Report on Pfizer’s Corporate Social Responsibility And Ethics

Pfizer is one of the world’s largest research-based biopharmaceutical companies. In case of revenues according to the annual reports Pfizer stands second for two consecutive years 2009-2010 lead by Johnson and Johnson (see Appendix- 1 for complete table for 2008, 2009 and 2010) leaving behind companies like GlaxoSmithKline, UK and Novartis, Switzerland. Pfizer was founded by two cousins Charles Pfizer and Charles Erhart in 1849, at Brooklyn, New York. It has its headquarters in New York City. Its first achievement was due to Civil War, as there was a heavy demand of painkillers and other disinfectants.

In 1862, Pfizer produced tartaric acid and a cream of tartar to fulfil the need of the army. Pfizer gained mass success by becoming the America’s leading producer of citric acid (used to manufacture penicillin) in 1919. In the late 2000’s Pfizer expanded globally with the acquisition of Warner-Lambert, Pharmacia and Wyeth, becoming the first U. S pharmaceutical company to join the U. N Global Compact (training and nurturing partnership between companies by promoting good corporate citizenship).

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Pfizer generates more than 58 percent of revenue from international markets.

Pfizer’s approach towards Corporate Social Responsibility (CSR) CSR according to csrnetwork. com, 2009 is about how a business “align their value and behaviour with the expectation and needs of stakeholder” in simple words it is a term that states that the company is for the people and it should be the priority of the company to opt for the business suitable and acceptable by its stakeholders (customers and investors, suppliers, communities, special interest groups and societies).

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The company should be answerable and committed to its stakeholders.

Pfizer’s Corporate Social Responsibility report, 2009 speaks about Pfizer’s initiative to work more ethically to achieve its mission of “working together for a healthier world”. The company lays great emphasis on its stakeholders, especially prioritising patients’ needs. It also had a Corporate Governance Committee that keeps updated information about the company’s corporate social responsibility issues and monitor upcoming issues that may affect the pharmaceutical industry and the company. Analysing the CSR from a view of ‘triple bottom line’.

It is the term coined by John Elkington, who states that business should not only concentrate to earn profit but also should also be useful to the environment and the society, this is important for sustainability (long-term maintenance of system) as if the environment and the society are not taken care of in the near future, then there will be no existence of the organisations and businesses as they will not earn profits. (Crane and Matten, 2009) It is really important to do things keeping the future generation in mind that will lead to sustainability.

Triple bottom line consists of three components. a) Environmental: these consist of steps that a company takes to prevent environmental damage or problems by climate change, greenhouse gas omissions, carbon foot printing and continuous use of non-renewable resources of energy. In case of Pfizer, they are working very hard with other companies to find sustainable solutions to the problems regarding environment, health and safety issues, by sharing their practises and technologies.

Pfizer has also set a goal of receiving 35 percent of the electricity from clean energy resources by 2010 but has yet not yet been able to achieve it due to problems like closure of plants due to financial instability (recession) and financial impracticality of the new technology, it is also working to reduce the carbon footprint by investing in projects to remove it from the automobiles it uses (32,000 in number), it is also working on projects to control an remove the harmful ozone depleting and volatile depleting compounds. Read about the human cost of an illiterate society

Pfizer has already paid the sum of $975,000 in 2008 as a civil penalty for causing hazardous air pollutants (2002-2005) from its facilities at Groton. b) Social: these consist of steps that the company takes to prevent social injustice, human rights and labour practises. In case of Pfizer, it is the safety of patient with the support of government by preventing counterfeiting. According to World Health Organisation, in developing countries, the rate of counterfeiting and distribution is 10 to 30 percent higher than the developed nations with 11. million counterfeited tablets seized in 2008. They test products free of charge to find the authenticity with the help of new technology like Radio Frequency Identification Device.

Although there are animals tested for experiment, Pfizer make sure that the experiments are only done after considerable ethical re-evaluation and thoughtfulness. The company is also working to remove certain epidemic diseases like Malaria from sub-Saharan Africa that killed 863,000 people in 2008. WHO report on malaria, 2008) c) Economical: it consists of the company’s attitude towards maintain the sustainability for the long–term market. In case of Pfizer, it has joined hands with GlaxoSmithKline to work only on the research, development and commercialization of HIV medicines and will focus on treatment of children with HIV. Pfizer generated $48. 3billion as revenue in 2008; it earned a profit of 8. 1 billion after tax and spends 7. 9billion in research and development.

It is observing enough that in spite of the profits going down by almost $10 billion from 2006, the company still spent a large amount on research and development. In fact there is an independent auditing committee which reviews the financial statements audited by the auditing committee, which works on behalf of the Board of Directors. It can be analysed from the above triple bottom line that Pfizer is trying hard to achieve its goals of sustainability by preserving the environment so that in the long-term, coming generations can reap and share the benefits of that sustainable environment.

