Business organizations must apply legal policies and ethical considerations when performing their marketing activities. Legal policies are the constituted laws by the government, which control an organization’s marketing activities. These are mainly aimed at safeguarding and protecting the safety of the consumers. Ethics on the other hand, represent the stipulated code of conduct by which the activities of the company are expected to abide. Ethical issues are caused by disagreements that arise in the course of the advertisement and marketing process. These can be caused by customer in-satisfaction as a result of poor qualities or quantity of products. Some issues on the other hand, arise when companies do not follow the stipulated laws that govern the marketing and advertisement of goods. Market audience is an ethical issue that affects a firm. Firms are expected to market their goods to their selective audiences, who make up their target group. Market audience selection protects consumers from the consumption of goods, initially not intended for their consumption depending on age, gender or even cultural values (Boundless, 2016). CompCARE for example, began advertising AD23 directly to consumers and marketing the drug directly to hospitals, clinics, and physician offices, even though compounding pharmacies are not permitted to sell drugs in bulk for general use. The company violated the marketing audience in their marketing and advertising policies. Deceptive advertising is also an emerging issue that had affected legal and ethical marketing considerations. Companies violate ethics by marketing goods that do not offer the utility and satisfaction mentioned. Consumers end up therefore, consuming the right products for the wrong purposes. PharmaCARE’s research indicated that AD23 might also slow the progression of Alzheimer’s disease. The company therefore, decided to use the drug in slowing down Alzheimer’s disease instead of using it for the purpose which it had been originally manufactured for. Consumption of AD23was later linked to cardiac arrest because of the deceptive marketing and advertising techniques adopted by PharmaCARE.
Delivery channels both in marketing and advertising are controversial issues that affect legal and ethical marketing considerations. According to Boundless (2016), companies are expected by law to adopt the right advertising channels, aimed at creating awareness only to their intended target group. Companies should determine whether their product should be advertised using television commercials or direct mails. These channels determine the audience affected by the advertisements (Chandran & Stanton, 1979). CompCARE began advertising AD23, directly to consumers, and marketing AD23 directly to hospitals, clinics, and physician offices. This was a violation of legal and ethical considerations as the drug was sold directly to consumers. This is because, the sale of AD23 in bulk for general use, is prohibited by the laws of drug marketing. Many companies have thus adopted anti-competitive practices of marketing and advertising with an aim of maximizing profits. Some of these anti-competitive practices include advertising goods at cheap prices and then later raising their prices, designing products which has a limited utility period for repeated purchases, and marketing a similar product under a different company’s name and also, offering the product at lower prices like in the case of PharmCARE. The company marketed AD23 under the name of CompCARE in order to avoid Food and Drug Administration scrutiny. All these illegal and unethical forms of marketing and advertising are not only harmful to the consumer, but are also a limitation to the company’s success (Goltz & Neufeld, 1992). Consumer’s safety is often put at risk by illegal marketing practices. The company’s reputation also suffers as a result of the same. This could lead to failure of the company in the long run if caught up by the law.
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Direct to consumer marketing and advertising is a technique used by pharmaceutical companies in selling their products directly to consumers. This method differs from the usual administration of medicine, which has for a long time, been the role of medical practitioners in hospitals and other health care facilities. In the United States, this method of advertising is regulated by the Food and Drug Administration. There is need for its regulation because, direct to consumer advertising of pharmaceutical products has increased the rate of medicine prescriptions by 34.2% (Food and Drug Administration, 2016). There has been an increase in the use of direct to consumer method of advertising. This method has affected different patients in diverse ways. In order to ensure consumers efficiently understand the risks and benefits associated with a specific drug, direct to consumer advertising should be monitored and regulated with an aim of decreasing and eventually, calling an end to it. Direct to consumer advertising makes patients uncomfortable during their treatment process. This is because, a patient is offered a variety of different drugs, each one of which promises to return the best returns. Patients thus, become confused as to the type of medication that they should settle on. They end up consuming different drugs for the same problem, not completing an earlier started dose, and asking a lot of questions whenever they visit a medical practitioner. According to Weissman (2003), the direct to consumer advertisers often don’t disclose all of the risks associated with the consumption of a specific drug. This is aimed at increasing sales and maximizing profits. With poor knowledge about the risks associated with a drug, patients suffer from any associate side effects in silence, unaware of the causes of their problems. Despite the availability of direct to consumer drugs, patients should understand the importance of consulting healthcare professionals before medical drug use. This enhances the patient’s awareness of the whole treatment process for a good recovery process. I therefore discourage the use of direct to consume advertisement of pharmaceutical products.
Through drug compounding, licensed pharmacists combine and mix the ingredients of a specific drug or medicine in order to alter its concentration and purpose. This is often done by pharmacists with an aim of tailoring the drug to meet the needs of a patient whose infection cannot be alleviated by drugs approved by the Food and Drugs Administrations. These compounded types of medicine are thus, not approved by the FDA, therefore, the degree of safety measures involved in their consumption highly depends on the pharmacist. The safety and effectiveness of these drugs is thus, determined by bodies who regulate the compounding of drugs and the general manufacture of products. These bodies include the Federal quality standards, which is tasked with the general safety and quality measures of all products manufactured for consumption in the United States. Pharmacies are also frequently monitored and regulated by the State Board of Pharmacy. The operations of the State Board of Pharmacy, who perform their roles as stipulated by the Compounding Quality Act are however, under the regulations of the Food and Drug Administration. In the case of PharmaCARE, the company had violated the Compounding Quality Act by establishing a subsidiary company, called CompCARE, and avoiding the scrutiny of the Food and Drug Administration. The compounded drug did not therefore, pass the required safety standards before it was released to the public. This was a violation of the law. The company could be charged for having produced the right set of drugs, but for the wrong purpose, and for not having gone through the recommended channels of regulation prior to the provision of the drug for consumption.
