The Ethics of the Life Sciences Industry: Making Company Decisions and a Plan that Demonstrate Good Business and Strong Values

By Rosemary Weghorst

In today’s market, pharmaceutical, medical device, and biotech companies straddle two worlds. In one world, they are driven by a public need to ensure access to a safe product at an affordable price. In another world, companies are driven by a competitive and capitalistic market to increase profit and market share while lowering costs. These two worlds do not have to be in conflict, but they sometimes are, and those conflicts can drive an ethical perception of an organization. The 2013 Harris poll in the United States indicated that American consumer perceptions of the pharmaceutical industry had gone down: only 10 percent of American consumers believed that the pharmaceutical industry was trustworthy (down from 13 percent in 2003), and were considered less trustworthy than other regulated industries, such as banking (18 percent) and public utilities (14 percent). In addition, 39 percent of survey respondents indicated that they wanted to see more government regulation in the pharmaceutical industry.

Industry literature is prolific with examples of inappropriate activity: everything from research fraud, physician influence, and kickbacks to grayer areas such as direct-to-consumer advertising and a life science company’s role or social responsibility to ensure open access to its product regardless of cost. Values like product safety (significantly important in the life sciences industry) and and a life science company’s role or social responsibility to ensure open access to its product regardless of cost. Values like product safety (significantly important in the life industry) and efficiency (significantly important to any business in order to remain viable and competitive) are excellent for an organization to use as a foundation, and they can live together in harmony, but it takes a conscious effort to ensure that the integration of values is just that: an integration, and not a conflict. Executives need to contemplate how their decisions will be perceived by employees, consumers, healthcare practitioners, and ever-watchful government entities. How will they ensure that their decisions demonstrate commitment to both corporate and ethical responsibilities?

How do life sciences companies close the gap in ensuring ethical operations, as well as perceptions both within and outside the industry regarding the ethical operations of their companies? While the list might seem endless, reviewing a company’s culture and action plan against the following items can assist in determining steps that may be taken:

  • Tone at the Top: It sounds cliché, but “tone at the top” has been and continues to be the most critical aspect of ensuring that people follow the values of an organization. Executives who agree to a code of conduct on paper and then immediately begin to determine ways to work around policy or squeeze through gray areas in the system will send a message that what the company culture says on paper is irrelevant, and that there is another behind-the-scenes culture that is the norm and the path to success. For example, when company leadership overrides a compliance structure already in place at the behest of a sales executive or sales target, there is a message sent that the compliance structure, in place to protect the company, is not completely relevant to the operation of the business. It does not necessarily mean the decision was incorrect, but if the system is constantly overridden, the company needs to reevaluate how it is conducting its business and if business practices need to be revised.
  • Appropriate Policies and Procedures: Policies and procedures need to reflect a culture that works to further its corporate goals while maintaining its core values. Some companies want to think that the road to ensuring ethics might be a single code of conduct or overarching policy statement to “do the right thing.” However, company policies and procedures should be customized to integrate and reflect the overall value system of the company. This gives employees, associates, and contractors a road map for how to operationalize not just business operations but also company values.

For example, a company may create a policy of not promoting the sales of its product off-label. Then it creates a sales representative incentive plan in which the only way to reach individual sales targets is by selling off-label. The company—intentionally or not—could send a message that promoting off-label is necessary, and that sales employees need to be out of sync with corporate policy in order to be successful.

  • Transparent Messaging: In the wake of the Sunshine Act and the unparalleled access that individuals, the government, and the media have to company information, companies need to understand that messaging needs to be transparent, even when complicated and nuanced. As an example, it has been heard many times from the industry that high consumer prices are driven by the amount of research and development that goes into a product, and/or that companies spend millions on researching product ideas that ultimately fail to gain FDA approval. While that may be true, juxtapose that message with the multiple messages heard from both scholarly and media sources that the industry spends far more—in some cases close to twenty times more—on marketing than it does on research. Consumer perception could be that higher prices are driven by promotional, not research, needs. In the face of information now accessible to the public, industry must be prepared to address issues like these and how openly available data is used and interpreted.
  • Monitoring and Auditing: In some companies, getting over the hurdle of implementing a comprehensive compliance monitoring and auditing program can be daunting. The initial reaction or perceptions from employees and sales staff can be that 1) something is wrong or 2) leadership does not believe that staff can be trusted. Staff need to realize that the healthcare industry has been accused of inappropriately encouraging non-compliant behavior such as off-label promotion due to issues such as lack of oversight or flawed oversight. Monitoring and auditing can uncover issues within the organization, but many times this is because of process issues that can be corrected, such as lack of adequate training, confusion over company requirements, communication protocols, and outdated processes. It is important that staff understand that it is the company’s ethical duty to perform due diligence to ensure that policies and procedures are being appropriately followed and that everyone fully understands how to execute on those policies and procedures.

Sustaining an ethical company takes a conscientious effort; it takes planning and foresight; it takes consistent and transparent messaging; it takes executive agreement; and it takes an openness to critically review the company’s own methods of operations in a way that benefits the company both ethically and from a business perspective.

Good ethics is also quite simply a necessary component of a good long-term business plan. Organizations that make short-term profit decisions in lieu of principled decisions that focus on core values of an organization will not last the long term. Companies that balance the needs of people (consumers and employees) with strong fiduciary decisions that support realistic financial returns will be able to sustain long-term survival. In an industry pushed by consumer choices and access to multiple options and sources of information, a trustworthy brand is invaluable. Sending the message internally and externally that your company is the company driven by a well-thought ethics model will create an environment where “doing the right thing” becomes ingrained beyond codes of conduct and operating procedures, and imbeds itself in the company ethos.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.


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