Corporate Ethical Responsibility of Glaxo Smith Kline Company - Report Example

CORPORATE ETHICAL RESPONSIBILITY By (Name) Code+ course name Professor’s name University name City, State Date Executive Summary The pharmaceutical Industrial growth has been marked by massive development over the years. This is evidenced by the introduction of medical discoveries which are aimed at improving healthcare in the world. The increasing number of health corporations over the past decades is owed to the global development in research and increasing market. Marketing strategies of the drugs have also advanced to higher levels as the industry grow as both small and large corporations comes with great initiatives for medical research. This may also be as a result of the increasing importance of medical needs that directly affects quality of life. The world has continuously realized the Importance of research organizations and pharmaceutical companies like GSK. Introduction As a global leader in the pharmaceutical industry, GlaxoSmithKline (GSK) has a merger of numerous small businesses that diversify its products offers. The pharmaceutical giant operates in more than 100 countries in the world and enjoys a large volume of pharmaceuticals sales annually. This advantage of sales volumes accrue to enormous spending that many countries, especially the United States and other developed economies, budget on healthcare (drugs and other medical costs) in annual terms. The nature of products that GSK offer are very sensitive to global health, therefore to life, and constantly putting GSK’s corporate social responsibility to test. With its policy statement reflecting on value operations, respects and dignity in decisions and practices both to the society and to industry, the company has previously undergone through heavy criticisms under ethical stance that has largely affected its corporate responsibility principles. The following analysis provide some of the ethical lapses that have befell the company over the past years and ethical integrity discussion of the company’s leadership. The paper will also discuss the previous ethical consequences that have been witnessed in china about various pharmaceutical firms, especially GSK and make suitable conclusion about the disadvantages of unethical practices. Ethical Lapses at GSK GSK’s commitments and reputations of discoveries of new medications that could combat diseases that have no cure have been in great trial after series of ethical and legal allegations have raised against its products. Despite several efforts to maintain its pharmaceutical integrity through its intentions to finally discover malaria vaccine, the company has come under heavy ethical scrutiny in the past, a situation which has affected most of its operations. Lawsuits have been rallying against the company over production liability, marketing, and quality control, most of which arises due to its sale of drugs to the public after establishing or suspecting the side effects of such drugs may be detrimental to health. The following analysis discusses the ethical lapses which have impacted greatly on the product quality at GSK. One of the notable lawsuits against the company arose after one of its products called Paxil was claimed to have deadly side effects, particularly to children. Paxil is a drug, of antidepressant nature that is recommended for depressed patients suffering from anxiety disorders. The drug had been performing well for its purpose. However, it was realized that the drug had side effects like birth defections, withdrawal symptoms, addictive behaviors and suicidal tendencies, mostly on children. Following this, a class-actions lawsuit was filed against the company claiming the company had marketed the product for children while intentionally hiding the facts about the product being unsafe and ineffective for children. This was also followed by the accusation of the British authorities if the same matter. When the company was also appeared to have paid Maria Carmen Palazzo in 2010 about $5,000 for every child she enrolled for a research fraud of the antidepressant Paxil, a practice she did for clinical trial, it was a heavy ethical blow for the company. This clinical trial was aimed at children who had not suffered from the side effects of Paxil. It was also realized later that Palazzo had falsified documents and psychiatric diagnoses to further her course of the seemingly ultimate crime. For its unworthiness, she got a 13 months sentence after admitting of the crime, and the company suffered further if its tarnished reputations over its involvement in the matter. When the company’s diabetes drug, Avandia was realized to increase risks of heart attacks, a lawsuit was filed against the company. The chances of consumers taking the drug, Avandia, to suffer from a heart attack than when they took other alternative diabetic medications was proven to be 49 percent out of research carried out by The New England Journal of Medicine. The ethical misconduct came by when it was reported that the company had known the risk but intentionally failed to disclose of the risk to the public. More than that, the company had inflated the price of the drug through the perception of being less risky drug than it was. Despite the company’s denial, more evidenced were provided that proved the case against Avandia was true. The sale of Avandia was later restricted and the company suffers an annual loss of $1 billion annually from the restrictions of Avandia. The other ethical lapse that befell GSK was the off-label drug marketing, which was proven to be potentially capable of misleading the consumers and thus misusing medications. This is a serious ethical offence and it attracted the attention of the US government who investigated about the allegations. It was alleged that the company had been promoting Wellbutrin as a drug for weight loss, while the drug is an antidepressant. The case was based on Lauren Stevens, a former GSK counsel associate who tried to cover up for GSK’s use of the off-label marketing. The company suffered another marketing ethical blow when the US Senate Finance Committee attacked its promotional tactics such as sponsorship of medical programs, speaker events, advisory boards and grants. They argue that grants were used illegally to promote drug products and ordered the company, through the pharmaceutical departments to provide their clearance and information regarding their use of the educational grants. The provided information led to further accusations and several GSK agents face legal charges and the company faces other pricing cases including fraud and