The Business Ethics Blog

People worry about how the lure of profits will affect the judgement of biotech companies in the highly competitive, aggressively capitalist North American business context.

Less thought has been given to ethical standards at biotech companies in the developing world. Regulatory infrastructure is notoriously weak in most developing nations; accordingly, constraint on business practices is by default left up to managers at individual companies. A lot of people think that India and China, in particular, loom on the horizon as burgeoning biotech powerhouses. Thus there’s been a lot of talk about the funding going into research in those two countries, their relatively educated workforces, their vigorous (or, in the case of China, blossoming) marketplaces, etc.
My question: 10 years from now, when China & India are biotech powerhouses, will their respective biotech sectors have the requisite depth of understanding of the corporate ethical issues involved in conducting the business of bioscience in a safe and ethical manner? Someone ought to write a Ph.D. dissertation on this.

Here are some starting points, mostly focusing on the case of India:

Shaping the Indian biotech sector

Biotechnology is called the “technology of hope” owing to its revolutionary promises in agriculture, healthcare, industrial processing and environmental sustainability. The technology offers so much hope that trade groups and governments are trying to make environments conducive to the emergence of this technology.

Fuelled by aspirations of self-reliance and pressured to cope with poverty and underdevelopment, Indian Government is focusing on education and infrastructure to establish strong biotechnology capabilities. An Ernst & Young report identified 96 exclusive enterprises as biotechnology companies, making Indian biotech sector third largest in the Asian region after Australia and China. Though India is yet to introduce a novel biotechnology product, it has a strong science and the potential to generate a revenue of $5 billion and a million jobs by 2010.

Some relevant items from the web:

• Agricultural Biotechnology in India: Ethics, Business and Politics
• “Ethics will be the gateway for clinical research in India”
• India well positioned to achieve biotech potential by 2010
• Venturing into the unknown
• Agilent bullish on pharma, BT in India

Some relevant books:

• Biotechnology in India
• Science, Agriculture and the Politics of Policy: The Case of Biotechnology in India
• The Ethics of International Business, by Tom Donaldson
• Agricultural Biotechnology in International Development
• International Biotechnology, Bulk Chemical, and Pharmaceutical GMPs

Working on the assumption that it’s never too late to ‘get out in front’, Wal-Mart is now advertising for a new director of global ethics. Here’s the full story: Wal-Mart: Desperately seeking ethics (by Matthew Boyle, for Fortune.com

That Wal-Mart (Research) needs to beef up its ethics organization is not too surprising. The Bentonville, Ark. behemoth has been bloodied on several fronts lately — an $11 billion class-action discrimination lawsuit, employee pay and health benefits, and former vice chairman Tom Coughlin’s alleged expense account padding have all provided ample fodder for the retailer’s growing chorus of critics.

The ethics director, once hired, will oversee a team of about ten staffers inside Wal-Mart’s Global Ethics Office, which the retailer created in 2004 to “advance the company’s ethical, values-based culture,” according to the job posting. The job spec also details a veritable laundry list of responsibilities, from developing a global ethics strategy to “policy refinement” to overseeing an ethics hotline, where employees can report violations of corporate policies.

So, Wal-Mart is catching up with the half of the Fortune 500 companies that already have ethics officers. (I read elsewhere that such a position has actually existed at Wal-Mart for years, but it was handled part-time by an executive with other duties.) Of course, having a ‘director of global ethics’ is one thing, but having the right person in the job and then making effective use of the position are different things entirely. On these issues, Boyle’s story has a couple of great quotes from experts:

Having a say in Wal-Mart’s corporate policies suggests that the position will be more than window dressing. “The key is not just to have the role, but what you do with it once you have it,” says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

[T]he job will include “frequent and informal” interactions with senior corporate officers, “up to and including” CEO Lee Scott, according to the job spec. “You have to have the commitment of the CEO,” says [Andrew] Wicks [of the Olsson Center for Applied Ethics ]. “If not, this is just like the ethics code at Enron.”

