Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property: A Case Study of PharmaCARE

Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property: A Case Study of PharmaCARE


Marketing is defined as an active outreach for sales from potential consumers. The aspect of marketing is related to various legal and ethical issues and has a strategic plan. The intended impact of marketing is always related to profit increments or achievement. This is accomplished due to the impact of marketing transactions on the target market segment. Each marketing transaction has an impact albeit minute. No transaction goes unrewarded. The marketing strategies used by companies determine the edge they posses above their competitors. It is therefore imperative that marketing be associated with some ethical and legal issues to moderate the levels to which companies and individuals may go to achieve the desired profit increments.

Since marketing has both economical and social effects, it is important that marketing behavior be guided by ethics and defined rights which direct actions. Each decision made in marketing is associated with a specific ethical dimension. As a company engages in marketing, it should be clarified whether it is doing so ethically or not. Societal norms judge and constrain both marketing and other business behaviors (Laczniac & Murphy, 2006).

The purpose of this paper is to discuss various ethical and legal issues associated with marketing and how CompCARE Company violates some of them. In addition to this, focus will be directed on the whistle blower rights and protection as well as on the pros and cons of Direct-to Consumer marketing by drug companies.

Ethical Issues

According to basic perspectives on the moral aspects of marketing, ethical marketing puts persons first. This refers to both the recipients of the advertisement and the employees associated with the production of the marketed product. In the case of PharmaCARE, the advertisement of a known harmful product does not consider the potential customers; neither does it put them first. Consequently, the practice of continued marketing despite the revelations about the harmful nature of the drug is unethical. A marketing strategy that does not operate on the principle of people first risks long term detrimental effects (Laczniac & Murphy, 2006).This perspective defines managers as being responsible for the impacts of their decisions on people.

Apart from this, the behavior of marketers should be such that it exceeds the legal expectations of the law. Any behavior below or in line with the legal expectations is considered almost unethical. For instance, by carrying out marketing activities while avoiding the Food and Drug Administration scrutiny, PharmaCare engages in unethical behavior. Besides this, the law requires that when a drug company engages in the marketing of a drug it should have been proven safe and effective. However, this company, having confirmed that the drug is a potential cause of cardiac deaths, still encouraged stakeholders to roll the dice and continue marketing. This is a violation 1of ethical consideration.

Thirdly, in considering the ethical aspects of any action, it is necessary to analyze the intent, the means and the end. The intention behind any business advertisement activity is always to achieve economic benefits. It is therefore difficult to judge whether a marketing action is ethical or not based on the marketing intent. However, it is possible to determine whether the action is ethical either through the means with which it is carried out or through the outcome of the action. In its marketing activity, PharmaCARE achieves profitability through acceptable measures, yet the overall outcome is not positive for many due to the cardiac deaths involved. The action is therefore a breach of ethics.

Honesty is one of the most advocated for values in marketing operations. It is ethically expected of companies and their stakeholders to offer right information about the products, to offer high value products, to stand in support of their products in case of potential failure and to honor promises and commitments to product consumers. By engaging in positive marketing without mentioning the negative impacts of AD23, PharmaCARE breaches the expectation of honesty.

Another ethical value that is considered in marketing is openness. This is in reference to product marketing. Every marketer is obliged to communicate directly about their products, to describe potential product benefits, explain potential product risks, accept positive criticism, and explain the price ranges and to give exact information about products (Laczniac & Murphy, 2006). It is therefore unethical for a company to market its products without disclosing a full range of information.

Direct to Consumer Marketing

Marketing of pharmaceuticals is currently carried out through several platforms, the most common being direct to consumer marketing. This is done mainly through the television or through internet marketing. The pharmaceutical industry has observed a definite growth in this form of marketing with marketers realizing potentially incremental profits. However, this marketing mode can be associated with other pros and cons apart from the obvious economic benefits gained by companies.

Despite the associated economical benefits of DTC, there have been deliberations regarding its suitability in dealing with patient issues. It would be worth to note that although it is a suitable method of marketing for pharmaceutical companies, it may not be ethical as it places the patient at a position that may encourage self prescription. Its limitations are therefore much more in comparison to its positive impacts.

One of the major advantages that have been linked to Direct-to-consumer marketing is increased public awareness with respect to potential risks and treatment benefits of pharmaceutical products. This is described as an advantage since consumers can now make informed decisions about whether to purchase a drug or not.

Secondly, the patient also gets to have better dialogue with the physician since the client has more power gained through information. This makes it less embarrassing for the patient to discuss related issues with the physician. This is due to the common background that the client has with the physician prior to actual meetings and discussions.

