Unethical Behavior in the Pharmaceutical Industry - Essay Example

Case Study in Business Ethics When people are in sales it is sometimes difficult to understand what they need to do in order to become good sales people. There are many pressures and stresses in some sales jobs that make the individuals have to make a decision between making a quota of sales and losing their job. In these situations it is important for sales people to take a step back, understand the ethics of what they are doing, and adhere to these ethics. This becomes a problem if the sales people perceive that they must "cheat" in order to make their quotas. In the article, "Ethically Questionable Behavior in Sales Representatives-An Example from the Taiwanese Pharmaceutical Industry" by Ya-Hui Hsu, Wenchang Fang and Yuanchung Lee the idea of ethical behavior with salesmen in pharmaceutical companies is explored. The reason this was explored is because they saw "recent corporate disgraces and corruption" in business and they wanted to see whether this affected pharmaceutical sales. PREVALENCE OF PROBLEM Unethical behavior in the pharmaceutical industry is something that has happened for many years. MedZilla Staff report that pharmaceutical companies are using a variety of "questionable" tactics to approach doctors and "lure" them into prescribing certain drugs to their patients. Some companies have taken steps to stop the larger perks like tickets to ballgames or financial incentives. As an example, PhrMA is one of the leading companies in the business and they sell 90% of the pharmaceuticals in the United States. In 2002, they chose to change their marketing approach and educate their customers instead of spending so much time trying to lure doctors (MedZilla Staff). This article also states that the best way to make sure you are behaving ethically is to sell the doctor on the positive aspects of the drug and give information about clinical trials. Although many people believe that their primary care physician gets "perks" and "financial incentives" to prescribe certain drugs, they do not want to totally believe this because it makes them feel that they are vulnerable. Hsu, Fang and Lee studied this practice to find out exactly what makes this necessary for salesmen to create unethical behaviors in order to make the sales team look good. The researchers used four variables from human resource management in order to "explain the ethically questionable behavioral of sales representatives in the pharmaceutical industry" (155) MANAGEMENT AND UNETHICAL BEHAVIOR Although unethical behavior exists it is an area where management studies have not been done extensively particularly in the areas of sales. Through some of the current studies they have found that sales representatives may spend time exaggerating the function of their products so they can sell more of them. Many become desperate to make the sales and they try any tactic they can use instead of thinking about the patient (155). They did their study because of these problems and they note that it is important to understand that people judge ethical situations differently; this is why they used the four variables that formed the basis of their hypotheses. VARIABLE 1: FRAME PATTERNS According to the researchers a persons judgment can be determined by "frame patterns" that they use in any situation. They state that if a person feels they are going to lose something they may take a greater risk than if they were in a position to gain. Unethical behavior can happen when there is pressure for the sales reps to make quotas because they are afraid of losing their jobs. Some people frame this information positively while others see it as a negative situation ("framing" refers to how the individual perceives the pressure). If they perceive that the pressure is positive they may try to sell more legitimately. If they perceive it to be negative, they will constantly feel like they are being watched and that they have not completed their goals if they only have completed half of what they were told to do. VARIABLE 2: COMMISSION STRUCTURE Some people will respond to a commission structure that makes them feel that they are going to make more money if they do more sales. If they feel that they can do this quickly they may fall into ethical behavior. "People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction." (The Bible: as qtd in Hsu, Fang and Lee 156). Sales reps will be more likely to fall into the unethical behavior when they are living from a higher commission structure than one that is lower (156). VARIABLE 3: BEHAVIOR CONTROL TYPE This one is difficult for most businesses because sales reps are serve a global clientele. This makes it difficult for a company to monitor what they are doing and therefore cannot control their actions. When a company has "loose behavior control" the rep is more likely to choose unethical behavior; if they know they have more accountability, they will work ethically (157). VARIABLE 4: MARKETING NORM PERCEPTIONS Marketing is a very important aspect of any business and according to the researchers people think about moral norms when they get into a difficult and ethical situation. When this happens, they rely on a set of standards to guide them. When no marketing standard exists, they are more apt to choose unethical behavior; when they have the guidance they need, they will choose marketing. These are the variables and hypotheses that they were used to start the study. STUDY RESULTS The study found that over all "sales representatives choose to engage in ethically questionable behavior 1.5 times more often then the alternative" (163). When they are under pressure to make sales, and it can create a situation of unethical questionable behavior with their colleagues, representatives form different companies and with their clients. They also found that employees who expected a higher reward would sometimes be