The Business Ethics Blog

I’m not sure why I haven’t blogged about this case before. Everyone in the world of bioethics / health-care ethics knows about it, but maybe not everyone with an interest in business ethics, though it’s as much a story about corporate ethics as it is about health.

It’s a story about 6 healthy young British men who were paid to be part of what’s called a “Phase 1” clinical trial, to determine whether a new drug was safe for use in humans.

It was not safe. Definitely, devastatingly not safe.
Indeed, the 6 men “ended up in intensive care, their heads swollen like balloons and their immune systems seriously damaged.”

Here’s the story, from The Mirror ONE YEAR AFTER DRUG TEST HORROR…NO APOLOGY NO MONEY

The drug is called “TGN1412,” and was developed for treatment of leukemia and certain inflammatory conditions. The young men were each paid £2,000 (about $4,000) for their work as human guinea pigs. For this, they were to undergo several injections and a few days in hospital under observation. That much is pretty standard. Every new drug has to be tried on someone first (following, of course, trials in animals — which, unfortunately, don’t always give definitive evidence of a new drug’s safety for humans).

The result in this case was very nearly a worst-case scenario: all 6 men had nearly immediate, serious reactions to the drug. All of them ended up in the intensive care unit, in excruciating pain. As the Mirror puts it, “The drug was destroying their immune systems and shutting down their vital organs.”

Here are some of the ethically interesting elements of this case:

1) The company running the study had an insurance policy to help in case of adverse outcomes — but the policy is too small (£2million, or about $4 million) to cover the health-related expenses the 6 men are likely to face as a result of the drug trial.

2) The manufacturer of TGN1412, a German company called TeGenero, has gone out of business. As a corporate entity, it no longer exists. An American firm, Parexel, was running the drug trial, but has refused to accept responsibility. (This highlights one of the down-sides of the limited liability corporation. Once a corporation has folded, no one is left to take responsibility.)

3) From what I can read, the consent the men gave to participate in the trial was pretty far from the standard of “free and informed.” Well, it was free, but not terribly well informed. According to the Mirror, the men were told that the only risks were things like nausea and headache. The physician in charge of the trial apparently reassured the men that this was “certainly” not a risky trial.

I don’t have a lot to add by way of analysis, except this:

One important note has to do with the role of physicians. There’s some dispute, in the research ethics literature, about the role of physicians in clinical trials. In conducting such trials, is a physician “primarily” a health-care provider, with overriding fiduciary obligations to the patients involved, or is she “primarily” a researcher, with an overriding obligation to the advancement of science? Or, again, is she “primarily” a corporate employee or consultant or contractor? I don’t have space to offer a full argument here, but I’m of the view that physicians cannot — ever — shed their role as trusted providers of healthcare. A physician conducting a clinical trial is still a physician. (In the eternal words of Marge Simpson, “A professional in a gorilla suit is still a professional.”) No matter how useful it might be, in some circumstances, for corporations to be able to treat physicians as their private consultants, physicians remain publicly-licensed professionals, trusted and generally held in high esteem by the patients in their care. It’s quite likely that the young men in the TGN1412 were greatly reassured by the presence of a physician, and trusted that physician to protect them.

A second point to make is that this case should be studied by business ethics scholars and taught in business ethics classrooms, just as it ought to be (and likely will be) talked about by scholars and students of bioethics (and, in particular, of research ethics). It’s a case about health, and about health research, but it’s clearly also a case about corporate responsibility. How much should health-research corporations do to protect the people who participate in drug trials? How much insurance ought they carry? What attitude ought such corporations adopt with regard to the physicians (or other professionals) in their employ? And what is the pharmaceutical industry as a group going to do to better self-regulate, so that incidents like this don’t happen, given that such incidents are clearly detrimental to the industry as a whole, as well as to the public interest?

See also:

From the New York Times (last April): British Rethinking Rules After Ill-Fated Drug Trial

Relevant Books:
Case Studies in Biomedical Research Ethics
The Ethics of Biomedical Research: An International Perspective
Belmont Revisited: Ethical Principles for Research with Human Subjects

Just in case you ever wondered, here are what are currently the Top 10 Most Popular Business Ethics Blog Entries (stats were collected over the first half of this month, i.e., March 1- March 15, 2007).
According to my site stats, these are the most-viewed blog entries…mostly, that means these are the ones most often sought out via Google (and other search-engine) searches. And no, listing my own top-10 isn’t entirely narcissistic…it provides a bit of a window into what sorts of business ethics topics folks out in the google-sphere is interested in.

