Archive for the ‘product safety’ Category

Business Ethics in China

There are significant problems with business ethics in the world’s second biggest economy, China. Witness the recent scandals involving tainted milk powder. Before that, lead paint used in toys was the big issue. Last year, there was a scandal involving injecting water into meat to increase its weight. And it’s not just a matter of a few scandals. According to Transparency International’s 2009 Corruption Perceptions Index, China ranks 79th (just a couple of notches below Columbia, and just above Swaziland and Serbia. (New Zealand is #1 — i.e., least-corrupt. The U.S. ranks 19th, and Canada is tied for 8th.)

Here’s an interesting piece on the topic of the special problems of business ethics in China, on Russell Flannery’s blog on Forbes: On The Front Line In China: Challenging Business Ethics. It’s well worth reading.

Here are just a few thoughts and questions:

1) It’s worth thinking about the relationship between ethics and success in the Chinese context. Three years ago, I blogged from a conference in Latvia, and I pointed out that many countries that were formerly part of the Soviet Union “are still struggling with establishing democratic institutions, and establishing the kinds of background conditions — including the rule of law and traditions of basic trust — that allow their populations to prosper.” In other words, at least some basic business ethics is necessary in order to have a flourishing economy. It’s a truth that many economists (including Nobel prize-winners like Ronald Coase and Amartya Sen) have written about. But China’s economy is booming, apparently despite serious problems related to basic integrity in business. Why?

2) Will foreign trade help? In particular, I wonder about the role of companies like Apple and Walmart. Apple and Walmart (and especially the latter) provide mechanisms for Chinese companies to sell stuff to wealthy westerners. But Apple and Walmart are also high-profile American companies, subject to constant, intense scrutiny. And both have the economic muscle to force Chinese suppliers to do things their way, if they decide to. In other words, if Apple and Walmart insist on (and verify) certain kinds of behaviour, it will happen. In some cases, of course, a company like Walmart — with its constant pressure on suppliers to cut costs — may be part of the problem. On the other hand, dealing with a company like Walmart is going to make all sorts of basic dishonesty very hard to get away with. Walmart famously pays close attention to the details.

3) What about western companies selling things in China? A while back, I blogged about the fact that there’s a lot to be gained by, for example, North American companies that figure out how to do business in China in a way that’s ethically acceptable to the folks back home. In this regard, Google and various pharmaceutical companies come to mind. Again, those are companies subject to significant scrutiny. Is there hope that those companies can raise the ethical tone of the Chinese industries they work in or with? Again, some may find it ironic to see anyone looking to Big Pharma to improve ethics anywhere. But despite its many failings, Big Pharma is heavily regulated, and those regulations (and the threat of litigation) force those companies to avoid behaviours that are likely very tempting to companies operating in places, like China, where regulations may be more lax.

The BP Disaster: Regulating (and Managing) Complexity

In my previous blog posting on the BP oil-rig disaster, I pointed to the disaster’s ethical complexity, measured in the sheer number of relevant ethically-interesting questions that we might be interested in.

But the issue of complexity arises in a much more straightforward way in the BP disaster, namely in the fact that the oil rig on which the disaster took place was itself a terrifically complex piece of technology.

See this nice piece by Harvard economist Kenneth Rogoff, The BP Oil Spill’s Lessons for Regulation.

The accelerating speed of innovation seems to be outstripping government regulators’ capacity to deal with risks, much less anticipate them.

The parallels between the oil spill and the recent financial crisis are all too painful: the promise of innovation, unfathomable complexity, and lack of transparency (scientists estimate that we know only a very small fraction of what goes on at the oceans’ depths.) Wealthy and politically powerful lobbies put enormous pressure on even the most robust governance structures….

Rogoff’s point is about regulation, but it could just as easily be about management, and/or the relationship between the two. And to Rogoff’s examples of complexity-driven disasters, you can add Enron and a couple of NASA shuttle explosions. Now, none of these cases can be explained entirely in terms of the difficulty of managing complex systems; each of those cases include at least some element of bad judgment and probably unethical behaviour. But in each of them one of the core problems was indeed complexity — either for those inside the relevant organizations or for those outside trying to understand what was going on inside. When systems (financial or mechanical) are mind-numbingly complex, it becomes all the easier for poor judgment to produce catastrophic results. It also makes for good places to hide unethical behaviour.

