Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property - Term Paper Example

Legal and Ethical Considerations in Marketing, Product Safety and Intellectual Property Introduction Companies have to deal with ethical issues every day. The manner in which each company deals with these issues determines whether a company thrives or fall away. There are companies that have collapsed because of failure of addressing the ethical issue such as the Enron scandal. As such, companies should know their ethical responsibility to their shareholders and customers. We are living in an age where the stakeholders are aware of their rights. If a company fails to address some of the issues, it may find itself facing serious legal repercussions or losing its customer as this spoils their brand. This would eventually slow the company growth especially in this age where a company success is dependent on its ability to optimize on all available resources. Although the fines that a company may get for a certain ethical mistake may seem small, they have a long-term harmful effect on the company brand. Advancement in information technology has come with the ethical challenge of ownership of intellectual property. Today, it is possible to access any information on the internet and this has resulted in copyright issues as some people take other people’s work as their own (Qato & Alexander 2011). Companies in the food and health industry are often faced with ethical issues. This is because they deal with products that are directly consumed by people. This implies that if they are not well regulated they may end up harming the consumers. Besides providing the customers with safe products, companies are expected to conduct businesses in an ethical manner. This involves being ethical in marketing and refraining from unfair competition. Ethical issues relating to marketing and advertising, intellectual property, and regulation of product safety Ethical issues in Marketing Companies have the ethical obligation to ensure that the consumers get the best. According to Kant’ argument on ethics, buyers should not be considered as a means by an organization to get financial benefits. Instead, they should be treated as the end. This implies that the main goal of an organization should be to satisfy the needs of the consumers. As such, a company should respect the customer’s freedom of choice and should not use false advertising, coercion or manipulation to get them to buy certain products. A company has an ethical obligation of providing the customers with the right and adequate information on a certain product or services. It would be wrong to withhold some crucial information about a product. In their marketing a company should ensure that they provide all information regarding a product or services including the negative aspects so that customers can make the right choices after being sufficiently informed. Buyers can be forced into impulse buying by high sales pressure. As a result, some government has developed regulations that give the buyer some time to cool off during a sale offer. For instance, In Canada, companies are supposed to give the buyer ten days after announcing a sales offer to give them time to cool off and not be influenced by the sales pressure. Companies are also expected to refrain from other deceptive form of advertising as the buyers would choose the product based on false information. According to utilitarian ethics, ethical practices should result from the overall happiness of the society (Switzer & Bulan 2002). This implies that when an organization practices ethicality in marketing and advertising, both the buyer and the seller are happy. The company should thus focus on meeting the needs of the clients and respecting the client as a person. When the customer is happy, they will end up choosing being loyal to that company and this has a long-term sustainability effect on that organization (Anderson 2004). According to the same theory of utilitarianism, a business is considered ethical if it promotes the overall happiness of the society. For instance, although there are many people who would be willing to sell and buy illegal stuff such as child pornography, mild altering drugs and counterfeit goods, this business results in the overall decline of the society happiness. As a result, such practices are considered unethical. Marketing is thus considered ethical or unethical depending on the whether it sells quality products to the society and at the right pricing (Qato & Alexander 2011). It is also based on the promotion strategy being non-coercive and provision of adequate information so that the customers make the right decisions. Ownership of Intellectual property There are several ethical issues surrounding intellectual property. This is because with the onset of modern development in information technology, it is now possible to access a lot of information on the internet. This has created a problem of ownership of intellectual property especially for individuals. Companies have now invested in developing software that protects the intellectual property of their customers and employees. There are several software solutions that companies can use to monitor the use of company data. This is to ensure that employees use an organization data for the purposes that they are meant for. It also restrains them from engaging in unethical activity as they are aware that they are being monitored. However, there are some measures that a company may take when monitoring the employees that could be seen as illegal. Some companies tap the employees email and social network accounts. This is a breach of the employees’ freedom of expression and privacy. A company may even find themselves facing lawsuits from the employees (Switzer & Bulan 2002). This means that it is important that organization protect their intellectual property but at the same time respect the rights of the employees and other stakeholders involved. On the other hand, the employees are expected to behave ethically when using company properties. This is because if the employees were involved in unethical activities such as illegal downloads it is traced back the company. The company would then be exposed to lawsuits and this could