March 3, 2016

Legal and Ethical Considerations in Marketing, Product Safety, and Intellectual Property

Legal 500
Professor Carter

Introduction
In the book Pharmaceutical Ethics, Jon Merrills’ defines ethics as: * Ethics is the systematic study of what is right and good with respect to conduct and character. * The beliefs and behaviors to which members of the profession subscribe. * A critical evaluation of assumptions and arguments. * A discussion about what ought to be done or ought not to be done.
Using Merrill’s’ definitions as a rough guide we can evaluate the legal and ethical decisions of PharmaCARE’s use of the diabetic drug AD23 in slowing the progression of Alzheimer’s disease. The drug was reformulated to maximize its effect on Alzheimer’s treatment however, PharmaCARE took actions to avoid the Food and Drug Administration in the reformulated drug for Alzheimer. PharmaCARE setup its own pharmacy company CompCARE to sell the new formulation to the public. CompCARE was able to take advantage of PharmaCARE’s databases, networks, and sales and marketing expertise to create a high demand of the product. Once the high demand was there, CompCARE started to advertise AD23 directly to consumers and marketing the drug directly to hospitals, clinics and physicians. After the success of AD23 CompCARE was sold to WellCO. Two weeks later AD23 was linked to 200 cardiac deaths.

Research three to five (3-5) ethical issues relating to marketing and advertising, intellectual property, and regulation of product safety and examine whether PharmaCARE violated any of the issues in question.

Multinational Corporations have grown to the point where their wealth can exceed that of a small or undeveloped country. This sizable amount of power can create situations where ethics and safety become second to profit while their marketing tactics can sell an unsafe product with revenue heavily outweighing the cost of future product liability and legal cost. Although, PharmaCARE’s actions seem unethical in practice those tactics are used by the larger drug manufactures and in some cases on much larger scales.
In November 2013, Christopher Kelly with the FDA had a news release stating Janssen Pharmaceuticals, Inc. to plead guilty and pay over $1.6 billion to resolve allegations of misbranding and filing false claims for is schizophrenia drug Risperdal (Kelly, 2013). The release also had a criminal fine of $400 million and the parent company Johnson & Johnson and JPI were aware that Risperdal posed serious health risk including increased risk of stroke, but that the companies downplayed those risks by combining negative data with other studies in order to support a perception of decreased risk from using the drug. Based on this case PharmaCARE and CompCARE would be also guilty of misbranding a medication for diabetics to use for Alzheimer.
According to a scientist for the U.S. Food and Drug Administration (FDA), Avandia is linked to as many as 100,000 heart attacks. Clinical studies show that the drug increases the risk of heart attack by 43 percent and can double the risk of heart failure after one year of treatment. During clinical trials, more people died as a result of a cardiovascular event taking Avandia than those taking a placebo, studies show. Despite these findings, Avandia’s black-box warning label did not mention an increased risk of cardiovascular death until the FDA warned about the risks in 2007. A two-year investigation by the U.S. Senate Finance Committee revealed GlaxoSmithKline knew of the cardiovascular dangers associated with Avandia for years and tried to stifle concerns noted by several doctors about the medication. Many patients feel that GlaxoSmithKline should have made doctors and the public aware of the cardiac risks associated with Avandia at the time the company knew of the dangers. In an article by Tom Moylan, GlaxoSmithKline plc (GSK) on July 24 said it has reached an agreement in principle with the attorneys general of seven states to pay $229 million to resolve lawsuits relating to the development and marketing of the diabetes drug Avandia, along with a lawsuit by the Louisiana attorney general relating to other GSK products. In addition to Louisiana, the settling states are Kentucky, Mississippi, Maryland, South Carolina, New Mexico, West Virginia and Utah. In a press statement, a GSK spokesperson said, “The Company is settling these matters to avoid the expense and uncertainty of protracted litigation and trial. The company did not admit to any wrongdoing or liability of any kind under these states laws in this settlement (Moylan, 2013).” Based on this case PharmaCARE and CompCARE would most likely settle without admitting liability. In 2012 Abbott Laboratories had a federal lawsuit accusing it of illegally promoting its cholesterol drug TriCor of uses not approved by regulators, including the prevention of cardiac health risks in patients with diabetes. According to an article by Peter Frost. Amy Bergman, who says she was an Abbott saleswoman from 1999 through 2008, alleges in the suit that she was "trained, directed, incentivized, and encouraged" by Abbott to promote TriCor for so-called off-label and medically unnecessary uses. She also claims the company directed her to give illegal kickbacks to doctors to encourage them to prescribe the drug. In doing so, she alleges, the company defrauded federal health programs, including Medicaid, for an eight-year period between 2000 and 2008. Drug makers are barred from actively promoting drugs for uses not approved by the Food and Drug Administration, though doctors have the discretion to prescribe drugs for so-called off-label uses (Frost, 2012). Based on this case it seems clear that PharmaCARE and CompCARE as drug makers were actively promoting drugs for uses not approved by the Food and Drug Administration. Argument for Direct-to-Consumer (DTC) marketing by drug companies DTC should not be allowed in the United States. Only two developed countries in the world allow DTC, the United States and New Zealand. The cost of prescription drugs in the United States are much higher that many countries this is in part due to advertising. In the United States new drugs are highly advertised in media. The Food and Drug Administration (FDA) oversees prescription drug advertising with the Federal Food, Drug, and Cosmetic Act and related regulations. Drug companies are generally required to include all of a drug's risk information in a product claim ad however, the risk are not given the same attention as the main message. The FDC is supposed to ensure balance and accuracy however, in most television ads the risk are spoken so fast you cannot comprehend all the risk. Their clearly is a bias against the risk in advertising. The average person seeing an advertisement will on comprehend the benefits and not the risk.

