Legal Issues with Compounding Pharmacies
You are a new associate at the law firm of Dewey, Chetum,
and Howe. John, a former researcher at PharmaCARE, comes to your office. He has
concerns about PharmaCARE’s use of AD23, one of the company’s top-selling
diabetes drugs. Two years ago, after PharmaCARE’s research indicated that AD23
might also slow the progression of Alzheimer’s disease, John and his team of
pharmacists began reformulating the drug to maximize that effect. In order to
avoid the Food and Drug Administration’s (FDA) scrutiny, PharmaCARE established
a wholly-owned subsidiary, CompCARE, to operate as a compounding pharmacy to
sell the new formulation to individuals on a prescription basis. CompCARE
established itself in a suburban office park near its parent’s headquarters. To
conserve money and time, CompCARE did a quick, low-cost renovation.
CompCARE benefited from PharmaCARE’s reputation, databases,
networks, and sales and marketing expertise, and within six (6) months had the
medical community buzzing about AD23. Demand soared, particularly among
Medicare, Medicaid, and Veterans Affairs patients. Seeing the opportunity to
realize even more profit, CompCARE began advertising AD23 directly to consumers
and marketing the drug directly to hospitals, clinics, and physician offices,
even though compounding pharmacies are not permitted to sell drugs in bulk for
general use. To circumvent this technicality, CompCARE encouraged doctors to
fax lists of fictitious patient names to CompCARE. PharmaCARE sold CompCARE to
WellCo, a large drugstore chain, just weeks before AD23 was publicly linked to
over 200 cardiac deaths.
As CompCARE and its new parent company enjoyed record
profits and PharmaCARE’s stock price approached $300 per share, reports started
surfacing that people who received AD23 seemed to be suffering heart attacks at
an alarming rate. The company ignored this data and continued filling large
orders and paying huge bonuses to all the executives and managers, including
John, whose wife recently died from a heart attack after using AD23. John has
come to you with an internal company memo describing the potential problems
with AD23, and information describing the company’s willingness “roll the
dice” and continue to market the drug. Your senior partner has asked you
to write a memo outlining the following issues for review by the senior
partners.
Write an eight to ten page paper in which you:
1. Research three to five 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.
2. Argue for or against Direct-to-Consumer (DTC) marketing
by drug companies. Provide support for your response.
3. 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. Support
your response.
4. 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 ways the company
could compensate John for the use of his intellectual property.
5. Summarize at least one current example (within the past
two years) of intellectual property theft, and examine the effect on that
company’s brand.
6. Analyze the potential issue surrounding the death of
John’s wife and other potential litigants against PharmaCARE as a result of AD23.
7. 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.
8. Use at least three quality resources in this assignment.
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