Management Paper on Stakeholder Responsibilities in Consumer Protection

Question 1

In the contemporary times, the concept of workplace diversity has become increasingly popular, with most multinational organizations considering such diversity an effective approach towards sustainable business operations. The most common types of workplace diversity are those which are described as primary diversity. Primary workplace diversity is defined as the differences among workforce that are attributed to innate factors that the workers have no control over and which are time invariant. These factors include race, ethnicity, culture, gender and social and psychological characteristics. Diversity enhances the heterogeneity of the workforce. With different individual capabilities, organizational performance improves significantly resulting in better outcomes for shareholders as well as clients.

In spite the benefits of workplace diversity, there are concerns regarding the specific characteristics to include as part of workplace diversity. Lawrence and Weber (2014) emphasize that workplace diversity should only be described in terms of the characteristics that are innate. Similarly, Hudson Jr (2014), describes workforce diversity into two categories namely, primary and secondary forms of diversity. The primary diversity includes characteristics that are innate such as gender, culture and race among others. As such, illegal immigrants cannot be considered as part of workplace diversity within the context of primary diversity. While the illegal immigrants bring value into an organization, their impacts on the organization are based on differences in individual experiences and not on innate factors. One’s status as an illegal immigrant can be changed through gaining the proper documentation and/or going back to one’s native country. This therefore means that while the illegal immigrants at Chipotle helped the shareholders to gain higher profitability by virtue of their capabilities in producing Mexican foods, they did not enhance the diversity of the workforce in any way.

On the contrary, considering the concept of workforce diversity from the secondary diversity perspective would give the impression that illegal immigrants may be a cause of at least one of the primary diversities. The illegal immigrants come from different cultural backgrounds compared to the already existing employees, and may be of other nationalities, religions and even genders. The religion, gender and even culture are primary forms of workplace diversity that are recognized by Lawrence and Weber (2014), while the illegal immigrants are not a form of workplace diversity but rather a cause of it. When the illegal immigrants change their status by acquiring the necessary documentation, they may remain a part of the workforce, maintaining the cultural, ethnic, religious, gender and/or race diversities that they had introduced while still illegal immigrants. Thus, the status of illegal immigrants can be changed, but the types of workforce diversity that are created by their presence cannot be changed.

Question 2

Hiring illegal immigrants can be detrimental to the national economy in various ways. According to Maha and Maha (2010), the national economy hurts as a result of increased illegal immigrants due to the increased pressure on social resources, which is usually unplanned. Additionally, the government does not receive revenue from the taxes of illegal immigrants. For the employers however, illegal immigrants can be a source of reprieve and at the same time a cause of concern. Working with illegal immigrants is easy for employers since they have no statutory labor requirements to comply with. There remunerations are not controlled by the minimum wage in the country, and they are not under the scrutiny of the labor department. On the other hand, the employers may also lose significantly as a result of violations of the labor regulations, which can result in high legal costs. For the general public, illegal immigrants create a source of cheap competition for employment. Since every employer desires to reduce operational costs while increasing profitability, working with illegal immigrants helps them to achieve this at the expense of the legal citizens of the nation.

Part B

Section 1

The ethics of the pharmaceutical industry is one of the areas of ethics that is mostly discussed in business. Alongside ethics, the subject of social responsibility is also of significant concern in the industry. For instance, the entire process of medication testing and development is surrounded with various issues around social responsibility. The key social responsibility of any pharmaceutical company in the manufacture and distribution of any drug is to ensure that the drug addresses patient concern without causing intentional harm to the patient (Leisinger, 2005). Consequently, the process of drug testing and development is quite rigorous and eliminates any probability of intentional harm to the patient. Moreover, the participation of several entities in the process makes it sufficiently socially responsible. Based on these two factors, it is arguable that the actions of Merck in the testing and development of vioxx were socially responsible.

One of the social responsibilities of pharmaceutical companies is to ensure that drugs are effective for treating the conditions they are marketed for treating and are safe for patient consumption. To do this, the process of drug testing and development involves multiple stages. Accomplishing this responsibility culminates with the approval from the Food and Drug Administration. For Merck, this responsibility began with the identification of the need for a drug that would result in better outcomes for patients suffering from osteoarthritis through the suppression of COX-2 without any effects on COX-1. This objective was driven by years of research (running from the early 1990s to 1999), and a series of clinical testing activities in the renowned Merck lab (Lawrence & Weber, 2014). These practices indicate the company’s commitment to producing a safe effective drug for patient use. The commitment to the process is an indication of the willingness to undergo the rigor of evaluation and correction.

Another aspect of pharmaceutical social responsibility in testing and development of new drugs is the focus on customer centricity. According to Gladd (2015) drug development should be based on the awareness of an existing need among consumers, and the commitment to producing quality drugs that meet those needs. Gladd (2015) points out that a customer-centric development approach for the pharmaceutical industry reduces the time incurred to deliver products to the market and also reducing the costs of drug development. Merck worked with existing information in the industry to identify the areas of need and then focused its resources to the development of a product that would address those needs. This not only confirms the focus on the customer but also the willingness of the company to go an extra mile in investing in the satisfaction of its clients.