more prone to questionable ethic behavior. The researchers proved their hypotheses. Another important variable that was only touched on in this article was that of culture. Some cultures give gifts as part of their culture and this must be taken into consideration when developing new guidelines. In a normal sales transaction in certain countries like Korea it may be seen as an insult if the doctor does not take the gift. PERTINENCE OF THE FOUR VARIABLES These four variables are very important for managers to understand because thy can be the basis by which their sales force operates. Many sales people spend a lot of energy attempting to make the sale and they forget about the end user, which in this case is the patient. Doctors take the Hippocratic Oath that basically says to, "do no harm" but there are many ways to do harm. As an example, when some people get older it seems that doctors give them more drugs than what might be considered normal. Sometimes these drugs are paid for by their insurance and sometimes they are not. Many seniors are not willing to ask their doctor to give them something less expensive because they do not want their doctor to become angry with them. It is known that some drugs have complications when they are given with other types of drugs. If a doctor becomes more involved with the perks they get from the drug than they do with their patients they could prescribe something to a patient that would not be the best assistance to them. The other aspect of this could be that they would prescribe only specific drugs to patients without real consideration of their specific needs. RECOMMENDATIONS TO HUMAN RESOURCE AND MARKETING DIRECTORS In small business the newest emphasis on sales is building relationships instead of attempting to make quick sales. The thought is that by building relationships, there will be more than one sale made. In this way the sales force will not have to constantly find new people to put into the pipeline because they are constantly finding new ways to assist their old customers. This would be the first thing that I would recommend to human resources and marketing. The world has been moving out of the hard sell stage for many reasons and most sales groups are adopting this idea of building relationships. In the pharmaceutical industry, according to Jennifer LeClaire, this is already beginning to happen. According to her article, new compliance programs have been created by the Office of Inspector General, Pharmaceutical Research ad Manufacturers of America to create a stricter environment for sales representatives to work within. These actions have made many managers look towards other ways of helping their sales groups because they can no longer offer the higher incentives. The challenge is that without the incentives many reps are unable to talk to doctors. Another very important way that some sales reps have found to get to doctors and therefore strengthen their relationships is by becoming educational resources. They are studying specific therapeutic area or specific diseases. As an example, some doctors may choose to specialize in respiratory diseases and bring this type of information to doctors. This seems to be an interesting way to get doctors to listen because they do not have the time to always keep up with the latest information in their fields. Legally a pharmaceutical company must look at the specific guidelines that are already stated in the various aspects of their industry and find ways to track what their sales force is doing. There are ethical guidelines in every industry and by expecting their sales force to stick to these guidelines they will be within the law. Although many articles say that there is no way to track exactly what each sales person will do at the point of sale, I believe it is important to take into consideration what this study has shown. I believe that doctors have a moral obligation to do the best for their patients and that sales people have a moral obligation to express the benefits of their drugs in an honest and forthright manner. When doctors get involved with incentives it can tend to ruin their character. The challenge is that this old way of selling to doctors is so ingrained that it can be difficult to break the pattern. I would also recommend that sales reps have professional development in the form of sales training and that the company pay for their classes or workshops. Emphasis should be put on building relationships and creating sales through these relationships. CONCLUSION As we look into the future of pharmaceutical sales there may come a time when drugs are not given to patients but that other types of remedies become important. As medicine makes changes pharmaceutical companies and medical supply programs will need to also make changes. Also, if our economy stays the way it is now many people will not have the money to purchase the most expensive drugs and they may not be able to pay co-pays if they have insurance. The companies are going to have to make ways for people who are low income to receive their medicines whether they have insurance or not. As an examples, we will see more Wal-mart type programs ($4 per prescription) that are affordable for the consumer. Finally it is very important for the pharmaceutical company to look towards the end user before they start selling drugs. Works Cited Hsu, Ya-Hui, Fang ,Wenchang and Lee, Yuanchung "Ethically Questionable Behavior in Sales Representatives-An Example from the Taiwanese Pharmaceutical Industry" Journal of Business Ethics. (2009) 88: 155-166. LeClaire, Jennifer. "The New Ethics in Pharmaceutical Sales". Monster.com. 06 June 2009. < http://career-advice.monster.com/in-the-office/Workplace-Issues/New-Ethics-in- Pharmaceutical-Sales/article.aspx>. MedZilla Staff. "Pharmaceutical Sales Ethics: New Reforms or Business As Usual?" Medzilla in the News. Press Release. 23 July 2004. 28 June 2009. Read More