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BUSINESS ETHICS

INTRODUCTION

Business ethics was the determinant factor contributing to the success of organisations. While some believe that consistent ethical reputation is essentially followed by a positive public reputation that aids business entities in generating profits, others oppose against this notion. They believe that public interest being satisfied is at the expense of profitability. However, the contemporary cost of ethical operations is proved to be only a fraction of the destructive consequence resulted from unethical practices. The case of GlaxoSmithKline typically exemplifies an unethical healthcare marketing practice and emphasizes the significance of business ethics in the present days of the business world.

COMPANY BACKGROUND

GlaxoSmithKline (GSK) is a pharmaceutical company established in 2000 from two Healthcare and trading giants Glaxo Wellcome and SmithKline Beecham. GSK was the world's sixth largest pharmaceutical company in 2015 (“The World's Biggest Public Companies”, 2015). It had a market capitalisation of around $107 billion, the fourth largest on the London Stock Exchange by August 2016 (“FTSE All-share Index Ranking”, 2016). However, in 2012 GSK pleaded guilty for unlawful promotion of certain prescription drugs and reluctance to report usage safety information in the United States. The unethical practices were entailed by the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company of $3 Billion in total (the US Department of Justice, 2012).

THE THEORETICAL CONCEPTS

Business ethics is the centerpiece of this case and it is essential that we can understand the theoretical concepts and the background of the incident. In a business sense, ethics is the framework guided by laws, regulations, and responsibility of decision-makers to which businesses may choose to follow to gain positive reputation towards stakeholders and trust from shareholders. In 2012, US Department of Justice sentenced GSK of 3 crimes – two charges for misbranding drugs, Paxil and Wellbutrin and one charge of intentionally underreporting safety data about Avandia to the Food and Drug Administration (the US Department of Justice, 2012). This scandalous incident represented a typical breach of corporate social responsibility and the most confronted business ethical dilemma.

THE ETHICAL DILEMMA CONFRONTED BY GSK

In the leading position of the pharmaceutical industry, GSK management board was driven by the intense of market competition. In a sense, they were blindfolded to the ethical issues by the lucrative profits while obscuring its market position. In fact, before New York State Attorney Eliot Spitzer sued GSK for having withheld the pediatric trial outcomes (Richard Casey, 2004), $4.97 billion profits from illegal promotion of Paxil can already help GSK cover the unprecedented settlement fine of the Pharmaceutical industry of $3 billion in 2012, let alone profits earned from sales of Wellbutrin and Avandia (which were also misbranded and promoted unlawfully) (W. Kondro; B. Sibbald, 2004). Overall, a benefits-responsibilities confliction was confronted by GSK.

ETHICS ANALYSIS - THE IMPACTS OF THE UNETHICAL PRACTICE

In this case study, I will address the charges of GSK's illegal promotion of anti-depressants Paxil from 1998–2003 and its negative impacts. From a teleological perspective, the consequences represented an extreme harm to patients' health. In 2003, Britain's Medicines and Healthcare Products Regulatory Agency analysed study 329 led by Martin Keller, professor of psychiatry and human behaviour of Brown University about the efficacy of Paxil. The study experimented Paxil and Tofranil on teenagers aged 12–18 diagnosed with major depressive disorders that lasted at least eight weeks. Eleven subjects on Paxil, compared to five on Tofranil were reported to have experienced serious adverse events (SAEs), including behavioural problems and emotional lability. Out of 93 subjects taking Paxil, one subject experienced headache while tapering off, and ten suffered from psychiatric problems. Seven of the ten were hospitalized. Two of the ten were diagnosed with worsening depression. Psychiatric disorders such as aggression were found on two subjects. One case of euphoria and five of emotional lability, including suicidal tendency and behaviour were also reported. Of the 95 patients taking Tofranil only one experienced emotional lability (Keller, 2001, p.769).

From a deontological point of view, GSK intentionally failed to communicate the essence of the drug warning and participated in bribery. GSK was accused of publishing misleading medical journal articles misreported by a ghost-writing program called CASPPER developed by the company (Jim Edwards, 2009). The articles withheld the clinical trial failures of Paxil to demonstrate its effectiveness in the treatment of teenage depression (Max Baucus, Chuck Grassley, 2010). GSK was also using sham advisory boards, and supposedly independent Continuing Medical Education programs to promote Wellbutrin for these unapproved uses. Moreover, The United States further alleged that GSK bribed doctors and physicians into giving accreditation to such off-label uses as treatment of attention deficit, hyperactivity disorder, sexual dysfunction, substance addiction and weight loss by sponsoring all-expenses paid trips, five-star hotels and spa treatments (United States Department of Justice, 2012). This scandal has compromised the relationships between doctors, physicians, and patients, cast doubt on the pharmaceutical industry and the Government consumer-protecting policies.