completely tarnish the company’s name affecting its overall sustainability. Intellectual property owned by companies is under the protection of copyright, patents and trade secrets. However, there have been instances where individual sell innovative ideas to big companies which develop the idea as their own without acknowledging the contribution of the person who developed that idea (Qato & Alexander 2011). The company then sells the idea as it own. This is completely unethical. A company can only sell an idea as its own if it was developed by one of its employee or when it has bought the idea from the innovator at the right value. Quality control of products and services Businesses are expected to produce products and services that are safe for consumption. They are also expected to produce products that are of the best quality. As such, companies are expected to behave ethically by producing good using the right material, test their end product for safety and quality, give an honest report about the results of the test and correct any errors that they may come across. Although, there are several regulatory bodies that look into the safety of goods and services, it is hard to realize that a company has failed to meet the requirement unless a major problem occurs. This could be people suffering greatly physically or otherwise due to a company products or services. When this happens, the company loses greatly because its brand is completely damaged and it would have trouble rising up the market. In most cases, companies that are faced with such huge scandals collapse completely. When a company is faced with a potential safety issue, it should first investigate to understand the cause of the problem (Anderson 2004). It should also ensure that the faulty products in the stores are not distributed to the consumer until the fault has been corrected. After investigating and discovering the problem, the company should be willing to compensate its customers for damage or any harm causes. This way, it would be possible for the company to maintain good relationship with the clients. Companies are held accountable for any faults that may arise from negligence or is committed intentionally or accidentally. Companies are required legally and morally to design products that are safe for their clients. Companies that produce products that have the potential of causing harm to the end user should have a warning label on the packaging of the products (Switzer & Bulan 2002). It is assumed that when a company takes a product to the market that that product is safe for use. Therefore, if the products are harmful the company thus needs to take full responsibility. Direct-to-Consumer (DTC) marketing by drug companies The strategy of direct to consumer promotion by drug companies has increased over the past few years. Direct advertising messages in pharmaceutical are directed to the patients and not to the patients. This is despite the fact that it was legal in America since 1985. Although this form of promotion has had some positive impact such as the patients understanding their various options for treatment, it generally has some serious negative impacts and should be banned. To start with, most of these advertisements focus more on the advantages of a certain drug and ignore the side effects. This is from the research conducted on some prescription where 40% of the interviewed patients were aware of the advantages of certain medication and only 20% were aware of the side effects. It seems that the drug companies are not giving the consumers adequate information on the drugs and this could lead to the patient making the wrong choice of a drug (Perle 2004). Moreover, the doctors reported that they felt pressured to prescribe a certain brand that was popularized in the media. This is because the patients mention these drugs during consultation. It is thus possible that these adverts influence prescription of drugs and may lead to the patient not get fair choice on the right medicine. Another danger that the direct to consumer marketing brings about is that it makes the patient to rely more on the information presented in the adverts instead of seeking professional advice. This has potential harm because if patient started buying drugs over the counter without consulting a doctor they may get complications (Anderson 2004). The information provided by the advertisement is not adequate to make a decision on which treatment to take. It is important that a patient consult a doctor before taking medication. In addition, these advertisements have been found to have the effect of making patients request for expensive brand names from the doctors. In most causes there are cheap generic alternatives which are equally effective (Perle 2004). This has the overall effect of increasing the cost of healthcare and is against the ultimate goal of the healthcare industry of offering health care at the most affordable costs. Nevertheless, direct to consumers marketing has some advantages such as the patient gets a deeper insight of their condition and can have better discussions with their doctor on alternative treatments. It also increases the patient’s awareness of their healthcare. Who regulates compounding pharmacies under the current regulatory scheme? The state board of pharmacy is responsible for the regulation of compound pharmacy. Compound pharmacies are different from other pharmacies in that they are mandated to distribute dangerous drugs but at the same time can manufacture, actively dispense and compound drugs. The federal agencies and the pharmacy industry also play a role in the regulation of the compound pharmacy (Perle 2004). Since the compounding pharmacies are controlled by the three bodies, this has created some loop holes single there no single agency which has the full responsibility of monitoring these pharmacies. The compounding pharmacies falls under the distribution pharmacies since they do not manufacture new medicine and only customize existing medicine to meet the needs of the customers. Manufacturing pharmacies on the other hand are involved in the manufacture of new drugs and are regulated by FDA. If the compounding pharmacy were treated as manufacturing pharmacy, it would fall under