(That last bit, of course, is a reference to Enron’s Code of Ethics…a document that, at 64 pages long, might seem impressive, but is actually a pretty bad document, and notoriously ineffectual.)

Here’s an update on a posting from a couple of weeks ago, calledWal-Mart & the Morning After Pill.

Yesterday, Reuters had this story: Wal-Mart pharmacies to carry morning-after pill.

Wal-Mart Stores Inc. said on Friday that all of its pharmacies would carry morning-after contraceptive pills, bowing to pressure from states seeking to force the world’s biggest retailer to do so.
In a statement posted on its Web site, Wal-Mart said all of its pharmacies would begin carrying “Plan B” contraceptives as of March 20, but added that workers who did not feel comfortable dispensing a prescription could refer customers to another pharmacist or pharmacy.

A Wal-Mart spokeswoman said the company would not comment beyond the contents of the statement.

“We expect more states to require us to sell emergency contraceptives in the months ahead,” Ron Chomiuk, vice president of pharmacy for Wal-Mart, said.

“Because of this, and the fact that this is an FDA-approved product, we feel it is difficult to justify being the country’s only major pharmacy chain not selling it,” he said.

It’s anyone’s guess, of course, just what is really motivating Wal-Mart here. When a corproration attributes a change in behaviour to pressure from government, it could mean:
a) we’re bowing to pressure from government;
b) we’re using “pressure from government” as an excuse to do something we wanted to do anyway;
c) we’ve some other motive which no one outside the corporate boardroom will ever figure out.

It’s also interesting to consider the implications of Wal-Mart’s claim that “workers who did not feel comfortable dispensing a prescription could refer customers to another pharmacist or pharmacy”. This sort of proviso holds the possibility of making the promise to carry the pill a bit hollow; there’s not much benefit to customers in need if you stock the product but employees are unwilling to dispense it. Policies like that are usually called “conscience clauses,” and are designed to protect employees from having to participate in an activity that violates their personal ethical or religious convictions. That sounds like an admirable policy. Of course, problems arise when those personal convictions interfere with doing one’s job, and in particular when it poses a serious obstacle to customers (or patients) getting the products and services they need.

From the current issue of Wired: A Nation of Guinea Pigs, by Jennifer Kahn.

This is a story about drug companies conducting clinical trials in South Asia, using tens of thousands of poor Indians as “guinea pigs.” It’s sort of The Constant Gardner, minus the violent killings.

The key ethical aspects of the story:

• Drug companies pay hospitals and doctors to enroll patients in drug trials. The potential for conflict of interest is clear: hospitals and doctors, far from wealthy themselves, may succumb to financial temptations to enroll patients inappropriately. Of course (and with a few important differences) the same worry applies here in North America.
• Most of the people being enrolled in trials are poor, illiterate, and culturally deferential to doctors. Their ability to give free and informed consent is questionable.
• Most of the drugs being tested are drugs that are irrelevant to the health needs of a nation like India; they’re mostly medicines (like blood-pressure drugs) aimed at the North American & European markets.

One final element of this story needs explanation. The author points out a couple of times that sometimes people get enrolled in drug trials ‘even though the trials won’t help them.’ That sounds shocking, unless you know that clinical trials are never intended to help the test subjects who are enrolled in them. The idea that clinical trials are supposed to benefit those enrolled is what my colleagues in Bioethics call “Therapeutic Misconception.” The real goal of clinical trials is actually to answer a scientific question: “is this new drug effective?” or — preferably — “is this new drug better than the old way of treating this disease?”
So, while there are LOTS of ethical concerns when it comes to conducting drug trials in developing countries, the possibility that such trials “might not help” the test subjects is not one of them.
——
Update: This blog entry was excerpted in the “Rants & Raves” section of the May 2006 issue of Wired.

Here’s a BusinessWeek Online story I apparently missed last week, “Calling the Ethics Cops”, by Joseph Weber.