STAKEHOLDERS WERE SIGNIFICANTLY INFLUENCED

The unethical practice of GSK had an unexpectedly wide-spreading negative influence on its stakeholders. They are GSK shareholders and management associated with doctors who received the bribe, the pharmaceutical industry and its investors, and the national economic. In particular, GSK management together with doctors who participated in the illegal promotion of the disqualified drugs was directly responsible for the fact that investors and shareholders of other pharmaceutical companies were more reluctant to make any investment henceforth (Chris Bohnwagner, 2013).  Loss of GSK and other companies capital share was inevitable. This scandal also entailed other social consequences. The damaged public health in addition to the high unemployment rate as a result of plant shutdowns reduced social productivity as it simultaneously eroded the foundation of national economic growth.

PERSONAL VIEW AND CONCLUSION

I found myself underestimated and overlooked the consequences of unethical business practice as I imagined myself in the decision-making position of GSK. At one point or another, I was driven by the lucrative profits. To be honest, I was unable to notify the unethical issues and failed to evaluate the adverse effects to the industry and the society at large. However, after conducting this case study, I understand that it is the priority of any business entity to solve the conflicts between the distorting incentives for corporate profits and its social responsibility regardless of how challenging it might be (UNESCO Chair in Bioethics, 2013)

The outcome of this case study, as I believe, can generalize the ethical dilemma of profit and social responsibility confronted by any profit-driven entity and further emphasize the significant influence of business ethics to many aspects of the financial world.

WORD COUNT: 1100

PREFERENCE LIST

• Forbes. The World's Biggest Public Companies. (2015). Retrieved March 12, 2017 from

https://www.forbes.com/global2000/list/

• FTSE All-Share Index Ranking. (2017). Retrieved March 12, 2017 from http://www.stockchallenge.co.uk/ftse.php  

• The United States Department of Justice, Office of Public Affairs. (2012). GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data. Retrieved July 2, 2012 from https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report

• W. Kondro; B. Sibbald. (2004). Drug company experts advised staff to withhold data about SSRI use in children. Retrieved March 12, 2017 from http://www.cmaj.ca/content/170/5/783.long

• Richard Casey. (2004). GlaxoSmithKline Settles Lawsuits with Spitzer. Retrieved August 24, 2004 from http://www.ecommercetimes.com/story/36159.html

• Martin B. Keller, Neal D. Ryan, Michael Strober. (2001). Efficacy of paroxetine in the treatment of adolescent major depression: a randomized, controlled trial, Journal of the American Academy of Child and Adolescent Psychiatry, 40(7), 762 – 772.

doi:10.1097/00004583-200107000-00010

• Max Baucus, Chuck Grassley. (2010). Finance Committee Letter to the FDA Regrading Avadia. Retrieved July 12, 2010 from https://www.finance.senate.gov/newsroom/chairman/download/?id=a5c07780-6351-4905-8c63-52e4a7a7a66b

• Chris Bohnwagner. (2012). GlaxoSmithKline 3 Billion Dollar Lawsuit. Retrieved April 15, 2013 from http://businessethicscases.blogspot.com.au/2013/04/glaxosmithkline-3-billion-dollar-lawsuit.html

• Jim Edwards. (2009). Inside GSK's CASSPER Ghostwritting Program. Retrievedd August 21, 2009 from http://www.cbsnews.com/news/inside-gsks-cassper-ghostwriting-program/

• Omar Sultan Haque, Julian De Freitas, Harold J. Bursztajn, Lisa Cosgrove, Abilash A. Gopal, Robindra Paul, Itay Shuv-Ami & Samuel Wolfman. (2013). The Ethics of Pharmaceutical Induestry Influence in Medicine. Retrieved May, 2013 from http://www.unesco-chair-bioethics.org/wp-content/uploads/2015/09/The-Ethics-of-Pharmaceutical-Industry-Influence-in-Medicine.pdf

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