abuse of law like federal false claims. Apart from other quality control issues that have also been raised upon GSK’s sales of drugs like Paxil, Paxil CR, Coreg, and Avandia, GSK has closed some production sites like Cidra and the effects of these allegations, accusations and charges have contributed heavily against the company’s reputations. The company had made big steps in ensuring their social responsibility and business conduct would be transparent, ethical and value oriented. These ethical misconducts have made the company to alter their strategies and standards of operations in order to gain their fading reputations. Integrity Failures of the GSK’s Leadership in Dealing with Ethical Issues In 1998 when the merger between Glaxo Wellcome and SmithKline Beecham was eminent, the leadership components of both the companies were in great restructure. The two companies had different management styles and cultures, and any instances of merger would automatically lead to a collision of leadership cultures. The effects such leadership restructure accompanied by management politics led to the collapse of the impending merger. However, later on the merger occurred and Jean-Paul Garnier became the CEO of GSK. Although Jean-Paul Garnier managed to reconcile the two different management and leadership cultures, there were several loop-holes when he was retiring in 2007. He had managed to combine both traditional management cultures with innovative ones and adopted a management structure that made GSK a global leader in the pharmaceutical industry. The power shift in 2007 changed the management culture of GSK as serious lawsuits began running the way of the company. The new leadership suffered huge costs and sales following these strings of lawsuits that challenged GSK’s leadership during the era of Andrew Witty who was the new CEO. His idea of expansion into new markets and breaking into new fields of drugs, particularly into drugs which had been ignored by other companies, led to the emergence of drug inventions that would finally prove unethical. When lawsuits began running into the operations of GSK, the company’s leadership reacted in questionable manner that tested their integrity as far as ethical issues are concerned. When the company, for instance, was accused severally regarding its production liability, marketing, as well as quality control, GSK lacked the deniability character but was proven of the accusations. The merger between two companies, with different leadership styles was one of the main causes for these ethical integrity failures. The other reason is the inconsistency of the proven ethical accusations with the GSK’s codes of ethical codes of conducts and compliance with laws, regulations, and company policies that ensures fostering positive ethical environment. The proven accusations are not consistent with what the company’s policy stand for and these unfortunately unethical practices has caused the GSK leadership the integrity tests as far as ethics are concerned. The company’s commitment to performance with integrity that has zero tolerance to corruption cases and when such cases occur, the company’s leaders should take the responsibility of such misconducts (Schwartz, 2011, pp. 126-135.). Over the past years, there have been various evidences of bribes claims, which have severely tarnished the image of GSK’s leadership. These evidences are contributes to failures of the leadership of GSK to combat ethical cases. The instances of the company’s management authorizing promotion (marketing) of a product that it has full knowledge of its side effects particularly to children, for example Paxil drug, is unethical. Some of the other ethical issues and lapses discussed above are very critical in determining the ethical score of a company like GSK. Numerous failures of social ethical responsibility and series of ethical accusations and charges are some of the reason that has made the leadership of GSK to fail the ethical integrity. China has been known to be one of the economies that have zero tolerance to corruption cases. However, the Chinese recent crackdowns on the multinational companies that are involved with bribery and corrupt practices have left more than 18 GSK employees arrested. Although finer details have not been yet provided, the cases have recently impacted heavily on the GSK’s corporate image. The case has lead to GSK’s business in China and many pharmaceutical companies have been aimed of the impending tests on their ethical integrity. The scandal has is hoped to increase compliance costs and is also expected to depress the Chinese revenues from the multinational corporations in terms of sales. Bribery is one of the unethical practices which promote social and corporate unfairness and sales favoritism in a specific market domain. More importantly, many countries have zero tolerance to bribery since it denies the public the protection and supposed provisions of proper services (Schwartz, 2011, pp. 126-135.). Ethics and the responsibility that corporate societies swear to the public are in perfect contrast of the vice. GSK has been on the spotlight on ethical issues and the only step it can do to prevent these unfortunate situations is for the management to step up their role in ensuring the leadership structures and practices do not give any chance of such practices. The management should also come up with punishments which are deemed severe to its agents who are involved with such scandals as well. Reference List: Baxi, C. V., & Prasad, A. (2005). Corporate social responsibility: concepts and cases : the Indian experience. New Delhi, India, Excel Books. Bhattacharya, Jayanta. 2007,Corporate social responsibility ethical and strategic choice. Delhi: Asian Books, pp 34-76. GrüNewäLder, A. (2008). Corporate social responsibility Implementation in German companies. München, GRIN Verlag GmbH. http://nbn-resolving.de/urn:nbn:de:101:1-2010090122914. Mallin, C. A. (2009). Corporate social responsibility a case study approach. Cheltenham, Edward Elgar. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=487386. Mullerat, R., & Brennan, D. (2011). Corporate social responsibility: the corporate governance of the 21st century. Alphen aan den Rijn, Kluwer Law International. Schwartz, Mark S.. 2011,Corporate social responsibility: an ethical approach. Peterborough, Ont.: Broadview Press, pp. 126-135. Sims, Ronald R..2003, Ethics and corporate social responsibility why giants fall. Westport, Conn.: Praeger, pp. 493-503. Sociaal-Economische Raad. (2001). Corporate social responsibility: a Dutch approach. [Hague?], SER, Sociaal-Economische Raad. Read More

