Subject Name & Subject number
Assessment 01- Pharmaceutical Sector
Name and Index Number
Name of Lecturer
Word Count
TABLE OF CONTENTS
1.Introduction to the selected industry ....................................................................................... 5
2. Ethical Issues within the Pharmaceutical industry................................................................. 6
3. Contextual Analysis ............................................................................................................... 6
4. Stakeholder Analysis ............................................................................................................. 7
5. Normative Ethical Theories ................................................................................................... 9
5.1 Consequentialist Theories .............................................................................................. 10
5.1.1 Utilitarianism ........................................................................................................... 10
5.1.2 Egoism ..................................................................................................................... 11
5.2 Non Consequentialist Theories ................................................................................... 11
5.2.1 Ethics of Duty .......................................................................................................... 11
5.2.2 Ethics of Rights and Justice ..................................................................................... 11
6. Virtue Ethics theory ............................................................................................................. 12
7. Triple Font (TFT) Theory .................................................................................................... 12
8. Recommendations & conclusion ......................................................................................... 14
References ................................................................................................................................ 15
ABBREVIATIONS & DEFINITIONS
FDA-Food and Drug Administration
GSK-GlaxoSmithKline
WHO-World Health Organization
TFT- Triple Font Theory
LIST OF FIGURES
Figure 1 : World top 10 Pharmaceutical companies .................................................................. 5
Figure 2 : Medlow’s Matrix ....................................................................................................... 7
Figure 3 :Stakeholder Analysis .................................................................................................. 8
Figure 4 : Normative Theories ................................................................................................. 10
Figure 5 :Triple font theory...................................................................................................... 13
1. Introduction to the selected industry
The pharmaceutical industry has been selected for the purpose of analyzing the ethical
practices and ethical issues within the current business context. Ethics are about what is right
or wrong behavior (Salehi et al, 2012). Ethics are considered as systematic reflections of
values, norms and moral views. Compared to other industries pharmaceutical industry face
many issues compared to other industries. Different organizations like World Medical
Association introduced code of ethics with the intention of avoiding unwanted competition
and dealings (Robertson et al, 2007). The world pharmaceutical industry revenue in 2022 is
1.48 trillion U.S. dollars (statista, 2023). Within the world top ten pharmaceutical companies
Pfizer hold the market leadership and its revenue in 2022 is 100.33 billion U.S. dollars. Other
competitors are abbive, Johnson and Johnson, Merck etc (Burke, 2023). Within the world
pharmaceutical market, the investments in Research and Developments indicated an
increasing trend mainly due to the spread of Covid-19 pandemic.
Figure 1 : World top 10 Pharmaceutical companies
Source: (Burke, 2023)
2. Ethical Issues within the Pharmaceutical industry
Illegal practices and bribes
The pharmaceutical industry is highly subject to manipulations, bribes using the confidential
information within the market to achieve profitability targets. The pharmaceutical companies
give high level of priority for the achievement of profitability targets (Fortune, 2016).
GSK paid $ 3 billion for criminal liability incident since they have promoted certain
prescription drugs without revealing safety data (justice, 2012).
Lack of investments in Research and Developments
Using the existing patent rights pharmaceutical companies are earning high profits.
Companies are reluctant to develop new drugs since new drug approval within the market is
highly expensive and challenging. Companies are reluctant to invest in R&D due to failure of
getting substantial profit margins, unprofitable to invest time etc (Malavige, 2004). Pfizer one
of the top pharmaceutical companies within the market earned $ 22 billion profits by only
spending $ 6.6 billion for research and developments (Thomas, 2017).
Lack of clinical trials and testing
As a result of presenting false drug testing data results presentation Sun Pharma India and
Nvartis Japan were under the FDA radar (Pharma manufacturing, 2016). Due to the profit
making motive pharmaceutical companies are releasing machines within out testing and
clinical trials.
3. Contextual Analysis
To analyses the normative theories author has selected illegal practices and bribes according
to the Sri Lankan pharmaceutical industry. In Sri Lanka, the health industry manipulate the
procurement procedures and get low quality drug items to make profits and obtain
commissions rather than focusing on the health standards of people (Abeyratne, 2023).
4. Stakeholder Analysis
Stakeholders are parties who are influenced by the organization and parties who can create
influence on the organization (Ghosh and Jhamb, 2022). Stakeholders can be categorized as
internal stakeholders and external stakeholders. In order to analyses the stakeholders it is
appropriate to use “Medlow’s Matrix” to identify their level of interest and power.