On the other hand, opponents of DTC claim that it has the potential to cause strain in the relationships between patient and doctor due to the probable demands for inappropriate medication. The patient, having been influenced by the observed advertisements, may try to convince the doctor to prescribe medication which the doctor finds unsuitable for the situation (Byrne & Weeks, 2009).

Secondly, it may also lead to wastage of precious time as clinicians are forced to make explanations as to whether why what is observed in adverts may not be suitable to the patient’s condition when the patient comes in already believing that it is the best medication. This may also force private practitioners to prescribe drugs in a way that accommodates patients’ expectations although the prescription may not be the best for the client’s condition.

Apart from the potential effects on consumers, DTC also has the potential of increasing financial burden on the US financial systems. The US health care system spends a lot in advertising through DTC methods, with each dollar spent on advertising leading to a 4 dollar increase in sales. However, it is also reported that other drugs which are not marketed DTC may be more effective and cheaper than the ones which are marketed through DTC (Byrne & Weeks, 2009).

Besides this, it is also easy for DTC advertisements to over emphasize on drug effectiveness without clearly stating the detrimental effects of the drug (Byrne & Weeks, 2009). For instance, in observing the case of compCARE, although it was realized that the drug was related to increase in cases of heart attacks, the manufacturers, in their advertisements, continued to highlight the benefits of using the drug instead of explaining to the consumers the detrimental effects too.

In comparing the pros and the cons of DTC, it is therefore reasonable to conclude that DTC is more harmful than beneficial. The only citable benefit is of an economic nature with the other potential benefits resulting into limitations.

Compounding Companies

It is traditionally the responsibility of FDA to regulate the compounding of drugs under conditions stated by the FDA itself. However, some of these responsibilities are pushed to the states by FDA hence limiting the action of FDA on various cases of drug compounding (Kupchyk, 2013).

Since PharmaCARE engaged in compounding of drugs in anticipation of receiving prescriptions based on the intense marketing that was being carried out, it was within the domain of FDA to regulate their compounding. In case of a need to take enforcement actions, the FDA was expected to give a notification of violation and to follow up on the notification to ensure compliance with the laid down regulations on safety (Kupchyk, 2013). It would be possible for PharmaCARE to face the law due to the Company’s actions with regards to marketing a potentially harmful product.

Intellectual Property

According to the US intellectual Property laws, an intellectual property can only be identified as the owner’s through either, a patent, copyright or trademark. By registering one’s idea or piece of art in any of these ways, an intellectual property right is acquired by the applicant and thus this right becomes enforceable by law (Uspto, 2013).Consequently, PharmaCARE can protect its compounded drug through a patent of the idea as well as the compounding formula. The company may also go further ahead to trade mark AD23 in order to prevent generic drugs marketing as AD23.

There are only two ways in which one can lay claim to an intellectual property. First, the claimant must confirm that he/ she actually possesses the property through a patent, trademark or copyright. It is therefore clear that since John has none of these, he cannot lay admissible claim of property ownership. Consequently, even though the court may award a claimant monetary compensation after the establishment of proof of ownership, John has no potential benefits from PharmaCARE. In addition to this, since he was working for PharmaCARE as a researcher when he invented the drug, he was paid for his services and the outcome, which is AD23, remains a property of the company.

An example of intellectual property right theft in the last two years is the case of American Superconductor Corporation of Devels Versus Sinovel Wind Company where the former accused the latter of stealing technology from them. The jury indicted Sinovel Company based on evidence that some of its wind turbines contained software from the superconductor company (Ailworth, 2013). Since Sinovel is a Chinese Company, it reputation  dropped with claims that most Chinese companies carry baggage in terms of business.

Litigant Issues

Besides possible claims on injury and death, it is possible that those affected by AD23 recognize some of the issues related to this case. First, most of the cardiac deaths that resulted from AD23 occurred prior to the knowledge that the drug was potentially harmful. However, the management has the intention of continuing to market the product, telling the employees to continue rolling the dice and marketing.

The litigants might claim that the defendant has committed a tort of negligence since in requiring that employees continue to market a product, which is harmful, with the intention of making money, the managers breach the duty of care towards the patients as well as towards families as he fails to deliver sound judgment.

Whistle blower Rights

From the definition of a whistle blower according to, one of the key aspects that are considered is that the person may have provided information regarding the violation of some rules in his organization, to the relevant authority with regards to the violated rule. For instance, by providing information to the office of an attorney about the potential distribution of a confirmed harmful drug, John becomes a whistleblower and is entitled to protection from unfavorable actions by the personnel department either through termination, suspension, and denial of promotion, disciplining and others (Osha, 2013).


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