Ethical and regulatory issues with unapproved AD23 drug marketing

¶ … Intellectual property Theft and Ethical Issues with Reference to AD23

Benson Anderson

Ethical and Intellectual Property Issues Related to AD23 Drug

This memo discusses the ethical and intellectual issues related to the AD23 drug produced by PharmaCARE despite that the drug has been identified as one of the primary causes of cardiac disease linking to over 200 cardiovascular deaths. While the PharmaCARE and CompCARE management are aware that the drug is one of the major cause of many deaths, however, the management of the companies continue marketing the drug directly to customer leading this memo to question the ethical issues regarding this drug.

Ethical issues related to AD23 Advertising, Marketing, and Regulation for Product Safety

The memo attempts to identify and discuss different ethical issues surrounding the marketing of the AD23 drug since the re-modification of the drug has not yet been finally approved by the FDA (Food Drug Administration). Typically, the PharmaCare has established a partnership with the CompCARE to avoid the scrutiny of the FDA using the CompCARE as a compounding pharmacy to sell the drug to people on a prescription basis. Selling drugs to people without the FDA approval is illegal in the United States; moreover, the AD23 drug has caused an untold death to more than 200 people because it is one of the major causes of cardiac attacks. The FDA (2011) regulation mandates that all pharmaceutical companies have their drugs approved by the FDA to ascertain they are both effective and safe prior to marketing. Essentially, the FDA's approval process is to ascertain the strength, purity and quality of a drug before it is approved. By selling the AD23 without the FDA authorization, PharmaCARE has broken the FDA's rules. Over the years, the FDA has shown serious concerns about the drugs companies that market their drugs illegally without authorization. (FDA, 2011). The agency also asserts that

"the manufacturers of unapproved drug products have not received FDA approval and do not conform to a monograph for making over-the-counter (OTC) drugs. The lack of evidence demonstrating that these unapproved drugs are safe and effective is a significant public health concern" (FDA, 2015 p 1).

Thus, selling an unapproved drug raises the ethical question of the AD23 marketing process. Apart the PharmaCARE facing the risk of being prosecuted by the FDA for breaking the agency's rules and regulation, the company also faces the risk of paying the damages to the families of people that the AD23 has killed. Moreover, the agency considers a drug unsafe until it has been scrutinized and proven safe for the public. Additionally, the FDA will allow the drug to pass through the clinical trial with the goal of collecting as much evidence as possible before allowing it to be used by the public. Despite the laid down of the FDA protocols, the PharmaCARE does not submit the AD23 drug for the clinical trials before selling the drug by the DTC (Direct-to-Consumer) strategy. However, the DTC marketing of drug has been a subject of a great controversy because it is associated with direct product-to-consumers, public relations events, and ghostwriting. (Liang, & Mackey, 2011).

Greene & Herzberg, (2010) argue that the OTC marketing is in sharp contrast to the ethical pharmaceutical advertising since many pharmaceutical companies use the OTC strategy to market their drugs. Essentially, the OTC drug approval process plays an essential role in enhancing the effectiveness and safe drug use. Thus, PharmaCARE lacks the required approval to market the product in accordance with the FDA marketing process. Moreover, an increase in the marketing of non-FDA approved drugs has raised a concern of public health professionals making the government make regulations using the "Pure Food and Drugs Act" (George, & Stephen 2008 p 163) to prevent a fraudulent claim of strength, quality and purity of drugs as well as promoting the ethical drug promotion. By selling the non-approved drug to the public, the CompCARE has broken the FDA Modernization Act used to regulate the safety and ethical marketing of the drug in the United States. (George, 2005).

Apart from violating the FDA regulation, the PharmaCARE has not owned the intellectual property concerning AD23 re-modification since the FDA has not yet approved the drug. The IP (intellectual property) refers to a situation where an organization holds a monopoly on a product. Before an organization can claim to have the IP on their products, the government should approve the product. Since the government has not yet approved the AD23 drug, the company cannot claim an IP right on the drug. Any company can produce a similar drug, and if approved by the government, they will be the first company to claim the IP on the AD23. It is essential to realize that the goal of IP law is to protect the drug from copying. While IP law is to protect the company rights over their product, however, the PharmaCare has not yet taken the advantages of the IP law to protect their drug from copying. While the PharmaCare might have enjoyed the IP right on other products, violation of the FDA rules can make the company losing the IPs that it has enjoyed over the years.

Argument against or for DTC (Direct-to-Consumer) marketing by Pharmaceutical Companies

The direct-to-consumer advertising strategy for the pharmaceutical product has grown significantly in the last few decades because the DTC has become a prominent method for health communication. While the DTC is both detrimental and beneficial to the public, however, the argument in favor and against the use of the DTC is fairly balance. Ventola, (2011) defines the DTC as an advertising technique used by the pharmaceutical companies to promote their drugs directly to patients. (Parnes, Smith, Gilroy, et al.2009).

"Supporters of DTC argue that the DTC educates patients and allows them to take charge of their health. In the U.S., it is thought that informing consumers will benefit the drive for health care reform. Consumers can also benefit from having access to multiple information sources about drugs and other treatment options rather than relying solely on health care providers." (Ventola,2011 p 672).

The United States and New Zealand are the only advanced countries that allow the drug companies to use the DCT to market their drug. Many drugs companies use the "reminder ad" to elaborate product name, the strength of the drug, price and dosage form. The DTC channels include the internet, radio, print (newspapers, magazines) television and radio as the marketing strategy. In the United States, the DTC has become an effective promotional tool to boost the sales of the prescription drug. Many companies take the advantages of the DTC channel to sell their product directly to consumers without providing a proper education concerning the effect of the drug. (Shaw, 2008).

