Reference no: EM131292429

PRODUCT SAFETY AND ADVERTISING
For years, arthritis sufferers have risked intestinal bleeding from consistently taking nonsteroidal anti-inflammatory drugs (NSAIDs) like Advil, which are used to ease chronic joint pain. Your company, Big Pharma, introduced a new type of painkiller, a COX-2 inhibitor that addresses the pain without these gastrointestinal effects.

To get the word out to consumers, Big Pharma decided to market the new painkiller directly to consumers so that they could ask their doctors about it. The marketing was extraordinarily successful, ultimately creating a multibillion-dollar market. Over 100 million prescriptions were written in just five years, and the drug was a big contributor to your company's bottom line. Patients and doctors seemed grateful for the alternative, and doctors began using it to treat all kinds of pain.

Then, complaints began coming in about cardiovascular events (heart attacks) associated with taking the new drug. Early scientific studies suggested that there might be a problem, but the science remained inconclusive. It appeared that many of these patients had other health problems that may have caused their heart attacks. So your company undertook a more definitive double-blind placebo controlled study (the only kind that can truly demonstrate cause and effect), which eventually showed a link between your drug and increased risk of cardiovascular events if the drug was taken consistently for more than 18 months. The Food and Drug Administration suggested a stronger black-box warning on the drug packaging to warn of potential cardiovascular side effects from prolonged use. Your senior management team met to discuss what to do. Should you follow the FDA's advice or do something else?

The discussion included reference to your company's values and strong commitment to integrity and human welfare. You also referred to the famous Johnson & Johnson Tylenol incident and the success of that recall effort. After much discussion, you decided to recall the drug and cease manufacturing it. The negative reactions were instantaneous. In stinging press reports and congressional hearings at which your CEO had to appear, your company was criticized for not recalling sooner based on the earlier evidence.

And, the lawsuits began. It seemed that anyone who had ever taken your company's drug and then had a heart attack was bringing suit. Ironically, on the other side, patients and doctors who had been using the drug successfully also complained. They thought you should return the drug to the market with a stronger warning, so that they could do their own risk assessment. Nothing else worked for some patients, and they were suffering. But, after careful deliberation, you decided to stick to the recall decision and fight (rather than settle) the lawsuits. Early in the fight, your company won some lawsuits and lost some, but vowed to continue fighting them all because you were convinced that you had done nothing wrong.

The fight was costly in dollars and reputation. Eventually, after several years and winning more lawsuits than you lost, you decided to settle all remaining lawsuits and move on, a decision that was considered to be wise in the business community. Your company's financial performance took a big hit, but it is now rebounding and the future looks more hopeful as some promising new treatments appear on the horizon. Who are the stakeholders in this situation?

Experts claim there's always a risk when people take prescription drugs. How much risk is too much? How widely do drug companies need to publicize the risks of prescription medications? Or, is that the doctor's responsibility? Do consumers really understand these risks? Do drug companies have an obligation to ensure that doctors don't overprescribe their drugs? Is that a reasonable expectation? Was direct-to-consumer marketing appropriate for this type of drug?

When is it appropriate, and when is it not?

Do drug companies have a bigger obligation to explain the risks of the drugs that they heavily market directly to consumers because such consumers are more likely to ask their doctors for these drugs?

Why do you think the reaction to the decision to recall in this case was so different compared to the Tylenol situation?

Should senior management have expected the reactions they got? Was there anything they could have done to change them?