Ethical Issues That Have Impacted Product Quality in Glaxosmithkline - Case Study Example

ENG ASSESSMENT TEST: GLAXOSMITHKLINE Name Institution Introduction Many companies in the world thrive on the basis of the trust and professionalism that most clients have associated with them (Ryan, Schmit & Johnson 1996, p. 854). Typically, though ethics are found to be a universal component of many companies, some of these companies are expected to poise a higher degree of professionalism than the others. Pharmaceutical companies are at the peak of these expectations. These companies are expected to adhere to very strict performance and professional ethics. The right-based ethical criterion applies to a very large scale in most of the businesses and the companies that operate in sensitive areas such as medicine (Mounira 2009, p. 125; Romila, Caldwell and Dilip 2013, p. 3). However, sometimes it is found that most of these companies do not adhere to the ethical issues that are present in various cases. Most of them are profit oriented and the cost-benefit analysis using an egotism approach is the design most preferred and adopted for implementation in most of these companies. This paper examines the approaches that one of the world’s largest pharmaceutical company, GlaxoSmithKline (GSK) uses when dealing with ethical issues and ethical concerns that have been brought up against this company. It will be shown that the company has lost an a lot of goodwill and trust amongst various clients in the various nations that it operates in. The ethical lapses that the company has been accused of will be looked into and various ways of ensuring that these ethical dilemmas are not repeated in future will also be examined in this case. The company has been facing a lot of accusations from the public concerning that they have been selling potentially harmful drugs despite the fact that they knew that these drugs could have harmful side effects to patients. Part A This section shows the journey that GSK has followed since its inception to finally grow itself into an internationally recognized brand. With numerous mergers and acquisition, the company has undergone a process of branding and rebranding to an extent that has given it the shape it is in today. Over the years however, the company has continue to expand exponentially and this has brought in queries and issues being raised that pertains to the services and the products that the company offers. There are numerous ethical issues raised in this case study pertaining to the way of operations of GSK. Several drugs that have been manufactured by this company have been refuted as being dangerous to those taking them. There have been major concerns raised over the quality of these products as this section analyzes. Question 1: Ethical issues that have impacted product quality in GSK It has been observed over time that as companies grow huge in size, they experience diseconomies of scale. These diseconomies of scale sometimes lead to the companies producing substandard products, incur astronomically baseless costs and the issue of bureaucracy sets in (Sun 2009, p. 35; Gilley 2005, p. 14). Before GSK grew into the company it is today, the company was originally a small drug research and manufacturing company. The series of the mergers and acquisitions the company has undergone in the past has transformed the company into one of the largest drug manufacturing companies in the world. This has come with a price on its credibility. As the market grows large, the drugs that this company uses have been faced with a myriad of issues and the major concerns are the side effects that results from the usage of these drugs. Technically, there are a number of drugs that have been pointed out that have been tagged as being harmful to the various people who use them. Sale and promotion of harmful products Paxil and Avandia are among the brand drugs that have been associated with major issues pertaining to the health of the patients who take them. These drugs have been reported of having very many side effects and many law suits have been filed against the company for these damages. The litigation suits have been numerous and have cost the company millions of dollars in form of damages and litigation settlements. By following codes of ethics, the professionals who were involved in the production and sales of these two forms of drugs even when they had a knowledge that the usage of these drugs would have some devastating side effects. For instance, Paxil has been developed and marketed as a depressant aiming at being marketed to patients who have anxiety disorders and depressions. However, the drug is also associated with side effects such as addictive behavior, birth defects, withdrawal systems and even suicidal tendencies. Children and more prone to these side effects resulting from this drug than adults. Even with all these defects, the company is accused of promoting the sale of this drug despite having a clear knowledge of the drug’s possible negative effects. Despite claims from the company denying these allegations, the management of the company opted to have settlements conducted to the tune of more than $ 1 billion when the Paxil drug was found to be a major cause of birth defects. Operational fraud A psychiatrist jailed for her contribution in this case confessed to being paid up $ 5000 for every child she was able to sign up for these experimental sessions with Paxil. She