Thus, many pharmaceutical companies have been able to save the costs of the advert by selling directly to consumers. Using this strategy, the pharmaceutical companies are able to reduce the promotion costs. Thus, the promotion strategy has enhanced the explosive growth of the DTC making the drug companies to spend over $4.2 billion on DTC promotion in 2005. The increasing popularity of the DTC has tried to replace the traditional physician drug prescription disallowing the "egalitarian consumerist model of health information." (Greene & Herzberg, 2010 p 793).

Lack of ethical consideration with regard to the DTC has been one of the shortcomings of the drug promotion strategy. Essentially, selling the drug directly to the consumer without the physician prescription is not ethical because some drug companies hide the health effects when advertising the drug to the consumers. George & Stephen (2008) point out that the DTC has been widely criticized because of the ethical issues surrounding the marketing, production and prescription. (Donahue, & Cervasco, & Rosenthal, 2007).

Moreover, the DTC has increased the prices of drugs because the cost of the drug promotion through DTC is high. To recover the cost incurred from the advert, the drug companies increase the drug prices making consumers bear the burden. The DTC has also altered the conventional traditional patient-physician relationships. When consumers view the DTC advert, they may be convinced that the advert will remove their illness. By consequence, the DTC has promoted the self-diagnosis where consumers purchase drug without physician prescription, which may be harmful to consumers. The DTC promotion can also lead to overuse of drug. For example, the DTC promotion has led to Vioxx's overuse. The Vioxx is one of the products produced by the Merck and Co, and the side effect of the drug is that it provokes the cardiovascular risks if used by people other than people suffering from arthritis. In 2001, the Merck and Co. have spent more than $296 Million on the DTC promotion making many consumers purchasing the Vioxx to overcome the arthritis complications. Despite the benefit associated to the Vioxx, the drug has aggravated the cardiovascular complication of the patients because of its overuse. Merck & Co needs to recall the drug because the drug has been identified as one of the major cause of the cardiovascular risk.

Parties Regulating Compounding Pharmacies in the Current Regulatory Scheme

The different state governments in the United States regulate of the compound pharmacies create the State Board of Pharmacy. While the federal government plays a critical role in regulating the U.S. compound pharmacies, however, the board in the various states regulates the quality and production of the compound pharmacies. At the federal level, the FDA (Food & Drug Administration) is responsible for the safety and quality of drug production. Moreover, the FDA scrutinizes a drug before it is finally approved. However, PharmaCARE can be liable to a legal consequence because the company has not allowed the AD23 to pass through the scrutiny of the state board of pharmacy and FDA. In essence, the PharmaCARE has broken the rules and regulation of the agency because the AD23 not been securitized before being put for the DTC promotion. Apart from the legal consequence from the FDA, the state or federal courts can ask the PharmaCARE to pay for the damages caused by the AD23.

"Analysis PharmaCARE can use the Laws to Protecting their Intellectual Property & John true Claim to the AD23's Invention

The IP consists of the intangible rights that an inventor enjoys in order to protect their valuable product and services. The goal of IP is to protect the product invented or produced and prevent another company from copying the product. In the United States, different companies spend several millions of dollars through the R & D (research and development) to produce particular products. Thus, the company that produces this particular product will enjoy IP rights on the product to prevent other companies from copying the invented product. Common types of IPs include copyrights, trademarks, patent, and trade secret. However, the PharmaCARE enjoys the IP rights on the AD23 If the drug has been approved by the FDA. Apart from the protection enjoyed from the AD23, the PharmaCARE also enjoys the IP rights on all other approved products that the company has produced.

John was one of the employees of the PharmaCARE, and had participated in the development of the AD23 through research and development. Moreover, John had participated in the re-modification of the AD23 to avoid the FDA scrutiny. However, John cannot claim to be an inventor of the AD23 since he was an employee of the company, and used the facility of the PharmaCARE to develop the drug. Moreover, John cannot claim to be the sole owner of the invention because his employment contract did not specify that he should enjoy a sole IP right if inventing a drug within the company facilities. However, if the employment contract allows John to own the IP rights for the drug produced, John will be able the sole inventor of the drug developed.

Method PharmaCARE to Compensate John for the IP use

The PharmaCARE can use different strategies to compensate John for his IP use. The company may compensate John with thousands of dollars to encourage other researchers assisting the company developing new products. The PharmaCARE may also offer shares to John since the company share's value has increased to $300. The company can also allocate John 1% of the profits earned from the new drug developed.

"Current example of IP Theft, and Impacts on the Company's Brand."

A recent case regarding the IP theft was a case between the Changhong and Microsoft Corporation. The Changhong is an Asian Companies and has some subsidiaries in the United States. The Microsoft sued the Changhong accusing the company of illegally using the Microsoft product key without authorization to activate the Microsoft software such as Microsoft Office and other IP product of the Microsoft Corporation. In 2013, the Microsoft claimed that its product keys were stolen and illegitimately being used. Over the years, Microsoft has suffered massive IP thefts both in the United States and outside the United States. Several private and public organizations have been accused of the IP thefts of the Microsoft protected IP products making the company losing part of their revenue. In the case, several public and private organizations have been involved. Some public universities have also been implicated in the case. The Microsoft claimed that Changhong activated the Microsoft product with the stolen keys 2000 times making the company losing millions of dollars.