Corporate America is a surprisingly corrupt place. The high-profile scandals may have been just the tip of the iceberg. Graft, self-dealing, dishonesty, sexual harassment, and other unethical activity is strikingly common, according to recent surveys by search firm Hudson Highland Group and the Ethics Resource Center. The outfits found that between 31% and 52% of U.S. workers have witnessed co-workers operating unethically.

But that could change. One byproduct of the scandals is growth in the ranks of ethics officers. A professional group for in-house corporate cops, the Ethics & Compliance Officer Assn., began with just 16 founding members in 1992, grew to 600 three years ago and has since doubled to 1,250. For the unethical these days, says Keith T. Darcy, executive director of the Waltham (Mass.)-based ECOA, “there are no secrets and no places to hide.”

This article is worth reading, though it’s depressingly focused on behaviour that is outright criminal, rather than ethically complex or interesting. The Ethics & Compliance Officer Association actually just recently added the word “Compliance” to its title. Until recently, they were known simply as the Ethics Officer Association. Adding “Compliance” is a bit of honesty-in-advertising, I think, since it seems that compliance (making sure a company complies with legal & regulatory requirements) is most of their focus. Still, notice that the article uses the word “ethics” a whole lot, even when it’s talking about preventing behaviour that would normally just be considered outright “illegal.” Since when is stealing stuff a matter of ethics? Of course, stealing stuff is (usually) unethical. But using the word “ethics” for such cases is likely to a) make people forget that the behaviour in question is criminal, and/or b) make people conflate ethics & the law to such an extent that they risk wrongly concluding that if something is legal, it must also be ethical.

Last night I finally watched The Constant Gardner, the movie (based on John LeCarre’s novel) about murder and intrigue in the pharmaceutical industry.

After watching the movie, I thought maybe I’d blog about the (dis)similarities between truth & fiction, and how it is that an industry dedicated to saving & improving lives has become a plausible cinematic boogie-man (sort of a latter-day replacement for the once omnipresent Russian or East German bad-guys).

Then I found out today (thanks to The AJOB Blog) about the pharma story that won the 2005 George Polk Award for Health Reporting. Unlike in LeCarre’s yarn, no one gets hacked to pieces with a machete in this story; but it’s not a happy story, regardless. So, for today’s blog entry, why rely on fiction to inspire righteous indignation, when the truth will do?

Art Caplan at the Bioethics blog calls it a story about bioethics. I’d call it a story about corporate ethics. Either way, it’s shocking.

“Drug Industry Human Testing Masks Death, Injury, Compliant FDA,” was reported by Dave Evans, Liz Willen and Mike Smith. Their article documents injuries and deaths of participants in clinical trials conducted on behalf of various pharmaceutical companies throughout the U.S.

Here are the first few paragraphs:

Oscar Cabanerio has been waiting in an experimental drug testing center in Miami since 7:30 a.m. The 41- year-old undocumented immigrant says he’s desperate for cash to send his wife and four children in Venezuela.

More than 70 people have crowded into reception rooms furnished with rows of attached blue plastic seats. Cabanerio is one of many regulars who gather at SFBC International Inc.’s test center, which, with 675 beds, is the largest for-profit drug trial site in North America.

Across the U.S., 3.7 million people have enrolled in drug tests sponsored by the world’s largest pharmaceutical companies. The companies have outsourced 75 percent of experimental drug trials to centers like SFBC, a leader in a $14 billion industry.

At the same time, the U.S. Food and Drug Administration has farmed out much of the responsibility for overseeing safety in these tests to private companies known as institutional review boards. These boards are also financed by pharmaceutical companies.

So, the drug industry is paying the people who do the tests — and most of the people who regulate those tests. And that combination can be dangerous, and sometimes deadly.

Someone needs to invent a good Seinfeldian term (along the lines of “unvitation” and “re-gifting”) for “charitable” acts or donations that aren’t what they seem. (Recall my January posting about Reebok.)