used to enlist even those children who did not suffer from depressions and went ahead to falsify the records of these patients to cover up her crimes. This points out to the wide scale violation of ethics in both the company and in the professional conduct of the people who were involved either in research, development or sales of the drug. This could be one of the reasons for the lapse of the quality of the product. The investment made in the research, development and sale of this drug was a lot of money and the returns were expected to counter this investment. Many professionals who were designed to offer their guidance and consultation on the product quality, effectiveness and effects did not offer the correct diagnosis. A lot of money had been spent in research and promotion and one professional’s point of view on the drug did not matter. The key factor here was the emphasis on the profitability margins present. The benefit accrued from the sale of the Paxil drug was by far outstanding in comparison to the costs used in this case. Ethical concerns were ignored in the face of massive returns on investments. Avandia, another drug from GSK company found itself faced with major concerns on its security after it was shown to be among the major causes of heart attacks. Independent studies conducted show that the drug, aimed at curbing or minimizing the risk of diabetes actually led to raise of the capacity of getting heart attacks in majority of the patients who used this drug. When these patients took alternative medicines to cure the diabetes, they had a 43% higher chance of evading heart illnesses compared to those who took Avandia. Surveys show that the management of the company knew about this but decided to go ahead and issue the drug to those who had diabetes. This was a direct violation of the ethics that the professionals in this company were supposed to uphold. Violation of rights based ethics Rights based ethical perspectives in this company were overly ignored, with the profit figure proving to be quite an attraction to most of these professionals. They were mainly concerned about what they would achieve in the end from the sale of these drugs as opposed to the health implications that these drugs brought upon them. Instead of clamping on the sale of the drug and authenticating the allegations imposed upon them, the professionals at GSK only argued that the allegations had no ‘base’ and the drug did show any significant risk in patients taking the drug. To make matters worse, the company went ahead to inflate the prices of the drug by posing it as less risky than the other drugs in the market. Sometimes, as a marketing strategy, some companies increase the prices of their products so that they make have these products portrayed as being of more quality even if this is not true. This breach of ethics in GSK led to customers paying more money for a drug that was causing harm to them. A study conducted that showed the more than 47000 people suffered from strokes and heart conditions and this led to the sales of the drug being restricted in many nations. The European Union banned the sale, promotion or use of the during from the region completely and this led to a sharp decline in the volume and values of sales that the company had. Promotion of off label drugs Another manner in which the company has violated the ethical conducts of the business is through the promotion of off label drugs. Drug prescription should be conducted by doctors and FDA has very little control over this. However, some consumers are very swayed by the advertisements and promotions that many drug manufacturing companies make and this becomes detrimental to their health. For example, GSK conducted a huge promotion of the drug Wellbutrin, designed to act as antidepressant as a weight loss drug. This promotion was misleading to the people who wished to lose weight and the FDA filed a lawsuit against the company for conducting such promotions. Off label promotion has led to many consumers misusing medication because they have been led to believe that these medication can be able to sure other forms of illnesses. The widespread promotion of this drug led to many people misusing it for loss of weight while in fact the drug acted as an antidepressant. This only resulted into more and more complications. Illegal funding or drug promotions GSK is also accused of funding various programs that promote the use of drug products. For instance, they used educational grants, advisory boards and sponsoring medical educational programs as well as speaker events. Question 2: Why GSK’s leadership failed in preventing ethical issues related to integrity failures There are several issue that would have in one way or the other, led to the company leadership failing in the prevention of ethical issues relating to integrity failures. Some of these issues have been discussed in the following paragraphs. Bureaucracy in GSK Over the years, the company has managed to grow tremendously to encompass vast areas of interest across the globe. The uptakes of the drugs that the company manufactures has managed to turn the company into one huge conglomerate. When a company grows this huge, chances are that the company starts experiencing diseconomies of scale (Ajmal et al 2011, p. 113). Various facets of the company become defined and the departments of the company become too many. The flow of policies across various departments in the company become