So, here they are, starting from my most popular blog entry ever…

#1. Exploitative Videos: Bumfights & Girls Gone Wild (Why is that such a popular entry? I’ll leave that to your imagination…)
#2. Continuing Trouble at HP (presumably popular because the HP trial was in the news this week)
#3. What Causes Unethical (corporate) Behaviour? (This one’s been in my top-10 list forever. I guess people just google the causes of unethical behaviour a lot.)
#4. Disney & Sweatshops in China (This is a classic business ethics topic, and probably the topic of a gazillion ethics class assignments.)
#5. Wal-Mart’s New Policy on Shoplifting (Wal-Mart is always a popular topic. No idea why this entry is so much more popular than a dozen other times I’ve blogged about Wal-Mart.)
#6. Enron: Accepting, Without Taking, Responsibility (Again, Enron is a popular topic. But no idea why this entry is more popular than others about Enron.)
#7. McDonalds CSR Blog
#8. Pavlo on Skilling (the business ethics blog interview)
#9. Wal-Mart Movie
#10. Enron: Bad apple or poisoned orchard

I’m getting to it a bit late, but here’s a really interesting editorial from the Financial Times from about a month ago:
Profitable principles

The gist of the editorial is this: companies that undertake “socially responsible” initiatives almost never do so for noble, principled reasons. They do it because they think it will contribute, in some way, to the bottom line. That’s OK, says the FT, because “…as long as they produce results, there is nothing wrong with these self-interested motives.” The obvious follow-up question is this: what about when such efforts don’t produce results? The FT’s view on this is unclear. So, what should we think of self-interested corporate behaviour of the kind that seems socially responsible, but turns out not to have a positive impact?

To make any headway, we need to distinguish between two kinds of cases. In one kind of case, a corporate initiative that seems both socially responsible and profitable turns out not to have a positive social impact after all. Such cases are not necessarily cause for condemnation. Sometimes, things don’t turn out as planned, and decisions need to be judged based on the information the decision-makers had at the time the decision was made. Sometimes perfectly good decisions lead to bad outcomes. In a second kind of case, a corporate initiative that seems both socially responsible and profitable turns out never to have been intended to have a positive social impact. (This category includes many instances of greenwashing.) Clearly, we should be more worried about these cases. In these cases, the (normally justifiable) pursuit of profits is carried out by unethical means, namely by deceiving the public (and the market) about just what it is that they’re buying.

The other thing I wanted to point out about this FT editorial is that it helpfully reminds readers that some social problems are well-suited to remediation through market mechanisms (perhaps driven by conscience-driven consumerism), and others are simply best left to careful government regulation:

Voluntary standards will leave serious gaps. Consumer outrage has ensured that fair trade coffee is widely available, but seems to have made little impact on pollution from aeroplanes. It is hard to see how it could.
If customers are willing to pay for greener products produced to higher standards, then companies will respond. Such market demands, though, can be whimsical. Market leaders such as Nike will face strong incentives to do business ethically, but consumers put little pressure on smaller firms in anonymous sectors. We demand ethical trainers, but not yet ethical staplers or ballpoint pens.

First it was energy efficient lightbulbs. Now, retailing super-power Wal-Mart has set its sights on solar energy.

According to the Financial Times,

Wal-Mart (NYSE:WMT) , the world’s largest retailer and the largest private employer in the US, is regularly beset with superlatives. It may be now on the way to adding another, as it takes the first steps towards becoming the US’s largest user of solar power.

At the end of next month the retailer will receive proposals from companies that are interested in installing solar power equipment at a yet-to-be-determined number of its stores in as many as five US states. Initial projects would be carried out this year, but the retailer has also asked bidders for “expansion or build-out plans, including projected prices and costs, over the next five years”.

Just one more reason to believe my prediction about Wal-Mart, namely that, before long, the much-maligned company will be at the top of business ethics / CSR rankings. Anyone taking bets?

What do private companies owe the public when they profit from public subsidy or tax-dollar investment?

This question has been especially salient in health-related industries. Drug companies, for example, have been accused of charging the public twice for pharmaceuticals: citizens pay once for drugs through public investment in research, and then again at the pharmacy counter. But it’s not just pharma, of course: this criticism could be leveled against any company in any industry that benefits from substantial investment from government.

Grad students Matthew Herder and Jennifer Dyck Brian have commented on this in detail, in their paper “Canada’s Stem Cell Corporation: Aggregate Concerns and the Question of Public Trust.” [Abstract] The biotech company in question — Aggregate Therapeutics — is unique in that it was created not by private entrepreneurs, but by the Canadian Stem Cell Network (part of Canada’s federally-funded Networks of Centres of Excellence). The company brings together under one virtual “roof” the research — and intellectual property — of key research scientists and labs from across Canada. The idea is that many individual labs and individual researchers, on their own, don’t have the resources to bring key stem cell research to fruition. But joined together as Aggregate Therapeutics, they have enormous potential. Essentially, the company is an attempt to achieve economies of scale in an otherwise small and fragmented Canadian stem cell research community.

