BUSINESS ETHICS

V.Varun Kumar 1226110242 MBA-IB, Sec-B Pharmaceutical company admits to lying about the health risks of its drugs:
A major prescription drug company in the United States has admitted to making misleading claims about the safety of its products. The company failed to include important information about hypoglycemia and diabetes, and promoted its drug as being safer than other anti-psychotic drugs. The FDA has issued a warning letter to the company, telling them to comply by including the information regarding hypoglycemia and diabetes, and by avoiding making such unproven claims. This is for a drug that is prescribed to over 10 million people around the world, and generates $2,000,000 in annual sales for this prescription drug company. What's interesting about this case is that it's just the tip of the iceberg. We see a lot of corruption in the drug industry, and a lot of questionable tactics they use to sell more drugs. Some pharmaceutical companies have been caught burying the results of negative clinical trials; other have been caught distorting clinical trials, and yet more companies have been caught outright bribing physicians in order to get them to prescribe more prescription drugs to patients. So, in comparison, this violation of omitting health safety information about hypoglycemia and diabetes seems relatively minor. But, when you add it all up, it paints a fairly clear picture of an industry that is extremely corrupt, and will do practically anything to generate more profits, including compromising the health of the public. The FDA, for its part, typically ignores safety concerns of pharmaceutical companies, and seems to work to actually protect the pharmaceutical industry rather than protecting the public health. But, in this case, the FDA seems to be doing the right thing by demanding that this pharmaceutical company avoid engaging in this misleading activity. Now, another thing that's interesting here is that if a misleading health claim were made on the product label of a natural product, such as a nutritional supplement, the FDA would typically raid the company's warehouse and confiscate the products, wiping out that company's

inventory. However, when a pharmaceutical, such as this schizophrenia drug, is being manufactured and marketed with misleading claims, that company only receives a warning letter from the FDA. Their inventory is not confiscated, their company headquarters is not raided by FDA agents, and the company is generally allowed to continue doing business. This is an interesting contrast in the way the FDA treats natural products versus prescription drugs. In the case of natural products, herbs, or nutritional supplements, the FDA seems determined to use its maximum enforcement powers to pressure those companies, and if possible, harm them financially. But when it comes to the prescription drug industry, the FDA seems to be fine with sending warning letters and letting the company decide on its own when or if it wishes to comply.

Drug companies engage in massive health care fraud, but are never held accountable:
U.S. pharmaceutical companies are finding clever ways to avoid the consequences of a 1996 law that mandates their exclusion from federal health care programs such as Medicare and Medicaid if they are convicted of felony health care fraud. According to news reports, since 2001 at least four major drug companies have been convicted of felony health care fraud but have been able to avoid the penalty of being banned from government health programs by constructing creative settlements with prosecutors. In one case, a guilty plea was offered by an inactive subsidiary of a major pharmaceutical company that has no employees and sells no products. Even though this subsidiary pleaded guilty, and it alone cannot sell products to Medicare and Medicaid, it never sold any products in the first place, and its parent company is free to continue selling products to the federal government without any real consequence. Another company, Pfizer's Warner-Lambert division, agreed to $430 million in fines due to its alleged fraudulent marketing of the drug Neurontin. The company claimed that it was illegally marketing that drug only through August 20, 1996. The new law kicked in on August 21, 1996, and that's the day Pfizer claimed it stopped illegally marketing the drug. The bottom line is that these pharmaceutical companies are structuring their fraud settlements with the federal government in order to avoid exclusion from federal health care programs. It's not that the law has taught them to stop committing fraud -- it's just that the law

has forced them to get more creative in finding ways to simultaneously commit fraud while continuing to sell products. So what does all of this mean? It means that the pharmaceutical industry is engaged in business as usual. They will go after profits using any means necessary, including fraud, criminal activities, deceit, lying to the public, hiding information from the FDA, bribing doctors, and so on. Regrettably, there are no consequences for these actions -- it's as if the entire nation has given the pharmaceutical industry an unlimited stack of "get out of jail free" cards and told them they could engage in any practices no matter how criminal or unethical, as long as they keep making money. Part of the problem here, of course, is that many U.S. citizens remain invested in pharmaceutical companies. Virtually every mutual fund has some stock in at least one pharmaceutical company, and people seem to be quite pleased with the idea that they're making money, regardless of how many other people are being killed by pharmaceuticals or harmed by their dangerous side effects. But this is a choice that American consumers have to make on their own. Yes, you can make money by being invested in a company that sells extremely profitable, ridiculously priced products to the public, even when those products cause untold harm, but as a whole, we are not better off, and until we start holding pharmaceutical companies accountable for the death and destruction they are causing, and until we stop being so greedy that we will look the other way as long as we're making a buck, then this situation will not change.

Kellogg's ships mercury batteries inside boxes of childrens' breakfast cereal:

What could have prompted Kellogg's to take one of the most toxic heavy metals known to mankind and intentionally place it inside boxes of childrens' breakfast cereal? Even worse, Kellogg's has refused to pull the boxes from store shelves in Maine. Why? Kellogg's has to put something in the box to justify a $4 price tag for a bag containing twenty cents' worth of ingredients. The batteries alone are more expensive than the cereal. The problem is that they're also an environmental hazard. The federal government should ban mercury batteries in all toys and novelty items marketed to children, NRDC (Natural Resources Defense Council) and the Mercury Policy Project said today. Their call for immediate government action came on the heels of news that the Kellogg Co. had included a promotional

Spiderman toy containing a mercury battery in a number of its cereals, including Frosted Flakes, Rice Kris pies and Apple Jacks. "Superheroes are supposed to protect children, not harm them,"

The Spiderman toy contains two button cell batteries, and the cereal boxes do alert consumers that the batteries contain mercury and should be disposed of "properly." NRDC tested two of the batteries and found that they contained small quantities of mercury that were below the legal limit in concentration. Even so, NRDC says it is an unnecessary use of mercury that could harm public health when the toy is discarded. Like lead, mercury is a potent neurotoxin that threatens the brain and nervous system and is especially harmful to women and children. NRDC and the Mercury Policy Project pointed out that mercury pollution is widespread -- and much of it could be reduced significantly. "Most of the mercury used in consumer products could and should be eliminated". References: 1. Press release, NRDC (natural resources defensive council), (July 15, 2004). 2. http://www.naturalnews.com/001502.html. 3. http://www.naturalnews.com/001867.html.
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