For example if Pfizer is able to find a cure for HIV, malaria and other epidemic then the coming generation will not have problems with such dangerous diseases due to the cure and prevention found by its previous generations. The only concern for Pfizer is its inability to achieve few of its goals on time due to various problems. Stakeholders Theory Robert Phillips in an extract from the book argues that all organisations are responsible for their growth and success on their stakeholders.

Stakeholders are not merely shareholders but also other people directly or indirectly involved in sharing the benefits and losses that the organisation. Stakeholders consist of customers, suppliers, distributors, investors, government etc. “A stakeholder of a corporation is an individual or a group which either: is harmed by, or benefited from, the corporation; or whose rights can be violated, or have to be respected, by the corporation” (Crane and Matten, 2010) According to Freeman, there are large numbers of other people beyond the shareholders who are legally contracted with the corporation by the law and have rights and claims.

In case of Pfizer it is the patients, government, communities, investors, business and healthcare partners with whom the company works hand in hand with, Pfizer is also working for the development of the laid-off employees by finding new employment and careers. Pfizer is also working globally to improve public health by exploiting new business models which are practical and sustainable. It is also increasing the availability of medicine and taking strong measures to remove counterfeited Pfizer products. The company is also working on measures to remove traces of products that it produces from the environment especially water.

Key ethical issue Pfizer has been in news for all the wrong reasons for counterfeiting medicines, fraudulently marketing and misbranding of drugs. It was in 1996 when there was an outbreak of meningitis in Nigeria and Pfizer got a chance to test their medicine Trovan in a state named Kano. According to news report on bbc. com (2001 and 2007) Pfizer conducted the tests in the hospital where the families believed them to be the members of Medecins Sans Frontiers (MSF), an international aid and humanitarian organisation.

The parents unaware of the fact gave their children to the Pfizer team who tested the drugs on the children. This resulted in the death of 11 children, which Pfizer openly denied; it said that it did not get any written consent because of the illiterate population it was dealing with. Pfizer also produced a written acceptance by the ethics committee of Kano’s teaching hospital for the test in March 1996 it was denied by Dr. Sadiq Wali, the medical director of the hospital because the ethics committee started in October 2006.

The case was brought into the court in 2001 by the families of children who were affected and died of the trial medicines. There were a total of 11 deaths. There was a separate charges filed by the Nigerian government for the same cause demanding a sum of $7billion (?3. 5billion) as compensation for the families of children who either died or suffered side-effects from the medicine given by Pfizer. Pfizer like Shell settled out of court with the Nigerian government and the families for a total of $75 million (?50 million). (independent. o. uk, 2009) Application of Normative theories A normative theory is “an attempt to provide a general theory that tells us how we ought to live” it does not tell us what is moral or immoral but lays a way to find what things have moral properties. Normative theory is divided into 2 parts: 1) Consequentialist approach: it is result oriented and does not have to do anything with the action taken. If the outcome is desirable then the outcome is morally right and if the outcome is not desirable then the outcome is morally wrong.

It can be said that had Pfizer been able to successfully test Trovan without causing any deaths or side-effects, then it would have been morally right for the people of Kano whereas, now that the trial caused 11 deaths and more deformities among the children who took the medicine, everyone including the media saw it as a morally wrong act. Consequentialist theory is of two types: a) Egoism: it means that “the action is morally right if the decision maker freely decides to pursue either short-term or long-term desires or interests”. (Crane and Matten, 2009) Pfizer is a global company working at global levels.

Pfizer went to Nigeria to test their medicine so that they could launch it in the US market. It was a short-term opportunity for them as they tried their product (Trovan) on the affected people free of cost, but it back fired because of the deaths of 11 children as a result they had to face a law suit from the Nigerian government for proceeding without their consent and also by the parents of the affected children. This gave a negative impact on the company as it reduced its reputation in the global market (negative brand image) and in 1999 European Union (EU) banned Trovan from the market due to complaints of iver failure. Trovan was never approved for the use of children. b) Utilitarianism: it states that “an action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action”. Crane and Matten, 2009) it is consequentialist because it considers the action as complete ignoring the steps or actions taken to achieve that goal. “Nature has placed mankind under the governance of two sovereign masters, pain and pleasure.

It is for them alone to point out what we ought to do, as well as to determine what we shall do. On the one hand the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne. They govern us in all we do, in all we say, in all we think” — Jeremy Bentham, The Principles of Morals and Legislation (1789) Ch I, p 1 Pfizer in its CSR report talks about giving the most importance to its stakeholders. Ethics is taken very seriously by most of the companies and the stakeholders are well informed about this subject.

In case of Nigeria, although Pfizer wanted the greatest good for greatest people (if the trials were successful, there would be a new product in the market, that would increase the profitability leading to increase in dividend paid to Shareholders, may be an increase in salaries of employees increase in demand of minerals and salts from suppliers for that particular medicine and providing patients with a new drug to remove the epidemic completely, the natives would have been happy with the government decision thus positive image).

Instead it affected all the stakeholders in a negative way (shareholders lost their part of capital as the drug was banned by EU, parents were greatly affected by the death of 11 children and other being disabled for life, the Nigerian government lost the trust and image). As this theory deals with idea of utility, in human terms it can be pleasure and pain, happiness and unhappiness.