One of the notable lawsuits against the company arose after one of its products called Paxil was claimed to have deadly side effects, particularly to children. Paxil is a drug, of antidepressant nature that is recommended for depressed patients suffering from anxiety disorders. The drug had been performing well for its purpose. However, it was realized that the drug had side effects like birth defections, withdrawal symptoms, addictive behaviors and suicidal tendencies, mostly on children. Following this, a class-actions lawsuit was filed against the company claiming the company had marketed the product for children while intentionally hiding the facts about the product being unsafe and ineffective for children.

This was also followed by the accusation of the British authorities if the same matter. When the company was also appeared to have paid Maria Carmen Palazzo in 2010 about $5,000 for every child she enrolled for a research fraud of the antidepressant Paxil, a practice she did for clinical trial, it was a heavy ethical blow for the company. This clinical trial was aimed at children who had not suffered from the side effects of Paxil. It was also realized later that Palazzo had falsified documents and psychiatric diagnoses to further her course of the seemingly ultimate crime.

For its unworthiness, she got a 13 months sentence after admitting of the crime, and the company suffered further if its tarnished reputations over its involvement in the matter. When the company’s diabetes drug, Avandia was realized to increase risks of heart attacks, a lawsuit was filed against the company. The chances of consumers taking the drug, Avandia, to suffer from a heart attack than when they took other alternative diabetic medications was proven to be 49 percent out of research carried out by The New England Journal of Medicine.

The ethical misconduct came by when it was reported that the company had known the risk but intentionally failed to disclose of the risk to the public. More than that, the company had inflated the price of the drug through the perception of being less risky drug than it was. Despite the company’s denial, more evidenced were provided that proved the case against Avandia was true. The sale of Avandia was later restricted and the company suffers an annual loss of $1 billion annually from the restrictions of Avandia.

The other ethical lapse that befell GSK was the off-label drug marketing, which was proven to be potentially capable of misleading the consumers and thus misusing medications. This is a serious ethical offence and it attracted the attention of the US government who investigated about the allegations. It was alleged that the company had been promoting Wellbutrin as a drug for weight loss, while the drug is an antidepressant. The case was based on Lauren Stevens, a former GSK counsel associate who tried to cover up for GSK’s use of the off-label marketing.

The company suffered another marketing ethical blow when the US Senate Finance Committee attacked its promotional tactics such as sponsorship of medical programs, speaker events, advisory boards and grants. They argue that grants were used illegally to promote drug products and ordered the company, through the pharmaceutical departments to provide their clearance and information regarding their use of the educational grants. The provided information led to further accusations and several GSK agents face legal charges and the company faces other pricing cases including fraud and abuse of law like federal false claims.

Apart from other quality control issues that have also been raised upon GSK’s sales of drugs like Paxil, Paxil CR, Coreg, and Avandia, GSK has closed some production sites like Cidra and the effects of these allegations, accusations and charges have contributed heavily against the company’s reputations. The company had made big steps in ensuring their social responsibility and business conduct would be transparent, ethical and value oriented.

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