Check out this story from yesterday’s NT Times: Billionaire Gives a Big Gift but Still Gets to Invest It

Boone Pickens, the often controversial and always colorful Texas oilman turned investor, took advantage of a temporary tax break to make a gift that propelled him into the ranks of the nation’s top philanthropists last year.

But what Mr. Pickens gave away with one hand he continues to control with the other.

At the end of the year, he gave $165 million to a tiny charity set up to benefit the golf program at Oklahoma State University, reaping Mr. Pickens a tax deduction. Records show that the money spent less than an hour on Dec. 30 in the account of the university’s charity, O.S.U. Cowboy Golf Inc., before it was invested in a hedge fund controlled by Mr. Pickens, BP Capital Management.

“It’s all his money, and he’s on the investment committee” of Cowboy Golf, said Mike Holder, the university’s athletic director and former golf coach, who is on the board. “If a person’s making a gift of that size, he can stipulate what he wants it invested in.”

Asked whether investing in BP Capital had been a condition of Mr. Pickens’s gift, Mr. Holder said no. “That was my decision,” he said.

Is such behaviour unethical? Well, wait: this is a good example of where we should resist asking & answering in those terms. According to the article, Pickens’ ploy is legal (which is not everything, but it’s something). According to an expert cited on conflict of interest, there is “probably” a conflict of interest here. Did Pickens actually donate money to a charity? Yes, and that’s arguably still a good thing (it will likely benefit others, perhaps more than it will benefit Pickens). So, think our ethical analysis needs to be more fine-grained than “is this ethical: yes or no?”

How about these questions:
“Does Pickens deserve our admiration for this donation?” No.
“Is this an example of (legal) tax-evasion, and perhaps a shirking of civic duties?” Probably.
“Should Pickens be listed among those few high-level philanthropists who really want to give something back to their communities?” Nope.
“Is this a good example of real philanthropy?” No.
“How much moral credit should Pickens get?” Not much.

(Thanks to Wayne Norman for pointing me to this story.)

(This posting overlaps substantially with something I wrote for the Newsletter of the Canadian Society for the Study of Practical Ethics.)

Blogging has taken the world by storm, but has frankly barely generated a breeze in academic ethics. The biggest, best, and most popular ethics blog right now has got to be the blog written by the editors of the American Journal of Bioethics (blog.bioethics.net). Glenn McGee and his colleagues crank out an impressive volume of high-quality commentary on a range of bioethical issues. It is a must-read for anyone with even a passing interest in bioethics.

My own efforts have been focused on “The Business Ethics Blog”. My inspiration for starting a blog came from my dismay at not finding any business ethics blogs to speak of out there. Given the popularity of the medium, I was sure that when I finally got around to looking, I’d find dozens of blogs about business ethics and corporate social responsibility. My initial search turned up almost none, so I took up the challenge myself. I’ve since found a few decent ones – both academic and non-academic – that I now read almost daily.

But in general, there just aren’t a lot of ethics blogs, and even fewer good ones. I think this is a serious lacuna. Critics, of course, have already been trumpeting the “death of the blog.” Blogs, they say, are mostly vapid, self-indulgent exercises in unwanted opinion-sharing. And that’s mostly true. But that doesn’t mean that all blogs are useless. Blogs of the “guess-what-my-cat-did-today” variety are incredibly common, and even the best of them lose their charm after a couple of days. But clearly not all blogs are of that variety.

I think thoughtful ethics blogs by people with a background in ethics have the potential to be incredibly useful. First, of course, a good blog is a great way for readers “in the business” to keep up with current events and current controversies. Reading the AJOB blog is my primary means of keeping in touch with events in the world of bioethics, now that I’ve shifted most of my research to the world of business ethics.

Secondly, blogs can be useful teaching tools. One friend tells me he’s using my business ethics blog as a source of up-to-the-minute case-studies for discussion in one of his classes. Of course, a blog will never provide the kind of in-depth analysis and historical perspective that a good case book does; but then again, case books tend to be full of examples – the Ford Pinto, the Exxon Valdez – that happened before the current crop of undergrads was even born.