In the above issue one side of the coin is that it was essential for Pfizer to conduct those trials on the children suffering with meningitis in Nigeria so that they could come up with a drug to prevent the epidemic and the weight of the death of those 11 people was very little as compared to the death of another 100,000 due to the same disease. The other part of the coin will be that the drug in spite of the death was not preventive enough as it caused liver problems among the users and had to be banned in EU and America therefore it was not the greatest good for the greatest number of people affected by the meningitis.

Even if this issue is looked from rule utilitarianism the underlying principles of an action were for more pleasure but in the long run it proved to be a pain for the society. 2) Non-consequentialist approach: it is a moral assessment that concentrates more on the action adherence to the rule rather than the consequences. Non-consequentialist consist of two theories: a) Ethics of Duty: it was introduced by Immanual Kant. He argues that it is not the consequences of the actions that “makes an action right or wrong but the motive of the person who carried out the action” (Kant, 1780).

Kant made a theoretical framework called the ‘categorical imperative’. These frameworks should be applied to every moral issue not keeping in mind who is involved, who profits and who is harmed from the action. (Crane and Matten, 2009) these categorical imperatives consist of three maxims. Every issue will be considered if it stands correct according to the maxims. Maxim 1: Act so that you treat humanity, whether in your own person or that of another, always as an end and never as a means only.

It is based on the consistency, in case of Pfizer they experimented without the consent of the children, Nigerian government and the ethical committee (which did not exist at that point of time) a medicine which was not allowed to be tested on children. Moreover it caused death of 11 children and disabled many more. What if all the pharmaceutical industries enter developing countries test their new drugs without the consent of the government or other authorities? Will it be acceptable?

Would this be a universal law? The answer can be no for a reason because it is not possible and in doing so they would not be ethical or moral in terms of loyalty and honesty about their research, they may also not accept the failure as there would be no authorization or written acceptance as record. Therefore the key issue of Pfizer fails the first test of ethics of duty. Maxim 2: Act so that you treat humanity, whether in your own person or that of another, always as an end and never as a means only.

It is based on human dignity, in case of Pfizer the experiments were done on children although the drug was never before tested on children. The incident violated the Nigerian laws and the UN Convention on the Rights of the Child. “One was a 10-year-old girl identified only as Patient No. 0069, who was given the experimental antibiotic for three days as her condition deteriorated. She died without receiving any other antibiotic. ” (washingtonpost. com, 2006).

Moreover Pfizer defended itself by saying that they were there for ‘philanthropic motive’ to remove the epidemic but the physicians left once the trial was over and “the epidemic was still raging”. It is very clear from the evidences that the activities undertaken by Pfizer were not based on human dignity but on selfish motives. Therefore they fail the second test of ethics of duty. Maxim 3: Act only so that the will through its maxims could regard itself as the same time universally lawgiving. It is based on the element of universality.

When the media covered the incident of Pfizer’s failed experiment in Kano, a village in Nigeria. Pfizer did everything it could to save face in front of its stakeholders by providing false evidences, denying the incident completely or by moulding it to be “philanthropic motive” because it knew that the image of the company would be negatively affected by the issue. It is after the incident that the company started to make its stakeholders its priority as they are the pillars of an organisation. Therefore Pfizer fails in this test as well.

As Pfizer fails in all the three tests, it can be said that the action taken was not morally right as it was not able to ‘survive’ all three tests. b) Ethics of rights and justice: these are defined according to Locke. J, 1632-1714 as rights for which humans are entitled to and for which they should be respected and protected. “Natural rights are certain basic, important, unalienable entitlements that should be respected and protected in every single action”. (Crane and Matten, 2009) Rights consist of rights to life, freedom and poverty and also freedom of speech, consent, privacy, and the entitlement to fair legal process.

References

  1. http://www.bkconnection.com/static/stakeholdertheoryPR.pdf
  2. http://www.moralphilosophy.info/normativeethics.html
  3. http://www.independent.co.uk/news/world/africa/pfizer-to-pay-16350m-after-deaths-of-nigerian-children-in-drug-trial-experiment-1663402.html
  4. http://news.bbc.co.uk/1/hi/world/africa/6719141.stm
  5. http://news.bbc.co.uk/1/hi/world/africa/1220032.stm
  6. http://news.bbc.co.uk/1/hi/business/1517171.stm
  7. http://www.washingtonpost.com/wp-dyn/content/article/2006/05/06/AR2006050601338.html
  8. http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040301877.html Sidgwick, H (1907).
  9. The Method of Ethics. NY: Dover (1981). http://www.la.utexas.edu/methsidg/me/.

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Report on Pfizer’s Corporate Social Responsibility And Ethics. (2020, Jun 01). Retrieved from https://studymoose.com/report-on-pfizers-corporate-social-responsibility-and-ethics-essay

Report on Pfizer’s Corporate Social Responsibility And Ethics

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