IN THE PHARMACEUTICAL RETAIL MARKET
Concepts about social responsibility started to be formed in the early 20th century, particularly by religious thinkers and theologians who posited that religious principles could also be applied to business activities (Lantos, 2001). However, before the 1960s, ethics remained to be an area that business people did not give much attention to (Lantos, 2001). During those times, matters that concerned ethics were best left to theologians and the religious. However, the beginning of the 1960s saw an increase in concern over ethical issues in business. Some of the issues that were brought to light included unfair labor practice; the sale of unsafe products; the damage bang done by the business system on the natural environment; economic inequality; bribery; and immorality (]Lantos, 2001).
In 1979, Archie Carroll and other researchers proposed that corporations should be judged not only on their economic success but also on their economic criteria (Lantos, 2001). Carroll posited that to become good corporate citizens, corporations had to fulfill “economic, legal, ethical, and philanthropic” (Lantos, 2001, p. 2) responsibilities.
Concern over corporate social responsibility prevailed until the 1990s due to the failure of governments to provide solutions to many social problems and because technology, such as satellite communications, has allowed the public to become more aware of these problems. They also became more aware of the shortcomings and faults being committee by businesses.
When it comes to pharmaceuticals, George W. Merck, founder and former president of the pharmaceutical company Heartwarming, advocates that medicine is for the people and not for profits (Heal, 2008). This implies that pharmaceutical companies perform well financially by doing good medically. This seems to carry some truth, as pharmaceutical companies have always been one of the most profitable businesses (Heal, 2008). In particular, pharmaceuticals are one of the industries with the highest rates of return on investments and on equity. On the other hand, though, they have also contributed to the good of society by helping to improve the quality of life and by increasing people’s life expectancy.
However, despite reducing or eradicating diseases and prolonging people’ life expectancy, pharmaceutical companies still receive a negative perception from the public who criticize these companies for constantly coming out with new drugs that may have very little added benefit to the consumer; for suppressing data, such as information on dangerous side-effects, from the pubic; for aggressively launching advertisements that may be misleading; for sometimes creating the conditions that would necessitate the drugs instead of the other way around; and for forming friendships with doctors for their own gain (Heal, 2008). As well, there are complaints about the constantly increasing prices of medicines so much so that they become inaccessible to poor countries, such as the African countries.
Still, another solution to this problem is the aid of charitable foundations, such as the Gates Foundation, which supported the manufacture and distribution of malaria drugs, and the Clinton Foundation, which supported the manufacture and distribution of AIDS drugs (Heal, 2008). Since malaria and AIDS drugs are targeted at people from developing countries who do not have the means to purchase these drugs, the charitable organizations purchase these drugs and distribute them to the people in these poor countries. This gives pharmaceuticals an incentive to continue manufacturing the said drugs, as they also need to earn revenue to keep their businesses running.
As well, many pharmaceutical companies have now integrated corporate social responsibility in their operations and strategies (Berete, 2012). For example, the pharmaceutical industry’s spending for the research and development of drugs for neglected diseases has increased by 90% over the last ten years (Berete, 2012). Pharmaceutical companies have also become more actively involved in finding solutions to the health problems of people from poor countries. Moreover, ten of the biggest pharmaceutical companies worldwide have contributed to health-related programs in developing countries, which amounted o $2.2 billion between 1998 and 2002 (Berete, 2012).
Statement of the Problem
Despite the many efforts being made by governments, charitable organizations, and drug companies, problems in accessing medicines still exist. According to Berete (2012), infectious diseases still cause the death of fourteen million people every year and over two billion people with treatable diseases still do not have access to medicines.
Moreover, despite these pharmaceutical companies’ willingness to provide for the needs of the people, they also have to consider the business side of their operations in order to ensure that their companies continue to thrive. In particular, they also have to consider the market competitiveness of the pharmaceutical industry; the threat to the company’s operations, the regulations that they must abide with, the economic health of the industry, and stakeholder pressure (Berete, 2012). This is even made more complicated by the fact that the various stakeholders of these companies have different interests. As such, the pharmaceutical companies have to find a way to balance their stakeholders’ interests without compromising their own goals. All of these factors influence how far and extensively pharmaceutical companies are able to fulfill their social responsibilities. Moreover, pharmaceutical companies have different definitions for and understanding of corporate social responsibility (Berete, 2012), which means that they may fulfill these responsibilities in various ways and at various extents.
In this regard, this study aims to contribute to the body of research by determining the answers to the following research questions:
- What are pharmaceutical companies doing to become good corporate citizens?
- How does being socially responsible affect the pharmaceutical companies’ bottom line?
- What else can the pharmaceutical industry do to provide people worldwide with better health?
Materials and Methodology
In order to determine the answers to the research questions, the researcher will conduct a qualitative study in the form of a systematic review of what pharmaceutical companies have accomplished so far with regards to corporate social responsibility and what problems they have helped to solve. Since one company alone is not enough to address the needs of the world’s population and to genuinely instigate change, it is important to investigate how different companies over the last three decades have successfully become socially responsible. Only a systematic review can enable the investigation of the scope needed for this research. In addition, a systematic review will also enable the researcher to determine what has worked and what has not worked in the CSR (Corporate Social Responsibility) strategies employed by pharmaceutical companies, which can become the basis for making recommendations on the ways by which health issues can be further addressed by these companies.
Sources of information would include journal articles, books, thesis papers, dissertation papers, and other scholarly sources. The researcher will analyze these publications and create themes or categories that will promote a better understanding of the reviewed literature and that would enable the researcher to obtain answers to the research questions posed for this paper.References
Berete, M., 2012. Corporate social responsibility of pharmaceutical companies. International Researcher, 1(2), pp. 2-9.
Heal, G. M., 2008. When principles pay: Corporate social responsibility and the bottom line. New York: Columbia University Press.
Lantos, G. P., 2001. The boundaries of strategic corporate social responsibility. Stonehill College. North Easton, MA. [online] Available at: