Zina Amari
Rob Howe
Louis Morris
Andy Ratolojanahary
Ilya Vasilenko
MBA 674
17 April 2013
Ethics in Business
Ethical Dilemmas Facing
Drug Manufacturers
Saving Lives, Making
Money or Somewhere In
Between
Purpose/Agenda
Purpose: To evaluate ethical considerations
regarding the actions of drug manufacturers
Agenda:
 Issue

Facts and Background
 Company

Facts and Background
 Ethical
Question
 Wall Street Journal Analysis


Friedman
Freeman
 Questions
Issue

Facts
 Methotrexate-acute lymphoblastic leukemia in young children.
 Roughly 3,500 American children and teens diagnosed with this
cancer each year.
 Of which, 90% is said to be curable with drug.
 In 2011, 267 new drug shortages reported.
 Up from 54 in 2010.

Background
 Government's tight price controls for generic drugs.
 Many pharmaceutical manufacturers have failed to invest in
the technology and quality-control improvements that
would reduce the risks of partial or complete facility
shutdowns
 As the video states, companies are failing to report
shortages.
Company

Facts
 Established in 1938, Ben Venue Laboratories is the
manufacturing arm of Bedford Laboratories.
 Ben Venue Laboratories Inc., the leading distributor, closed
after federal inspectors found it had not been properly
maintaining equipment or promptly addressing defective
product batches and sterility problems.
 Four other companies reported production problems as well.

Background
 In Feb, 2011, Department of Health and Human Services wrote
a letter to BVL for it’s violations.
 In Dec, 2011, BVL is rumored to have had an unknown
substance in their 38 stainless steel mixing vessels.
 In Jan 2013, FDA injunction for failing to comply with current
good manufacturing practice requirement.
Ethical Question
Do Drug Companies have an Ethical
Obligation to Produce Unprofitable
Lifesaving Cancer Drugs?
WSJ Model
1.
Am I in compliance with the law?
2.
What contribution does this choice of
action make to the company, the
shareholders, the community, and others.
3.
What are the short- and long-term
consequences of this decision
Theorists
Friedman: Social Responsibility of a Business it to
Increase its Profits

Produce the medication based to protect the long
term interests of shareholders
Freeman: Shareholders, Employees, Customers and
Community have stakes in a business and each
groups’ interest is equally important

Producing the medication would contribute to a
balanced benefit for the stakeholders as a whole,
and will serve a humanitarian goal of saving lives
Friedman
Contributions:
 Company


(Managers and Employees)
Profit the Company in the Long Term
Employee Fulfillment
 Shareholders


Maximize Shareholder Profit
Ensure Long Term Value
 Community

Residual benefit to community via benefit to
shareholders
Friedman
Short Term Consequences:
 Company




Profit loss
Lower Wages and Compensation
Employee Motivation
Positive Public Image
 Shareholders

Decreased Value
 Community


Prevents Death
Provides peace of mind
Friedman
Long Term Consequences:
 Company




Continued existence
Maintain Positive Public Image
Brand Enhancement
Attract More Investment
 Shareholders

Added Long Term Value
 Community



Increased Costs of other Drugs
Trickle down wealth from shareholders
Long Term Benefit from Cancer Drug availability
Freeman
Contributions:


Company (Managers and Employees)

Reduces Risk of Litigation and Overreaching Regulation

Meaningful work (saving lives)
Shareholders


Customers


Ensures Steady Earnings and Long Term Value
Get treatment
Community


Jobs are not lost, tax base
Proud employees create a healthy environment in the
locale
Freeman
Short and Long Term Consequences:

Company




Shareholders



Short term - Missed Profits
Long term – Added Value and continuity of business
Customers


Emotionally Healthy and Productive Employees
Satisfied Customers
Positive Community Image
Lead normal lives and become productive citizens
Community



Promotion of ethical behavior
Saved lives
Economic dynamism and growth
Freeman
Balancing Stakeholders Interests:

Vulnerability and dangers of Entitlement Society
 Utilitarian Theory or “the greatest happiness
principle”

Simple tests for resolving ethical issues
 The Jennings National Enquirer Test
 Dr. Peter Drucker’s maxim
Examples
 King
Hussein cancer center (Friedman)
 Ford
Motor Company (Freeman)
Conclusion
 Yes,
we believe that drug manufacturers have a
moral obligation to produce unprofitable drugs
 Differ
in the Reasons Why
Questions