Assignment
4: Legal and Ethical Considerations in Marketing, Product Safety, and
Intellectual Property
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You are a new
associate at the law firm of Dewey, Chetum, and Howe. John, a former researcher
at PharmaCARE, comes to your office. He has concerns about PharmaCARE’s use of
AD23, one of the company’s top-selling diabetes drugs. Two (2) years ago, after
PharmaCARE’s research indicated that AD23 might also slow the progression of
Alzheimer’s disease, John and his team of pharmacists began reformulating the
drug to maximize that effect. In order to avoid the Food and Drug
Administration’s (FDA) scrutiny, PharmaCARE established a wholly-owned
subsidiary, CompCARE, to operate as a compounding pharmacy to sell the new
formulation to individuals on a prescription basis. CompCARE established itself
in a suburban office park near its parent’s headquarters. To conserve money and
time, CompCARE did a quick, low-cost renovation.
CompCARE benefited
from PharmaCARE’s reputation, databases, networks, and sales and marketing
expertise, and within six (6) months had the medical community buzzing about
AD23. Demand soared, particularly among Medicare, Medicaid, and Veterans
Affairs patients. Seeing the opportunity to realize even more profit, CompCARE
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. To circumvent this technicality,
CompCARE encouraged doctors to fax lists of fictitious patient names to
CompCARE. PharmaCARE sold CompCARE to WellCo, a large drugstore chain, just
weeks before AD23 was publicly linked to over 200 cardiac deaths.
As CompCARE and its new parent company enjoyed record profits and
PharmaCARE’s stock price approached $300 per share, reports started surfacing
that people who received AD23 seemed to be suffering heart attacks at an
alarming rate. The company ignored this data and continued filling large orders
and paying huge bonuses to all the executives and managers, including John,
whose wife recently died from a heart attack after using AD23.
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