Drug compounding has risks associated with it. However, in the case of PharmaCARE, the company used the laws of United States in order to protect its own intellectual property. The risks associated with compounded drugs pertains to the fact that these drugs do not meet the required safety measures of the Food and Drug Administration. This means that the drugs are not usually approved by this regulatory body. In cases of health complications, associated to any specific drug, the company involved in the manufacture is held accountable for the distribution of that drug for consumption. PharmaCARE however, adopted the laws of the land with the main aim of protecting their company. First, drug compounding is a legal practice in the United States, provided that the company involved in the activity is a registered and licensed pharmaceutical company. PharmaCARE therefore, participated in the manufacture of AD23, legally, because the company was a licensed and registered pharmaceutical company. In order to avoid the responsibility and accountability, relative to their compounded drug, PharmaCARE established a subsidiary company to handle advertisement and distribution for the drug. The established company, CompCARE, was established as a separate entity from the parent company. It was a limited company with the ability to sue and be sued in the courts of law. Through the establishment of a subsidiary company, PharmaCARE managed to protect the reputation of its company by using the laws of the land. John, the inventor of AD23, however, had expected compensation from the company. This could have been in form of monetary compensation for the loss of brand and property invention. The company could also have compensated the inventor by taking responsibility for the loss suffered by patients from consumption of AD23, and also, by linking these health complications to their illegal and unethical marketing practices.
Cases of intellectual property theft have a negative impact on the success and reputation of a company. Intellectual property theft cases usurp lots of money before their resolution. In addition to money, these cases also consume a business organization’s time, directed towards resolution efforts, like in the case of Bratz Dolls, which having started in the year 2005, closed down operations as recently as 2014. This case alone took 9 years in court to be resettled. This case involved an intellectual dispute between MGA Entertainment and Mattel over Bratz Dolls. The designer of Baltz Dolls, Carter Bryant, sued the manufacturers on the account of property rights, whose ownership he claimed. Despite the fact that this case spent about 9 years in court, neither Carter nor MGA Entertainment won the case. However, both parties had suffered losses in terms of money spent in hiring the attorneys and in facilitating other legal judicial procedures, as had been expected by the courts. The battle ended in a litigation that cost the Bratz line of dolls approximately seven hundred million U.S dollars.
Illegal and unethical marketing and advertising methods pose great risks not only to the companies involved in the practice, but also to the consumers who consume the products. Through unethical marketing, companies offer products and services with poor quality standards to the market. If consumed by citizens, the consumers can suffer physical, psychological, and health related complications. Unethical marketing practices also subject consumers to the consumption of goods and services that were not intended for their consumption. This is because most of the unethical marketing practices provide false information regarding the use of the products which they advertise. John’s wife, in the case of PharmaCARE, died from heart attack. This death resulted from the consumption of AD23 for the wrong purposes. This drug, even though it had been originally manufactured for the treatment of diabetes, was availed to patients, purportedly to help them with the control of Alzheimer. AD23 was thus, sold directly to patients, including those who did not suffer diabetes like John’s wife. The death of John’s wife was a result of the illegal and unethical marketing practices adopted by PharmaCARE Company.
John is a protectionist. The risks associated with the drug he invented have been revealed by the data of deaths surrounding the consumption of AD23. Despite these risks, the company involved in the manufacture and distribution of the drug seems unalarmed. This is because of the high income and profits, generated from the consumption of AD23. The company is therefore, willing to continue with the manufacture and distribution of this drug. John, the inventor of the drug, is however, a protectionist because he comes out with an internal memo that clearly reveals the problems associated with the drug; his invention. In addition to these problems, John also highlights the illegal and unethical practices adopted by PharmaCARE, his employers, in marketing this drug.
References
Boundless, (2016). Issues in Marketing. Boundless . Retrieved from https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/social-responsibility-and-ethics-in-marketing-16/ethics-in-marketing-102/issues-in-marketing-502-10770/ .
Chandran, R. and Stanton, J. (1979). Product Safety: The Role of Advertising. Journal of Advertising , 8(2), pp.36-41. Retrieved from http://dx.doi.org/10.1080/00913367.1979.10717975.
Food and Drug Administration, (2016). Compounding and the FDA: Questions and Answers . Retrieved from http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/ucm339764.htm.
Food and Drug Administration, (2016). The Impact of Direct-to-Consumer Advertising . Fda.gov. Available at: http://www.fda.gov/Drugs/ResourcesForYou/Consumers/ucm143562.htm
Goltz, N. and Neufeld, P. (1992). Undermining Parental Authority, Unethical Advertising and the Accountability of Self-Regulation: ThomasCook.ca as a Fable. SSRN Electronic Journal . Retrieved from http://dx.doi.org/10.2139/ssrn.2347345
Weissman, J. (2003). Consumers' Reports On The Health Effects Of Direct-To-Consumer Drug Advertising. Health Affairs . Retrieved from http://dx.doi.org/10.1377/hlthaff.w3.82.