So, if we’re going to build fantastically complex systems, we also need to learn how to manage those systems in highly-reliable ways. In other words, we need management systems — effectively, social technologies — that are as sophisticated as the physical and economic technologies they are intended to govern. We already know a fair bit about error-reduction and the design of high reliability organizations. Aircraft carriers are a standard example of one type of seriously complex organization that, through careful design of management systems, has managed to achieve incredibly high levels of reliability — i.e., incredibly low levels of error, despite their complexity. Similar thinking, and similar design principles, could presumably be applied pretty directly to the design and management of oil rigs. Presumably, that’s already the case to at least some extent, though as BP has proven, more needs to be done. The bigger question is whether business firms are ready and able to apply those principles to the design of all of their complex systems — whether mechanical or financial — such that we can continue to reap their benefits, without suffering catastrophic losses.

(Thanks to Kimberly Krawiec for showing me Rogoff’s article.)

Business Ethics & Alternative Medicine

This is a “meta” blog posting, bringing together the various blog entries of mine over the last couple of years on the single topic of business ethics and alternative medicine.

Alternative medicine (includes things like homeopathy, herbal supplements, Traditional Chinese Medicine, acupuncture, therapeutic touch, and so on) raises some interesting ethical issues. On one hand, most of it doesn’t work (or to be more accurate, most of it is unproven, and much of it is disproven), and we tend to think people should only sell products that work as advertised. But on the other hand, alternative medicine has many fans, and we generally think consumers ought to be able to choose for themselves what products are good for them.

Two other factors make alternative medicine interesting, from a business-ethics point of view.

One factor is that both the safety and efficacy of alternative therapies varies. Some therapies (e.g., homeopathy) are entirely implausible, whereas others such as some herbal therapies probably are effective. Not surprisingly, the pattern is reversed for safety: homeopathy is entirely safe (unless the consumer does something foolish like forgoing real medicine in favour of homeopathic remedies for the treatment of a serious illness), while on the other hand some herbal remedies pose significant dangers.

The second important factor is that alternative medicine is generally under-regulated. In Canada, for example, herbal supplements are categorized as “natural health products” and subject to only minimal oversight. The result is that neither consumers nor companies can assume that the law is providing significant oversight. In the absence of strong consumer-protection legislation, there’s a particularly strong obligation for companies to act ethically.

Here are my blog postings on this topic, in reverse-chronological order:

By the way, to the best of my knowledge, there is not a single scholarly paper that looks at the selling of alternative medicines from a business-ethics point of view. If you know of one, please let me know!

Labelling Dangerous Foods (for Kids)

hotdog safetyIn a blog posting a few months ago, I asked “Are Hotdogs Unreasonably Dangerous?” Some commentators suggested that the overriding concern with hotdogs ought to be their (lack of) nutritional value; but the immediate worry discussed in that blog posting was actually the choking hazard hotdogs pose for kids. And the question I posed was whether makers of hotdogs are in any sense responsible for deaths due to choking.

Here’s an update, based on a new story by Laurie Tarkan in yesterday’s New York Times: Labels Urged for Food That Can Choke.

This time, the issue is labelling. Here’s the bit I found interesting:

Some food manufacturers have voluntarily put warning labels on packages. “Two-thirds of hot dogs already have labels,” said Ms. Riley, of the National Hot Dog and Sausage Council. But Mr. Silverglade [legal director of the Center for Science in the Public Interest] said that was not enough….

What’s the weight of that statistic, in terms of how it should guide corporate behaviour? In an academic paper I co-wrote on the labelling of genetically-modified foods, I argued that consensus within an industry matters. When people’s safety is at stake, the fact that government hasn’t passed a law requiring companies to take action doesn’t mean those companies have no obligation to act.
When most companies in an industry think “this is how we ought to do business,” that means something. First, it means that people who know a given product best see a need for action. Also, when an entire industry gets behind a particular standard, that means that companies remain on a level playing field. Changing how you manufacture or label your product might otherwise put you at a competitive disadvantage. But when two-thirds of your industry is implementing the same standard, that argument pretty much falls apart.

Should Consumers Trust Big Pharma?

Lots of people don’t trust Big Pharma. And to a significant extent, that’s for good reasons. (I’ve blogged about some of those reasons here, here, here, here, here, here, here and here, just to cite a few examples. See also some of the entries on the other blog I co-author, the Research Ethics Blog.)

Trust in big pharma is an important issue. Pharmaceuticals are responsible for saving and improving a huge number of lives. Vaccines alone have prevented literally millions of deaths. Survival rates for many cancers are better than they used to be. And AIDS, once a death sentence, is now regarded as a chronic disease. So there’s real benefit from pharma, but also an undeniable track record of scandals and general unethical behaviour. What should we think?

The first thing worth noting is that the question in the title above is vastly oversimplified. The question isn’t “should consumers trust big pharma?”, it’s more like “To what extent, and under what circumstances, on what issues, should consumers trust big pharma?”

