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  • Published on: 14th September 2019
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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

Established from two Healthcare and trading giants Glaxo Wellcome and SmithKline Beecham, GlaxoSmithKline (GSK) was ranked as the sixth largest pharmaceutical company according to the List of the World's biggest public company by Forbes (Forbes.com, 2015). GSK's market capital share of $107 billion was reported to be the fourth largest on the London Stock Exchange, by August 2016 (Stockchallenge.co.uk, 2017). However, in 2012 GSK was accused of illegally promoting certain prescription drugs and withholding usage safety information in the US pharmaceutical market. The unethical practices were entailed by an unprecedented health care fraud settlement of $3 Billion in total (Justice.gov, 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 intentional misbranding of anti-depressants – Paxil and Wellbutrin and another charge of withholding safety data from the Food and Drug Administration (Justice.gov, 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 accused GSK of having deliberately concealed the pediatric trial outcomes (Ecommercetimes.com, 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) (Kondro, 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 Paxil from 1998–2003 and its negative impacts. From a teleological perspective, the consequences represented an extreme harm to patients' health. In 2003, an analysis was conducted into study 329 led by professor Martin Keller from Brown University by Britain's Medicines and Healthcare Products Regulatory Agency to clarify the scandalous rumour around Paxil efficacy of depressant treatment. 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) in which behavioural and emotional disorders were found. 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 together with five of behavioural and emotional disorders such as suicidal tendency was also reported. On the other hand, among 95 patients taking Tofranil, only one experienced emotional lability (Keller et al., 2001)

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 (Cbsnews.com, 2009). The articles withheld the clinical trial failures of Paxil to demonstrate its effectiveness in the treatment of teenage depression (Finance.senate.gov, 2010). Off-label uses of Wellbutrin were also unlawfully introduced to the US pharmaceutical market by shame advisory boards and a self-declared program called Continuing Medical Education remotely operated by GSK. Moreover, The United States further alleged that GSK bribed doctors and physicians into giving accreditation to such off-label uses as a remedy for attention deficit, hyperactivity disorder, sexual dysfunction, substance addiction and weight loss by sponsoring luxurious hospitalities and extravagant preferential treatment (Justice.gov, 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 (Bohnwagner, 2012).  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-bioethics.org, 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: 1079

PREFERENCE LIST

• Bohnwagner, C. (2012). GlaxoSmithKline: 3 Billion Dollar Lawsuit (July 2012). [online] Businessethicscases.blogspot.com.au. Available at: http://businessethicscases.blogspot.com.au/2013/04/glaxosmithkline-3-billion-dollar-lawsuit.html [Accessed 5 Apr. 2017].

• Forbes.com. (2015). Forbes Welcome. [online] Available at: https://www.forbes.com/global2000/list/ [Accessed 4 Apr. 2017].

• Stockchallenge.co.uk. (2017). FTSE All-Share Index Ranking. [online] Available at: http://www.stockchallenge.co.uk/ftse.php [Accessed 4 Apr. 2017].

• Ecommercetimes.com. (2004). GlaxoSmithKline Settles Lawsuit with Spitzer. [online] Available at: http://www.ecommercetimes.com/story/36159.html [Accessed 4 Apr. 2017].

• Justice.gov. (2012). GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data. [online] Available at: https://www.justice.gov/opa/pr/glaxosmithkline-plead-guilty-and-pay-3-billion-resolve-fraud-allegations-and-failure-report [Accessed 4 Apr. 2017].

• Cbsnews.com. (2009). Inside GSK's CASSPER Ghostwriting Program. [online] Available at: http://www.cbsnews.com/news/inside-gsks-cassper-ghostwriting-program/ [Accessed 5 Apr. 2017].

• Keller, M., Ryan, N., Strober, M., Klein, R., Kutcher, S., Birmaher B., Hagino, O., Koplewicz, H., Carlson, G., Clarke, G., Emslie, G., Feinberg, D., Geller, B., Kusumakar, V., Papatheodorou, G., Sack, W., Sweeney, M., Wagner, K., Weller, E., Winters, N., Oakes, R. and McCafferty, J. (2001). Efficacy of Paroxetine in the Treatment of Adolescent Major Depression: A Randomized, Controlled Trial. Journal of the American Academy of Child & Adolescent Psychiatry, 40(7), pp.762-772.

• Kondro, W. (2004). Drug company experts advised staff to withhold data about SSRI use in children. CMAJ. [online] Available at: http://www.cmaj.ca/content/170/5/783.long [Accessed 4 Apr. 2017].

• Unesco-chair-bioethics.org/. (2013). The Ethics of Pharmaceutical Industry Influence in Medicine. [online] Available at: http://www.unesco-chair-bioethics.org/wp-content/uploads/2015/09/The-Ethics-of-Pharmaceutical-Industry-Influence-in-Medicine.pdf [Accessed 5 Apr. 2017].

• Finance.senate.gov. (2010). The United States Senate Committee on Finance. [online] Available at: https://www.finance.senate.gov/newsroom/chairman/download/?id=a5c07780-6351-4905-8c63-52e4a7a7a66b [Accessed 5 Apr. 2017].

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