Merck has the policy to focus on the patients before the profits. This policy indicates the company’s commitment to fulfilling its primary objective, which was to provide a drug that would help alleviate the pains associated with osteoarthritis while eliminating the side effects experienced with conventional drugs.

Section 2

Pharmaceutical companies have ethical and social responsibilities to both shareholders and the customers. To shareholders, the primary social responsibility is to work within the confines of the available regulations while ensuring profitability to the investors. To do this, pharmaceutical companies have to operate within the scope of their mandate as per federal regulations and to collaborate with the administrative authorities such as the FDA towards ensuring full compliance. For Merck, this was achieved satisfactorily, through adherence to the protocol required for the testing and development of pharmaceutical products and realizing the company expectations of producing a blockbuster product (Lawrence & Weber, 2014). Additionally, transparency on the R&D and marketing costs could also be considered as part of the company’s efforts to perform its roles to the shareholders. Such transparency fosters planning and the allocation of resources, thus making the work of the shareholders easier by restricting it to the provision of the required resources.

From the customer perspective, the social responsibilities of pharmaceutical companies vary widely. One of these responsibilities is to ensure access to pharmaceutical products. Through an effective development of a safe product and its distribution to deserving customers, Merck addressed this social responsibility. Moreover, marketing practices have been cited as some of the ways through which pharmaceutical companies raise awareness of risks of various diseases. The opportunity utilized by Merck to advertise directly to the consumers also probable functioned as an opportunity for information. As such, the company not only satisfied the responsibility of giving patients access to a drug they needed but also ensuring that they were informed of the disease risks they faced. Additionally, the company can also be said to have acted socially responsibly with customers based on its decision to conduct internal researches on the effects of vioxx and eventually voluntarily recalling the product due to its side effects. This showed the company’s concern for patient safety and the desire to protect its consumers from harm.

Section 3

Marketing activities in the pharmaceutical sector, as in other sectors, is aimed at improving brand and product awareness and subsequently gaining higher profitability. While marketing, various social and ethical responsibilities exist that organizations have to adhere with especially when it comes to pharmaceutical products. According to Haque et al. (2013), pharmaceutical companies can use any marketing strategy as long as the advertising or marketing practices are appropriate. Inappropriate marketing entails any marketing activity that does not involve intentional use of knowledge to influence the autonomy of customers to make informed decisions regarding a drug, especially when that information relates to harm that may be caused to the user. However, Haque et al. (2013) further point out that it is the responsibility of regulatory bodies to confirm the effectiveness and appropriateness of an advertising message/technique and to prohibit inappropriate marketing from reaching consumers.

For the case of Merck, it is arguable that the company conducted socially responsible marketing and advertising for vioxx. First, the company used recommended strategies for marketing products. Haque et al. posit that marketing to physicians increases their awareness of new drugs in the market and the probability of their effectiveness in comparison to other drugs already in the market. For the direct to consumer marketing, the social responsibility lies in the opportunity for public information through the adverts. Given that advertising is the right of every pharmaceutical manufacturer since their primary goal is economic profitability. Additionally, contrary to concerns around marketing directly to customers and previous prohibitions of the act, it has been established that customers often face under-diagnosis and under-treatment as a result of their own lack of awareness of the potential risks, dangers and benefits of the drugs issued to them. Accordingly, the efforts by Merck to advertise directly to customers following authorization by regulatory authorities can be considered an act of corporate responsibility.

Furthermore, the company acted somehow contrary to its mandate to use advertising techniques that focus on profitability. This decision was in line with the company’s mission of focusing on customer treatment prior to looking at the profitability of the developed drugs. Haque et al. (2013), point out that pharmaceutical companies would not be acting unethically or in a socially irresponsible way by defocusing advertising from facts that would reduce profitability. By omitting some information from the marketing messages or even downplaying drug side effect warnings, a company does not act in a socially responsible way. This is based on the argument that a pharmaceutical company should focus on its mandate to foster profitability, and let the regulatory authorities, which should be monitoring the effectiveness of marketing practices, the safety of products and the need for additional information on drug interactions and effects, do its work. Based on this argument therefore, it would be said that the “dodge ball vioxx” initiative was not a violation of the company’s social responsibility in marketing.

Additionally, the company’s commitment to fulfill its social responsibility in marketing is seen through the decision to include warnings in the packaging as advised by the FDA and the eventual product recall in the midst of conflicting recommendations from scientists, where the majority was for the idea of keeping the product in the market with a clear warning. The combination of these factors provides sufficient evidence that the company had that innate commitment to its mission and social responsibilities in marketing even outside the conventional regulations.