Finally, I think high-quality ethics blogs make a serious contribution to public discourse. A good ethics blog doesn’t just alert people to stories; a good ethics blog should provide at least a little educated insight. So, when a story pops up about the “dangers” of videogames? Here are the basics – a few sentences – of the ethics of product safety. A story about accusations of conflict of interest? Here’s at least a definition of the concept. I find I use my blog the way I use media interviews: not as a chance to give in-depth analysis, but as an opportunity to give just enough insight to raise the average educated person’s understanding of a given story one notch, to show that there can be more than knee-jerk moralizing when it comes to ethically contentious issues.

Pre-eminent legal scholars Gary Becker and Richard Posner jointly write a very smart blog called “The Becker Posner Blog.”

This week, they’re blogging under the title “Google in China,” though they’re actually talking about the whole set of companies recently under fire for their activities in (or regarding) China.

Becker & Posner’s comments are worth reading in their entirety; I won’t try to respond point by point to what they say.

Just a couple of points & highlights:

What’s motivating these companies? According to Posner, “their claim to be altruistically motivated is ludicrous”. Posner’s cynicism here is unwarranted. Motives (individual or corporate) are notoriously difficult to read. Economists (and contractarian philosophers) sometimes “assume” self-interested (or profit-maximizing) motives, but that shouldn’t be taken as an actual hypothesis about what motivates specific individual companies or people: it’s rather an assumption that helps make sense of large-scale patterns of market behaviour or social interaction. Who knows what’s actually motivating Google or Microsoft? The available evidence includes their public pronouncements on the issue (which we might reasonably be skeptical about, I guess), and their history of behaviour. With regard to the latter, I’m slightly less cynical about Google than I am about Microsft. But really, the most sensible thing to say about these corporations’ claim to be altruistically motivated is not that it’s “ludicrous,” but that it’s irrelevant: we can’t really know what motivates a complex organization, so let’s focus on the likely effects of their behaviour (which is what Posner & Becker do, for the most part).

One of Posner’s points that I agree with is that we ought not bundle all of these companies’ activities together in our moral assessment: “There is a difference between censorship and surveillance”, says Posner. (“Censorship” here is a reference to Google’s agreeing to censor certain search results, and “surveillance” refers to Cisco’s selling to the Chinese government equipment that would help monitor dissidents.) I think companies can ethically enter the Chinese market, in at least some areas. But the nature of the product or service has to matter: compare the cases of a company that sells cheese to a repressive regime, and a company that sells them tear-gas.

For his part, Becker focuses on the case of Google, and the net benefit of Google providing even somewhat censored services in China:

…under present conditions [Google is] still providing millions of people in China, we hope that will climb to hundreds of millions, access to an unbelievable array of information. The subjects covered are far too numerous to enumerate, but let me just mention information about DNA and its discovery, medical treatments for breast and prostate cancers, the determination of prices under different market conditions, riots in the U.S. and elsewhere, the Becker-Posner blog, and many more.

Chinese Google users also have access to information that is highly informative about democratic institutions and processes. This includes discussions of elections in Japan, Great Britain, the U.S., the turnover of parties in power in democracies, histories of countries that were transformed slowly, like Great Britain, or rapidly, like Japan, from powerful monarchies to lively democracies. They also have some access to information on the overthrow of communism in East Germany, Poland, and the USSR, although that information is not as openly available as I would like.

In this way Google is still exposing millions of Chinese to information and knowledge that was unavailable to any one in the West even a decade ago. Isn’t this a priceless contribution to the welfare of the Chinese people, despite the restrictions placed on their access to certain subjects from using Google?

So, what Becker is pointing out that the Google’s provision of even censored search results to the Chinese market isn’t making anyone worse off. Further, it’s not denying Chinese citizens any rights that they previously enjoyed. That’s a fairly important point, ethically speaking.