the company could compensate the illegal usage of John’s intellectual property in such ways: 

  1. The income approach which predetermines that one should pay compensation equal to the future economic benefits of IP product.
  2. The income approach meaning that the company ought to pay the current value of the IP share according to its price on IP share market.
  3. The pay-off approach which is used to enhance the valuation of the IP. 
 
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The Current Example of Intellectual Property Theft

Every year, companies announce about the intellectual property theft that lead to the loss of profit and spoil their reputation in the world. Despite the high level of security, the corporate espionage cannot be absolutely excluded. In 2013, the Renault company announced that it became the victim of the intellectual property theft. One of the minor Chinese businesses used the Renault materials to manufacture cars, which were introduced as the result of the cooperation with Renault (“Stop Corporate Espionage,” 2009). Due to this, the Chinese organization used the brand of Renault in order to promote its own products. The materials that were applied in auto-making process did not correspond to the Renault’s high standards. Besides, Renault did not give a permission to manufacture the cars using their brand. 

In fact, it is a typical example of intellectual property theft. One company steels the materials from another, which has succeeded in manufacturing of certain goods and uses them to receive profit. The victim-company does not know about the issue. Nonetheless, the consequences of such theft have two big disadvantages. In the case of Renault, it did not severely damage the company, but the negative effect took place. The first disadvantage concerns the reputation of the corporation and its global image. The world brand company cares much about its reputation, even more that the loss of profit. The latter can be fixed, while reputation might be lost forever. To be more precise, the spoiled reputation creates the image of the unreliable business that cannot provide the control over its goods. The company with bad name will not have many clients, partners and shareholders who would like to invest in its development. 

The second issue, though it is less harmful but still exists, is the loss of revenue. Another company sells cars, introducing them as the result of Renault’s manufacturing. People who want buy such cars pay first of all for the quality of Renault, but they receive the items of Chinese -manufacture and appropriate quality level (Anišić, Koldžin & Freund, 2013). Hence, Renault loses the potential clients and it leads to the shortage of the possible revenues. In general, the casediscussed did not bring much harm to the company, though Renault experienced some difficulties that were caused by the intellectual property theft. 

The Potential Issue Surrounding the Death of John’s Wife and other Potential Litigants against Pharmacare as a Result of AD23

The death of Joan’s wife is the result of AD23 distribution. Despite the fact that PharmaCARE stopped its promotion, the drug was still available for the average consumer. PharmaCARE is the inventor of AD23. It means that the company is responsible for its impact and promotion by other organizations. In this regard, PharmaCARE had to provide the control over AD23, including the promotion of the drug by other companies. 

The second issue concerns the drug and its impact on people’s health. From this scenario, one receives information that PharmaCARE’s researchers could establish that AD23 slows the progression of Alzheimer’s disease. The firm started improving the drug in order to maximize this result. Soon, other businesses decided to promote this drug to receive profit and started selling it to consumers using the DTC marketing method. In fact, the innovation of AD23 was a rapid success and one had to ensure that it did not cause harm to human health. Nevertheless, the researchers ignored this fact, though they continued their studies. When they proved that AD23 was dangerous, the drug has already been available for wide audience for long time. The death cases were the first sign that AD23 is not safe and it should be forbidden. Hence, John has a right to bring an accusation against PharmaCARE as the initial distributor and the intellectual property owner of AD23. The company is fully responsible for the promotion of this product as well as the FDA.

The FDA is also guilty because this agency is the one who gives the permission on selling and promotion food and drugs. The responsibility of DNA cannot be justified by the fact that PharmaCARE established a wholly-owned subsidiary in order to avoid the FDA control. This case indicates on the weaknesses of the administrational system which are used by the companies to promote their goods without the FDA’s awareness. 

The Major Arguments that John Can Make to Claim that he is a Whistleblower and the Type of Protections that He Should be Afforded

John wants justice because his wife died from AD23 that was announced as a dangerous drug. He is one of those researches who were studying this medication and its impact on the human health condition. Therefore, he can claim that due to the materials received by the PharmaCARE’s research team, one obtained evidence that justify the negative impact of AD23. Thus, he wants to stop the promotion of this drug by CompCARE and other companies that have access to AD23. Moreover, the higher degree of responsibility belongs to CompeCARE which refused to forbid AD23 when it was announced as a dangerous medicine. This firm had access to PharmaCARE’s database and networks. Besides, the official investigation of 200 death cases caused by AD23 had no effect on CompCARE’s decision to sell this drug.

Drawing upon the above rationale, John may use these arguments to state that he is a whistleblower. Another proof that justifies this fact is that John was searching for help to stop the promotion of AD23. In this way, he becomes the opponent of AD23 usage, especially if one takes into consideration that his wife died because of this drug. John should receive the protection in this case as a witness who provides evidences against PharmaCARE and CompCARE. The information which is available to John may cause serious damage to the companies’ reputation and well-being (Whaley, 2010). John was a member of a research team in PharmaCARE. Thus, he is aware about the company’s studies and manipulation with legislation, such as the establishing of a wholly-owned subsidiary in order to avoid the control performed by the FDA. These materials make John a priceless witness in this case. Consequently, PharmaCARE and CompCARE are interested to discredit him as a witness and make him responsible for the drug’s promotion as well as others who take part in AD23 studies. 

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