too long and red taping sets in. The rapid development of the company into various markets, China being the largest has resulted into the company experiencing various issues which include diseconomies of scale (Shobbert, 2013). This has made it become a huge company and certain management hurdles have resulted into the company. For instance, today, the decisions that need to be made in the company are only made through a long process of bureaucracy. Sometimes making a simple decision takes a lot of time and this has often led to the company missing on various issues and offers to rival business (Schuster 2005, p. 13). Managers not conversant with medical field At the inception of the company, the personnel who were present in this small company had an intricate knowledge of the working of the company in medical terms. These people were best suited for the management of the company along the terms of product development, research and marketing because they understood exactly what it entails to come up with these drugs and promote them. As the company grew rapidly, there was a need to incorporate other people into the company. Most of these people did not have any knowledge of the medical field and as such, they could not be in a position to offer refined advice on the same. Sometimes, it is important to ensure that the personnel that get employed in various fields are highly qualified and well conversant with the area in which they are employed (Hartman, DesJardins & MacDonald, 2014, p. 12). In GSK, many of the leaders in the leadership position have acquired business skills as opposed to having skills in the medical field. However, these skills are not matched when it comes to managing the quality of the drug products that the company manufactures. Most of these managers are more concerned about profit margins as opposed to product quality. Because of this, the quality of the drugs that comes from this company may not be as high as that which can be derived if the management of the company were more aware of the intricacies of the medical field. Leader’s perception of whistle blowers in this company In the company, whistle blowing was not encouraged. The people who managed to ‘blow the whistle’ over various issues in the company found themselves out of job soon afterwards. Apparently, it was as if these leaders were trying to protect themselves and the company from any person who in any way alleged that they were involved in the process of fraud in this company. When Cheryl Eckard points out to the executives of GSK about the potential damage that the drugs could cause, she is fired within weeks. After that, the FDA splashed the company with multimillion dollar fines and Eckard was rewarded for whistle blowing. In this company, people who seem to be opposing the leaders are fired. This has led to many of these people keeping quiet about the dealings that the company engages into despite their knowing that the company could be in the business of manufacturing harmful products. Part B Question 1: Weaknesses or omissions in the code of conduct in GSK Bribery claims There are several weaknesses that can be identified in the code of conduct of various employees in this company. One of the weakness is the bribery claims. GSK has been accused of bribing doctors in China so that they can prescribe drugs from the company to their patients (Holland 2013). This has followed from the act of four employees of the company being detained in China over allegations of channeling billions of Yuan to the country. Though this has been termed as being a standard pharmaceutical practice, the act has caused ripples in the country and among other concerned nations. There are various implications for this form of conduct. One of the implication is that doctors could provide prescription to their patients pertaining to the usage of these drugs without proper diagnosis to understand whether these drugs are of top quality or not. This is among the issue that led to the introduction of Paxil drug as depressant without necessarily having tried to test its effectiveness. The drug caused numerous side effects and the company lost a lot in terms of litigations and law suits. Fraud Fraud is another weakness in this company. As shown earlier, the company paid a psychiatrist a lot of money to test products on children, some of whom were not sick and who certainly did not require these tests. The leaders of this company gave the nod to have drugs on the market even when they had full knowledge of the fact that these drugs were indeed harmful to the users. Fraud is a weakness that most of these pharmaceutical companies have that make them use products that are not very top in quality. Promotion of off label drugs The promotion of off label drugs is also another way in which this company has failed (Pratley 2013). Through the promotion of these drugs, the customers get misdiagnosed and they stand to misuse various drugs. The company has paid a lot of money on lawsuits that have been brought about following the promotion of these off label drugs. Question 2: Prevention of future ethical dilemmas and reputational damage There are a lot of ethical dilemmas and reputational damage that the company has encountered in the past in its scales of operation. Due to the fact that these dilemmas have led to a lot of issues in the company, most of them pertaining to product quality, the prevention of the same in the future is of paramount