Determine the parties responsible for regulating compounding pharmacies under the current regulatory scheme, the actions that either these parties or the FDA could / should have taken in this scenario, and whether PharmaCARE could face legal exposure surrounding its practices.

State boards of pharmacy can and do enforce regulations pertaining to pharmaceutical compounding. For example, in 2006, the Ohio State Board of Pharmacy took action against Home Medical Enhancement Services, Inc. The Food and Drug Administration Modernization Act (FDAMA), enacted November 21, 1997, amended the Federal Food, Drug, and Cosmetic Act relating to the regulation of food, drugs, devices, and biological products. FDAMA exempted individualized compounded drug products from the rigid federal current goods-manufacturing practices. Under federal law, drugs that are not manufactured in conformity with federal current goods-manufacturing practices are deemed to be "adulterated" under 21 U.S.C. 351(a)(2)(B) and subject to federal sanction. Under FDAMA, 21 U.S.C. 351(a)(2)(B) does not apply to a drug product compounded by a licensed pharmacist in a state-licensed pharmacy for an identified individual patient with a valid prescription order -- or in limited quantities before receipt of the valid prescription order (Lindon, 2012). The FDA should charge CompCARE for Adulterating the drug and subject PharmaCARE and CompCARE to federal sanction.
Analyze the manner in which PharmaCARE used U.S. law to protect its own intellectual property and if John has any claim to being the true “inventor” of AD23. Suggest at least three (3) ways the company could compensate John for the use of his intellectual property

Most corporations that create products should have all employees sign an intellectual property agreement. Companies can have employees sign away all their innovations, and the knowledge they will acquire during employment. This prevent an employee taking a new job with a competitor or starting their own company. If PharmaCARE did not have John sign an intellectual property agreement and acknowledge that John is the inventor he could be compensated as follows: * Stock in PharmaCARE and/or CompCARE * A performance bonus * Allowing John to put his name on the patent along with the CompCARE
While the first two are monetarily related the third option would be good for John’s career.

Summarize at least one (1) current example (within the past two [2] years) of intellectual property theft, and examine the effect on that company’s brand.

In a 2014 article in the American Health & Drug Benefits magazine counterfeit drugs has been growing in importance in the United States, supplies are coming from all over the world. The drug Avastin is recent example where internet pharmacies, which are often the source of counterfeit drugs, often pose as Canadian to enhance their acceptance as legal.
These companies take advantage of long and convoluted supply chain problems and the high cost of drugs in the United States. The effects on the company the sells lifesaving drugs should be small since a large percent of their customer would have some medical coverage to cover a portion of the cost. However, counterfeit drugs like Viagra or Cialis could pose a significant threat to a drug maker do to the higher cost associated with the prescription drugs.

Analyze the potential issue surrounding the death of John’s wife and other potential litigants against PharmaCARE as a result of AD23.

The purpose of filing a legal action against a drug manufacturer is to recover compensation from the company of any losses sustained as a result of a patient’s injuries. Damages are meant to not only punish the defendant, but to also discourage other companies for acting in a similar fashion. However, in this case John’s wife case seem it would not be as strong other potential litigants. John had to have known that his wife was AD23 and John should have known more than anyone else the risk his wife was taken by using AD23. It is hard to determine if John is a contributor to his wife’s death or a victim of his wife’s death. It is safe to say that no real scientist would experiment on a family member but it seems John did experiment on his wife. John had all the access to the data the company had. It seem very likely a scientist would monitor a new drug that they had been involved with especially if their family member was taken it. Other litigants seem to have a very strong case against PharmaCARE and most likely a class action lawsuit will follow. The potential issue is that John on one hand claims he invented AD23 yet PharmaCARE killed his wife with AD23.

Specify both the major arguments that John can make to claim that he is a whistleblower and the type of protections that he should be afforded. Justify your response. John major argument to claim that he is a whistleblower is that he possess internal memos with information describing the company’s willingness to put profit in front of safety of it consumers of AD23. However, his major argument is weak since John was receiving larges bonuses along with the other managers and executives. If allowed protection as a whistleblower John should be afforded protection from prosecution since John is the one that reformulated AD23 and allowed his wife to take it.

References

Blackstone, E., Fuhr, J., Jr., & Pociask, S. (2014, June). The Health and Economic Effects of Counterfeit Drugs. Retrieved March 03, 2016, from http://www.ahdbonline.com/issues/2014/june-2014-vol-7-no-4/1756-the-health-and- economic-effects-of-counterfeit-drugs Frost, P. (2012). Abbott faces federal lawsuit over marketing of cholesterol drug TriCor. Retrieved March 03, 2016, from http://articles.chicagotribune.com/2012-08-\ 22/business/ct-biz-0822-abbott-lawsuit-20120822_1_tricor-depakote-cholesterol-drug

Kelly, C. (n.d.). U.S. Food and Drug Administration. Retrieved March 03, 2016, from http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm373499.htm

Lindon, J. (2012, November 20). Medscape Log In. Retrieved March 03, 2016, from http://www.medscape.com/viewarticle/774501#vp_2

Moylan, T. (n.d.). GSK To Pay $229 Million To Settle Avandia, Drug Lawsuits By 8 State Attorneys General. Retrieved March 03, 2016, from http://www.lexisnexis.com/legalnewsroom/litigation/b/litigation- blog/archive/2013/07/25/gsk-to-pay-229-million-to-settle-avandia-drug-lawsuits-by-8- state-attorneys-general.aspx

Ohio State Board of Pharmacy. Settlement agreement with the Ohio State Board of Pharmacy. Docket Number 060626-089. http://pharmacy.ohio.gov/dddquery/pdfs/021299000.pdf
Accessed March 03, 2016.