Figure 2 : Medlow’s Matrix
Source: (accountancyindex, 2023)
Figure 3 :Stakeholder Analysis
Source: (Arpedio, 2017)
Employees
Employees are internal stakeholder category who is attached to the pharmaceutical
companies. Due to the unethical business practices and illegal procedures there might be an
employee resignations and laying off of employees to reduce the cost within the Sri Lankan
pharmaceutical industry. In terms of power and interest employees are having low power and
low interest. Thus it is appropriate to keep minimal effort on them.
Government
Government is having high power and high interest over the illegal practices and drug
manipulations. In 2016, to regulate the pharmaceutical industry, the government introduced
drug policy (Malavige, 2004). The government also can take court actions; impose penalties,
fines for the manipulations and illegal practices. Therefore government acts as a key player.
Customers
Within the healthcare industry customers are the patients who take medicines and treatments.
Due to the corruptions and unethical practices the patients will take legal actions against the
companies. Offering of high quality drugs at reasonable prices help to increase the health
levels of patients and reduce the side effects.
Recently within Sri Lanka, there were many cases reported due to low quality drugs. The
customers are having high interest and low power. Therefore it is very important to keep
informed on them.
Regulatory Authorities
One regulatory authority is World Health Organization (WHO), which is a specialized
agency of the United Nations to deal with the health issues in global terms. They are
monitoring and taking actions to eradicate corruption from the public health sector in each of
its member nations. In an effort to be proactive, the WHO has created policies and guidelines
that support accountability, openness, and sound governance in healthcare systems. The
group also supports the development of strong anti-corruption procedures and policies in the
health systems of its member nations (Abeyratne, 2023). Therefore the regulatory authorities
are having high interest and high interest. Therefore it is important to keep satisfied and
adhere to the regulatory practices and guidelines.
5. Normative Ethical Theories
The actions can be taken to avoid corruptions and illegal practices within the pharmaceutical
industry analyzed using normative theories.
Utilitarianism
Consequentialist Theories
Egoism
Normative Theories
Ethics of Duty
Non Consequentialist Theories
Ethics of Rights & Justice
Figure 4 : Normative Theories
Source: Author's work
5.1 Consequentialist Theories
5.1.1 Utilitarianism
Utilitarianism is about the actions that create happiness or pleasure than the actions which
create harm or unhappiness (Tardi, 2023). According to the ethical issues identified the
involvement of briberies and manipulations result to create happiness for pharmaceutical
companies by increasing their profitability, reducing cost. According to the utilitarianism
approach it is required to create happiness for greater number of people. However, it is
disadvantageous for the patients and quality level of the health system of Sri Lanka. Low
quality medicines and drugs result to create negative consequences and dangerous results like
death. Therefore the current practice is not in line with the utilitarianism.
5.1.2 Egoism
This is about taken actions taken by each person to achieve their rationale of self-interest
(Tibor, 2013). The purchasing of low quality drugs result to increase the profitability of the
individual companies and in return it will create disadvantages for patients and general
public. Considering the impact the society as a whole the getting of pharmaceutical items at a
lesser cost which are having low quality will result to create harm to the society as a whole.
5.2 Non Consequentialist Theories
5.2.1 Ethics of Duty
Ethics of duty refers to an action's guiding principle ought to be something that everyone can
adopt, regardless of their own preferences, social connections, or environment. (Robertson et
al. 2007). The use of illegal methods and briberies to purchase drugs is against the ethics of
duty. Even though it fulfil the desires on individual companies it create negative effect to the
society as a whole.
5.2.2 Ethics of Rights and Justice
Theory of Rights:
Rights are created by society, are always upheld and of the utmost importance, and are
deemed moral since they are supported by a wider group of people (Chonko, 2016). Every
patient in Sri Lanka is have a right to get the treatments from public health and they have a
right to get medicines with good quality to cure their diseases. Therefore it is unlawful and
unethical to create briberies and illegal actions in the process of purchasing medicines. This
indicated that the right of the human’s has been ignored in this process.