importance. This section investigates the various ways through which these dilemmas could be prevented in the future. Transparency in operations One of the best ways through which the ethical dilemmas in the company can be prevented in the future is through ensuring that the transparency of the operations of the company is paramount (Chew, Cheng and Petrovic-Lazarevic, S 2006, p. 59). With transparency in their operations, the company leadership does not have to face any forms of lawsuits that are filed against them pertaining to the way they operate. This process involves ensuring that every procedure that is used in the manufacture of the drugs from the company is well known and well documented. This raises the confidence scales of the various stakeholders of these drugs. Investment in research and design to improve product quality For a company like GSK, investment in R&D is an important factor in the development, growth and promotion of the products of the companies (Holland 2013). For any company to be able to come up with products that are well oriented and well acquainted to the various demands of the customers, investment in form of research and design forms the basic concept here. GSK needs to invest a lot in investment and design. This investment goes a long way in ensuring that all the products in this company are of top quality. Production of top quality drugs will ensure that the company does not face litigation due to poor quality products. Over the years, the company has paid a lot of money to fight litigations and other forms of lawsuits filed against them because of poor quality of the products. Investment in good leaders Sometimes companies tend to fail because of the leaders at the helm of the companies. Some leaders do not share the visions of the company and these could be very detrimental and can lead to the downfall of a business. It is therefore important that the company invests in leaders who understand the different dynamics and demographics that the company is involved in. As noted in the above portion, the company has people in its leadership scales who are not very conversant with the operations of the company. To prevent future dilemmas, GSK should invest in leaders who are more conversant with the business and who understand the full stakes that are at risk in this business. Employee participation One of the best ways through which employees in various companies get motivated is through ensuring that the participation of these employees in the process of decision making. When an employee is given the chance to participate in a decision making process, he owns the process and feels that what they have come up with is a prerogative of making these objectives get realized. GSK has lost a lot of money following whistle blowing from various employees in this company. If the company adopts a corporate culture of allowing various employees to give their opinions pertaining various issues, they would have been able to prevent some damages that the products they were creating brought upon them (Darling & Heller 2009, p. 11). Creation and cultivation of an ethical culture in the company Some companies fail in their endeavors because it is not within their culture to adopt certain policies. Each company has a different way of operation and different ways through which various issues in the company are handled (Amat and Gowthorpe nd, p. 3). The promotion of an ethical culture in the company could prevent a repetition of ethical dilemmas and reputational damages to this company. the adoption of a rights based ethical perspective that promotes a utilitarian approach as opposed to an egotism approach would be more suited for this company. The company would ensure that the drugs they produce are of top quality so that they may avoid issues such as litigations and lawsuits and at the same time be able to meet their objectives through increased sales volumes. Conclusion The above discussion has offered an insight into various ethical issue pertaining to many pharmaceutical companies. The GSK Company has been picked in this case to study about how various ethical issues have impacted on this company. Over the years, GSK has managed to grow and become a world-renowned drug manufacturing company. However, this growth has not been entirely smooth and as the company has grown in size following many mergers and acquisitions, there are very numerous ethical issues that have been associated with this cause. For instance, the company has been accused of promoting various drugs even if they thought that they were defective. The company has also employed various leaders who can’t be termed as being very competitive and who are not very much acquainted with the pharmaceutical world. Promotion, bribery and fraud have also been identified as other ethical issues that are prevalent in this company. The discourse has also shown how these ethical issues could be mitigated. One of the ways would be through ensuring that off label drugs are not promoted. Drugs should be used entirely for what they have been designed for. Any other use would be abuse and promotion would result into a crime. Another way of preventing ethical issues which has been discussed in this paper is through ensuring that bribery issues have been taken care of. Participation of employees is very crucial for ensuring that these ethical issues are not repeated in the future. 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