Setting aside the industry’s spotty track record, the main reason people tend not to think Big Pharma trustworthy is, of course, the fact that Big Pharma consists of profit-oriented organizations. And the general assumption is that money corrupts. Of course, money isn’t the only thing that corrupts judgment (so does love, reputation, ideology, etc etc), and big pharma is far from the only industry where big money is at stake. But still, there’s a real worry here (one I’ve blogged about before).

Now, what about the reasons in favour of trusting Big Pharma? What factors would tend to make Big Pharma trustworthy, to at least some extent?

Now I cannot emphasize this strongly enough: what follows is not intended to imply a general conclusion about the trustworthiness of Big Pharma. It’s just a list of important factors to keep in mind when assessing the trustworthiness of a particular claim, by a particular company, on a particular issue.

1) Ethics. Don’t just think about the organizations; think about the people who work at them. They’re mostly people like you & me. Most of them got into the business to try to help people (and, yeah, to make a living). And most of them were raised by their parents to be decent, honest folks. Most people tell the truth about most things most of the time.

2) Regulation. The pharmaceutical industry is heavily regulated, subject to lots of laws regarding the efficacy and safety of their products, as well as regarding advertising. Criminal and civil sanctions are possible when pharma companies misbehave. Now, that’s not to say that the current level of regulation is sufficient, or that enforcement is adequate. But companies (and individuals) have been subject to serious sanctions. Companies generally want to stay out of court, and so they’ve got a reason — not always a sufficient reason, but a reason — to behave in a trustworthy manner.

3) Peer Review. In few other industries is fundamental information about what makes your product work (or not work) open to public scrutiny. In order for a new drug to receive approval to be marketed, it has to show itself to be safe and effective in clinical trials, and the results and methods of those trials have to be published in peer-reviewed medical journals. Drug companies are not allowed to make claims based on secret data. “Peer reviewed” means that the articles reporting on the trials have to be vetted by a panel of qualified experts if they are ever going to see the light of day. It’s an imperfect system (all systems relying on human judgment are) but bad science tends to get weeded out pretty quickly. Then, once a study is published, it’s there for assessment, and potentially criticism and rebuttal, by hundreds or thousands of other experts.

4) Scientific Overlap. You sometimes hear it implied that physician-researchers (the ones who do most clinical research, as well as doing all that peer reviewing mentioned above) have all been corrupted by corporate money. And it’s true that there really is cause for worry here. Too many docs get too much money (and other perks) from pharma, and are insufficiently transparent about that. So: it’s good to worry…up to a point. Here’s the problem with the pharma-controls-everything theory. Physician-researchers publish in scientific journals that are read not just by other physicians (some of whom don’t have industry funding), but also by biologists, chemists, epidemiologists, statisticians, and so on, most of whom have no corporate funding whatsoever. Further, modern science more generally is an enormously complex process for finding mistakes and exaggerations in each other’s research. And it helps that there’s significant overlap between the sciences, so no one group of scientists is ever truly isolated and free from scrutiny. Oversimplifying, you could say that biologists are double-checking the work done by the physicians, chemists are checking up on the biologists, and physicists are checking up on the chemists. (That’s why any physician who tries to use “quantum theory” in writing about disease had better be careful: there are armies of physicists waiting to explain just how irrelevant quantum mechanics is to human physiology.)

5) Competition. People often talk about Big Pharma as if it’s a monolith, one big organization, rather than a bunch of companies with divergent interests competing savagely with each other. That competition gives them every reason to attack each other’s weaknesses, and to point them out to the public. Add to that the fact that there are hundreds of smaller firms nipping at the heels of the big players. It’s far from a cozy conspiracy. This vicious competition of course means that there’s sometimes an incentive to cut corners in unscrupulous ways; but it also means that when you cut a corner, there’s always someone out there ready to point it out.

Now, again, this list is not supposed to lead to any particular conclusion about just how trustworthy Big Pharma is. It’s just a list of social and institutional mechanisms we need to take into consideration, in addition to the obvious bad track record and obvious financial incentives. Each of those mechanisms will apply to a greater or lesser degree with regard to specific situations. For particular issues, we need to think carefully both about what’s at stake, and about whether the above factors are likely to be sufficient to reassure us.

Late-breaking Note:

I’ve been getting (and rejecting) comments full of unsubstantiated, and in some cases very dangerous, claims on some topics related to the above. When it comes to matters of health, if you’re not going to cite reliable sources, I cannot take responsibility for allowing your comments on here. There’s too much at stake, in terms of public health.

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