Theory of Justice:
According to justice theory, judgements should be made with fairness as their primary
consideration (Chonko, 2016). The conducting of bibaries and illegal actions at the time of
purchasing pharmaceuitical items is not inline with the theory of justics since it create greater
harm to the society at a large. Eventhough it is benefitical for the pharmacuitcal companies in
short run it create negative consequences in the long run like reputational damanges, legal
fines, restrictions, legal cases etc.
6. Virtue Ethics theory
Virtue ethics theory use to judge the behavior of people base on the character, rather than
normal behavior. This theory consider the morale, reputation, motivation in order to consider
any unusual and abnormal behavior to be decide as unethical behavior. (Johan, 2002).
Normally the pharmaceutical companies are profit oriented companies even though they are
contributing to create the wellbeing of humans. Therefore it is unethical to deliver low quality
drugs and conduct bribery activities by manipulating the procurement procedures.
The government is having virtue to reduce the prices of drugs and create affordability for
people to buy drugs. However, it is unethical to import low quality drugs and conduct illegal
procedures to get the drugs with lesser prices. The government, pharmaceutical companies
have virtue to act trustworthy, compassionate and honest manner (Lyon, 2021).
7. Triple Font (TFT) Theory
According to the Triple Font Theory (TFT) morality determined based on Moral objects,
intention and circumstances and consequences.
• The moral object will be determined via the
Moral Object reality of actions expected to achieve (Arjoon,
2006)
• Individual motives on good or bad conduct
Intention (Arjoon, 2006)
• Moral evaluation required to focus on the
Circumstances & situation where the action happed and imact of
Consequences that actions towards the goodness of the action
(Arjoon, 2006).
Figure 5 :Triple font theory
Source: Author's Work
The moral object behind the conducting of illegal practices and bribes is to increase the
profits and obtain commissions. Therefore the morale object is unethical and it creates both
short term and long term implications.
The intention of pharmacutical companies is to be good corporate citizens by adhering to the
government rules and regulations. However, in case of bribes and illegal practices the
intention of pharmaceutical companies is unethical. The intention is to increase the individual
profits and achievement of money making targets without considering the effect on the
patients and their lives.
Consequences create as a result of actions taken. Circumstances and consequences of action
include increase of death rates, increase customer resistances, increase of laws and regulatory
compliances. For example as a result of briberies and illegal practices within the Sri Lankan
health care industry government passed Anti-Corruption Act aiming to aligning governmental
policy with UNCAC guidelines and practices (Abeyratne, 2023). Furthermore, it will result
impose penalties by the WHO and take legal actions for the parties who involved in unethical
business practices. In the long run there is a risk of withdrawing the investments made my
foreign direct investors in Sri Lanka due to bad and unethical practices due to high level of
profit motive and lack of regulatory compliances.
8. Recommendations & conclusion
Educate medical students and doctors by conducting seminars and
discussions
In order to avoid the prescribing of low quality drugs to create commissions and increase
individual benefits it is very important to conduct seminars and discussions for doctors and
medical students to explain and educate them towards the prescribing quality drugs. It is
required to explain and educate them on value of following code of conducts and create
wellbeing of humans for the creation of long term sustainability.
Continuous monitoring and increasing of regulatory compliances
It is required to continuously monitor and increase the regulatory compliances to avoid the
manipulations of procurement procedures, illegal import procedures to avoid the import and
usage of low quality drugs. The implementation of modifications to national health policy,
continuous spot checks, increase regulatory compliances, take legal actions against the
companies who engaged in unethical practices will facilitate to reduce the unethical business
practices within the pharmaceutical industry and create long term sustainability
(Siyambalagoda, 2016).
Entering to agreements with global pharmaceutical suppliers
It is essential to enter into agreements with global pharmaceutical companies to import
quality drugs and create benefits to the humans by creating low level of side effects by
facilitating drugs at a lower cost.
The world pharmaceutical industry is having a high level of profitable industry segment and
pharmaceutical companies are becoming profit oriented companies rather than creating social
wellbeing. The government and other regulatory bodies are having genuine intention to
reduce the prices of drugs. However, conducting of bribes and following of illegal practices
like manipulation of circulars, procurement procedures with the intention of making profits is
unethical. This ethical issue has been discussed in this report using ethical theories namely
normative theories, Triple Font (TFT) theory and virtue theory. Finally the recommended
solutions and actions are given to avoid the unethical business practices and improve the
health and wellbeing of humans while creating long term sustainability. (Mehrdad Salehi,
2012).
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