the regulation of FDA. This would generally raise the cost of production of compounded medication. However, with recent occurrences, there have been concerns about the regulation of the compounding pharmacies by the state regulation. For instance, in 2012, there was a case of an outbreak of meningitis whose cause was traced to contamination of injections in one compounding pharmacy. In order to overcome the challenges that come with the regulation of compound pharmacies, there are several actions that need to be taken. To start with, there should be a clear distinction between compounding and manufacturing. This would ensure that products that cross the line of being compounded to being manufactured are monitored correctly under the FDA regulations. The types of pharmacies should also be clearly delineated as hospital based pharmacies, compounding pharmacies and wholesale specialties. There should also be clear definition of sterile and non-sterile compounding to ensure that they are correctly monitored. The inspection requirements should be clearly outlined. It should be clear to different regulatory bodies the frequency of inspection and the authority responsible for carrying out these inspections. The penalty for any omissions or errors should also be clearly outlined and standard for different crimes. This would make it easy to implement the drug regulations across all states. The regulatory bodies should receive enough state funding to ensure that they carry their duties of inspection adequately (Anderson 2004). Transparency should also be promoted and ensure that records about different compounding pharmacies are available to the public. Decide whether PharmaCARE’s use of Colberian intellectual property would be ethical According to the utilitarian theory an action is considered ethical if it for the good of the majority. The use of Colberian intellectual property is in this case not ethical. This is because it only benefits the company and her employees who live in nice hours while the community surrounding them suffers from environmental degradation caused by the company. According to the deontological perspective, the actions of PharmaCARE were unethical. This is because in their manufacture of new drugs they did not follow the FDA regulations for manufacturing pharmacies and instead manufactured the drugs as compounding pharmacy. In terms of virtue ethics, PharmaCARE is expected to act in the utmost good faith and provide safe products to her customer whom she failed (Perle 2004). Being in the healthcare industry, the company is morally obligated to care for the customers by providing safe products in the market. The way PharmaCARE uses U.S. law to protect its own intellectual property while co-opting intellectual property in Colberia PharmaCARE has failed to follow the rules and regulations that have been laid out on preparation of drugs and even on intellectual rights. The company uses the loop holes in the American law on regulation of compounding pharmacy to conduct illegal business to increase its financial income (Newton 2000). The company support environmental inventiveness but at the same time breaks the intellectual property laws. Three (3) ways the company could compensate the people and nation of Colberia for the use of its intellectual property and the damage to its environment I. Develop environmental rehabilitation initiatives II. Offer monetary compensation to families that have been affected by the company’s activities III. Create employment opportunities for the people of Colberia Compare PharmaCARE’s actions with those of at least one (1) real-world company whose creativity in skirting legal technicalities led to ethical lapses and financial loss PharmaCARE could be compared to Bayer Company which in the recent years have been reported to sell contaminated Hepatitis B and HIV blood products. This error is believed to have caused around 10,000 new HIV infections in America. When this product was banned in US, the company took the products to Asian and Latin American markets (Switzer & Bulan 2002). As a matter of fact the company admits to paying millions of dollars in order to end this scandal. This scandal caused the Bayers sales to reduce greatly. Determine the success PharmaCARE and WellCo shareholders would have in suits against the companies Although the companies may be bending a few U.S laws, they have managed to maintain a good public image by engaging in saving the environment initiative such as “We care about your world”. It would thus be hard to pin them down for their misdoings. Determine whether or not PharmaCARE lives up to its brand. Support the response The company does not live up to its brand. This is because being a large company, it is expected that it should produce drugs that are safe for use by the end users. Such a company should be on the forefront in ensuring the quality of drugs put in the market. Instead, the company releases unsafe drugs to the market in order to get financial gains at the expense of their customer’s health (Anderson 2004). Recommend at least three (3) changes PharmaCARE can make to be more ethical going forward Ensure that all the drugs that the company takes to the market pass through the required standards of quality and safety Invest some of their profits in the nation of Colberia so that the nation can also grow as the company grows. Access the environmental impacts of the company’s activities in Colberia and come up with strategies to mitigate these changes. References Andersen, B. (2004). Bringing business ethics to life: Achieving corporate social responsibility. Milwaukee, Wisc: ASQ Quality Press. Newton J. (2000). Complete Conduct Principles for the 21st Century. Oxford: Oxford University Press. Perle, S.(2004). "Morality and Ethics: An Introduction". Retrieved 2007-02-13., Butchvarov, Panayot. Skepticism in Ethics (1989). Qato DM, . Alexander G.C. (2011). "Post-Marketing Drug Safety and the Food and Drug Administration's Risk Evaluation and Mitigation Strategies". JAMA 306: 1595–1596. Switzer, C. S., & Bulan, L. A. (2002). CERCLA: Comprehensive Environmental Response, Compensation, and Liability Act. Chicago, Ill: Section of Environment, Energy, and Resources, American Bar Association. Read More