Section 4

When considering the actions of Merck with respect to its social responsibility to the FDA, it is important to consider the historical relationship between the two organizations. Lawrence and Weber (2014) described past events with respect to the drug approval process by the FDA, in which complaints from the pharmaceutical companies and patients resulted in concern that the drug approval process took too long. Pharmaceutical companies where then obliged to pay a fee to the FDA annually to facilitate the hiring of new researchers and scientists in order to fasten the drug approval process. These payments have been made statutory and the fact that Merck pays them is not to be considered as an attempt at influencing the outcomes of the drug approval process. However, LaMattina (2018), reports that such payments may have an influence on the objectivity of the FDA when approving drugs manufactured by the big pharma companies that pay more. Since there is no evidence that Merck specifically did anything other than what is required by law in order to have vioxx approved, the company cannot be blamed for any socially irresponsible conduct.

Additionally, the company adheres to all the protocol in relation to the FDA. The drug approval process for instance began with the testing and development at the company labs, and was followed by submission to the FDA for further review and approval. This is the same process followed by all big and small pharmaceutical companies. Even for the product recall process, the company duly notified the FDA as is required by law, and thus fulfilled its social responsibility. When prompted to include drug warnings on the packaging following the initial concerns about the drug side effects, the company followed this direction promptly.

Section 5

Various reasons have been cited for initiating product recall particularly for pharmaceutical products. According to Nagaich and Sadhna (2015), factors such as drug mix-up and potency issues can raise concern for drug recall. Additionally, the quality of dosage and adverse drug effects could also contribute to the need to recall a product from the market. Considering the case of vioxx, there was sufficient reason for the recall and the company acted within its mandate to protect consumers to initiate the recall voluntarily. In most instances, the FDA determines the extent of potential damage that can be caused by the products prior to advising on the best course of action. In the case of Merck, the FDA had previously advised the company to include a warning relating to the adverse drug effects on the drug packaging.

The fact that the company voluntarily offered to withdraw the product from the market is an indication of the company’s commitment to its objective of maintaining patient safety, and considering the welfare of the patients’ superior to the company profitability. The voluntary efforts to conduct further research on the effects of the product through programs such as VIGOR and APPROVe, are also indications of the company’s commitment to its social responsibility to protect customers (Lawrence & Weber, 2014). The company had an opportunity to continue keeping the product in the market since the FDA had given the go-ahead to just use a warning and various other scientists, some of whom were working at Merck, had given their opinion, namely to keep the product in the market as it not only satisfied its social responsibility but also acted ethically.

References

Gladd, T. (2015, January 27). Is a customer centric strategy a fit for pharmaceutical manufacturing? Pharmaceutical Online. Retrieved from www.pharmaceuticalonline.com/doc/is-a-customer-centric-strategy-a-fit-for-pharmaceutical-manufacturing-0001

Haque, O.S., De Freitas, J., Bursztajn, H.J., Cosgrove, L., Gopal, A.A., Paul, R., Shuv-Amy, I., et al. (2013). The ethics of pharmaceutical industry influence in medicine. UNESCO Chair in Bioethics.  Ministry of Education, Israel: Publications Division. Retrieved from www.unesco-chair-bioethics.org/wp-content/uploads/2015/09/The-Ethics-of-Pharmaceutical-Industry-Influence-in-Medicine.pdf

Hudson Jr, S.W. (2014). Diversity in the workforce. Journal of Education and Human Development, 3(4), 73-82. Retrieved from jehdnet.com/journals/jehd/Vol_3_No_4_December_2014/7.pdf

LaMattina, J. (2018, June 23). The biopharmaceutical industry provides 75% of the FDA’s drug review budget. Is this a problem? Forbes Magazine. Retrieved from www.forbes.com/sites/johnlamattina/2018/06/28/the-biopharmaceutical-industry-provides-75-of-the-fdas-drug-review-budget-is-this-a-problem/#7123ca1349ec

Lawrence, A.T., & Weber, J. (2014). Business and society: Stakeholders, ethics and public policy (14th Ed.). New York, NY: McGraw-Hill Education.

Leisinger, K.M. (2005). The corporate social responsibility of the pharmaceutical industry: Idealism without illusion and realism without resignation. Business Ethics Quarterly, 15(4), 577-594. Retrieved from www.jstor.org/stable/3857979?seq=1

Maha, S.S., & Maha, L.G. (2010). The impact of illegal immigration on U.S. economy. Retrieved from www.researchgate.net/publication/48375839_The_impact_of_illegal_immigration_on_US_economy/citation/download

Nagaiach, U., & Sadhna, D. (2015). Drug recall: An incubus for pharmaceutical companies and most serious drug recall of history. International Journal of Pharmaceutical Investigation, 5(1), 13-19. Retrieved from www.ncbi.nlm.nih.gov/pmc/articles/PMC4286830/