Pharm Case Pharmaceutical Recall Case

Pharm Case

Pharmaceutical Recall Case

Casings, Inc. does not have too many defenses to this contract clause, as it was evident in the contract that they signed and it can be expected that a business the size of Casings, Inc. would have the resources to perform appropriate due diligence in reviewing the contract before signing. If they could demonstrate that this clause of the contract or the actions and outcomes it led to were in some way illegal, however, such as any collusion that might exist between Robins & Robins and the selected account firm, then Casings, Inc. might be able to assert that the outcome of this clause was invalid and thus might be able to avoid the consequences of this clause in this case and even invalidate the contract, but that has to do with the actions of Robins & Robins after the contract, and is not an inherent problem with this clause itself. Casings, Inc. could also attempt to argue that this clause is a gratuitous promise, without any consideration received by Casings, Inc. For the consideration given, however as a fairly fundamental (if extreme) part of supplier contracts -- especially in industries with a high degree of liability -- it would be difficult for them to assert that this was not a reasonable expectation for the general consideration of payment for services/products delivered under the basic terms of the contract (Radcliffe & Brinson, 1999).

Question 2

Despite the clear violation of ethical and legal principles that Robins & Robins engaged in by bribing a member of the rule-making panel (and the less-clear ethical violations of interest group manipulation and a hijacking of the public comments process), there are some very valid reasons the pharmaceutical company could argue against the retroactive imposition of this rule. First, Section 553, paragraph d of the Administrative Procedure Act states, "The required publication or service of a substantive rule shall be made not less than 30 days before its effective date," meaning even the immediate imposition of the rule and certainly its retroactive application are illegal according to the black-and-white letter of the law. Second, paragraph e of the same section reads, "Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule." An immediate (and a retroactive) application of this rule makes this right to petition impossible.

Question 3

Robins & Robins complied with all relevant laws and took actions as soon as the issue of the tainted medications came to its attention, and as such should not be deemed liable for any negligence in this situation. Casings, Inc. was trusted as a supplier of certain components of Robins & Robins and had the faith of the company at the time these components were used; it is unfortunate that a lack of consistency in their safety practices led to our product deficiencies, and we are definitely pursuing this matter with them, however this does not create negligence for Robins & Robins. In addition, the recall constitutes an expectation of substantial change before products actually reached consumers, placing it in compliance with 402A. Robins & Robins lived up to its legal and its ethical responsibilities.

Question 4

The Blanchard and Peale method of determining ethicality consists of three checks, which can be applied to both the decision to avoid the $0.35 per-package charge to automate recalls and to the "fake" recall process of the company (Lankard, 1991). First, the models asks if the action is legal, both in terms of governmental laws and company policy; the answer for both dilemmas in this case is "yes." The second test is whether the action is balanced and fair, promoting "win-win" solutions; here, the answer in both cases is more ambiguous. The additional costs of medications from the UPC rule would have been passed on to consumers, which is a "lose" to some extent even though it would promote greater safety, and the fake recall would have been win-win for consumers and the company if it had been successful, though as it ended up it was clearly a lose-lose. Finally, this model asks "how would it make me fee" or how would it reflect upon the company; here, the answer is again the same for both companies: the action were not ethical in either case, and if published in a newspaper would definitely be detrimental. The right thing to do now is apologize and make all efforts to make amends for actions taken.