PharmacoEthics Articles

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Pharmaceutical Scandal or not?,

The Distinction Elaborated

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For a list of other drug corporation scandals see this page

In today's media much attention is given to corporate scandals, and the misdeeds and misdealings of large corporations are a consistent source of news. Pharmaceutical companies in particular seem to have been involved in more than their share of scandals. But, not all corporate scandals are the same, and important distinctions need to be made. For example, we should distinguish between "normal" financial or public perception corporate scandals, which have plagued such corporations as Enron, and true corporate drug scandals, which companies such as Merck & Co. have been involved in. Two questions should arise when we look at a scandal involving a pharmaceutical company:

  • Was the corporation clearly acting unethically?

  • Was the health of the public involved?

Note that any corporation can potentially be involved in an ethics scandal including, most typically, scandals with financial consequences, but drug corporations may in addition be involved in scandals that involve human health. This is a type of scandal many other corporations cannot be involved in.

Below we outline a number of corporate scandals and display how they fit into a schema that categorizes scandals according to their relevance to both ethics and human health. The goal here is not to arrive at final conclusions about each of these scandals, but rather to illustrate the diversity of and differences between various scandals. Click on each company's icon to open links to news articles relevant to each scandal, and click on the "Full Summary" links to get a detailed scandal report..

 

 

Human Health at Stake?

 

 

Yes

No

 

 

Clearly Unethical?

 

 

 

Yes

Merck

 

No

The Shell Brent Spar Scandal

  • What was done by the company: Shell planned to dispose of the Brent Spar floating oil container in the deep ocean, to save money and the wellbeing of workers.

  • What was supposedly unethical about it: Greenpeace claimed the Brent Spar had more contaminants on it then Shell said, and would cause environmental damage and waste resources if dumped at sea.

    • Shell would be wrong not to dismantle the Brent Spar on shore, Greenpeace claimed.

  • What was done about it: Shell dismantled onshore, under pressure from Greenpeace, the public and new international law.

    • But, Greenpeace later admitted they inflated the figure of contaminants on board.

    • Many accept that Shell's initial plans and figures were accurate, and Shell was right to put forth the option of sinking the Brent Spar over dismantling onshore.

  • Was human health involved: No. This was an environmental and public perception scandal.

    • This scandal belongs in the not-unethical/non-human health category above.

  • Click here for full summary


The Enron Accounting Fraud Scandal

  • What was done by the company: Enron lied to shareholders and the public about profits, and consequently stock value, by setting up puppet companies to shift debt into.

  • What was unethical about it: Enron clearly deceived shareholders by lying about profits.

    • Also, investors and shareholders lost a great deal when Enron finally collapsed due to fraudulent practices, while executives such as Kenneth Lay and Jeff Skilling made millions.

  • What was done about it: Many high-ranking CEOs and executives have been indicted and are either in jail or appearing in court soon.

    • Kenneth Lay plead not guilty to charges including bank fraud, making false statements and share trading fraud, in July 2004. He awaits further trial.

    • Jeff Skilling plead not guilty to 36 charges, including fraud and insider trading, in Feb. 2004. If convicted he could face life in prison and up to $80 million in fines.

    • Andy Fastow plead guilty to two counts of wire and securities fraud in Jan. 2004. He faces 10 years in prison, and will provide information to authorities about Enron.

  • Was human health involved: No. This was a financial scandal.

    • This scandal belongs in the unethical/non-human health category above.

  • Click here for full summary


The ImClone Insider Trading Scandal

  • What was done by the company: ImClone executives and others sold ImClone stocks before the announcement that their drug Erbitux did not get FDA approval.

  • What was unethical about it: This action is considered insider trading, and is illegal and unethical.

    • It is unfair to shareholders and outside traders to use inside information to sell stocks before an important and influential announcement becomes public knowledge.

  • What was done about it: ImClone executives and family friends were indicted.

    • Sam Waksal was charged to 87 months in prison and faced fines of $3 million for charges of insider trading and fraud.

    • Martha Stewart received a five month prison sentence on charges of insider trading.

  • Was human health involved: No. This too was a financial scandal. But, it was a financial scandal involving a pharmaceutical corporation. This example displays how a drug company can be involved in scandals just like non-pharmaceutical corporations, without involving the health of the public.

    • This scandal belongs in the unethical/non-human health category above.

  • Click here for full summary


The OxyContin Epidemic

  • What was done by the company: Purdue created the drug OxyContin, an addictive opiate derivative pain killer, which was abused as a street drug by many.

  • What was supposedly unethical about it: Some say Purdue is responsible for creating an epidemic of prescription drug abuse.

    • But, many would argue that Purdue did nothing more than any drug company which would create and market a drug as a painkiller.

    • Some argue that OxyContin is a legitimate drug, which merely got out of hand for many reasons and due to many agents.

  • What was done about it: Many professionals have taken up the cause of informing doctors, patients, the public and addicts of the dangers and legitimate uses of OxyContin.

    • Some advocate that OxyContin be restricted to only severe cases of pain relief, but still be available as a prescription drug.

  • Was human health involved: Yes. Many patients who shouldn't have been prescribed OxyContin became addicted, and many people acquired OxyContin to sell it on the street, making addicts of non-patient drug users.

    • This scandal belongs in the not-unethical/human health category above.

  • Click here for full summary


The Paxil Scandal

  • What was done by the company: GSK purportedly lied about the effectiveness and safety of their drug Paxil. Some claim it was ineffective in adolescents, and may have resulted in higher suicide rates among some users.

  • What was unethical about it: Fraud and misinformation.

    • Drug companies have a responsibility to provide only drugs which are safe and as effective as the company reports.

    • Also, pharmaceutical corporations should be transparent about the safety of products, and patients should be informed of any dangers associated with a product.

  • What was done about it: A civil lawsuit was filed in New York, claiming GSK committed fraud by misrepresenting studies of Paxil. The suit was resolved in Jan. 2002, but details of the resolution were not made public.

  • Was human health involved: Yes. If the claims about Paxil are true, then some patients were at a higher risk of suicide because of a drug they potentially didn't require.

    • This scandal belongs in the unethical/human health category above.

  • Click here for full summary


Merck: The Vioxx Recall

  • What was done by the company: Some claim Merck ignored findings in studies reporting that use of their drug Vioxx resulted in an increased risk of heart problems, potentially resulting in 27,000 unnecessary heart attacks.

  • What was unethical about it: Merck had a responsibility to research their product fully, and inform the public of potential dangers, or even not release the drug at all if it was too dangerous.

    • Instead, they ignored negative findings, and marketed Vioxx anyways.

  • What was done about it: Vioxx was quickly pulled from the market, but some would say it was done too late.

  • Was human health involved: Yes. Many unnecessary heart attacks occurred if Vioxx was in fact as dangerous as some would claim.

    • This scandal belongs in the unethical/human health category above.

  • Click here for full summary


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