One of Matthew and Jennifer’s key worries about Aggregate Therapeutics is that the governance structure of the company does nothing to guarantee its supposed purpose, namely to push stem-cell research forward for the benefit of all Canadians. Set up as a private corporation, Aggregate Therapeutics will naturally seek profit for shareholders, and Matthew and Jennifer point out that those backing the company have little to say about what would happen in circumstances where the interests of shareholders failed to coincide with the interests of Canadians more generally. So, the owners of the company will benefit from aggregating publicly-funded research, without ensuring any return on investment for the public that funded it.

I’m not entirely convinced by this argument: governments invest public money in research (or in other kinds of infrastructure) because they believe — rightly or wrongly — that doing so is in the public interest. It’s not obvious that there’s a problem when companies that benefit from such investments fail to guarantee a specific return on that public investment — after all, typically none is promised. If government invests in education in Computer Science, for example, the result is high-quality employees for computer companies. No one expects computers to be sold any cheaper, though.

But this point is certainly debatable, and ought to be open for debate. And Matthew and Jennifer are certainly right that the lack of transparency here is appalling. Chances are that very, very few Canadians have even heard of the company. The website for Aggregate Therapeutics is a single-page thing that gives very few details. A few more details are available in various newsy and PR pieces online, such as this one. And so far, the media has failed to take notice of this strange new company, and to ask the kinds of tough questions that Matthew and Jennifer are asking.

(To find out more about their research, you can contact Matthew, at mherder@stanford.edu. Jennifer can be found here.)
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(Full disclosure: Matthew and Jennifer’s paper is part of a Special Issue that I edited for the Journal of Business Ethics, dedicated entirely to ethical issues in the biotechnology industry. So, I’m not an unbiased commentator on their work.)

Here’s a somewhat odd example of honest advertising, at the hardware store near my house:

Well, it’s blunt at least. I haven’t seen the light fixtures they’re selling, so I can’t vouch for the accuracy of this claim…

Merck (the pharmaceutical company) has apparently decided to stop lobbying state legislatures in the US to make their new HPV / Cervical Cancer vaccine mandatory for young girls.

(I blogged about this last May: Merck’s Cancer Vaccine & the Religious Right)

Here’s the recent story, via ABC News: Drug Giant Merck Suspends Campaign for HPV Vaccines

Drug manufacturer Merck & Co. announced Tuesday that it would suspend its campaign urging states to implement mandatory vaccination programs for preteen girls with Gardasil, its human papillomavirus vaccine .

According to the company, Merck made the move to avoid having its campaign take attention away from the bills being drafted in many U.S. states that would make the vaccine mandatory for preteen girls.

So, essentially the folks ar Merck are stopping their lobbying campaing because they’ve realized that it’s actually counterproductive. Corporate lobbying generally is a really great business ethics topic: it seems perfectly legitimate for companies large and small to try to influence public policy, but with great power comes great responsibility.

Of course, Merck hasn’t stopped promoting Gardisil altogether. If you haven’t already, you’ll soon bump into an ad like this, which I ran into while reading the news this morning:
What’s interesting about the ad campaign is the focus on parents protecting their daughters. I assume this campaign is going to result in some serious soul-searching for a lot of parents — parents who love and want to protect their daughters, but who don’t want to admit (or foresee) their daughters being sexually active. It’s going to make for some rather complicated parent-daughter conversations, I’d say…

Oil execs must wake up every day and thank their lucky stars that there are tobacco companies out their making oil companies look good in comparison.

Yesterday, I blogged about a plan by RJ Reynolds to spend a lot of money to promote a new brand aimed specifically at women.

Now comes news that 3 tobacco companies will challenge a Canadian law that restricts cigarette advertising in various ways, including forcing companies to place graphic health warnings (like the one above) on cigarette packages.

Here’s the story, as told by the Halifax Chronicle Herald’s Christopher Maughan: Tobacco industry challenges ad laws

Canada’s three major tobacco companies are at the Supreme Court arguing for looser restrictions on tobacco advertising, saying the current law is so vague it amounts to a total ban and violates the companies’ constitutional right to advertise.
Under the current federal Tobacco Act, cigarette manufacturers can advertise in adult-only public places, in certain magazines, and through direct mail. But few companies have actually bothered because of what they say is a vague section of the Tobacco Act aimed at forbidding advertising aimed at kids.

The debate over freedom of commercial speech is a complicated one. Freedom of speech is a dearly-held freedom in all civilized parts of the world. But does that right extend to corporations? When you limit the free speech of a corporation, are you effectively limiting the free speech of the people who collectively make up the corporation? What kinds of ill effects must be anticipated from commercial speech before we’re justified in restricting it. Or are restrictions never justified?

I’ll just add one further thought, specific to the current case: It’s hard to square the tobacco companies’ opposition to limits on advertising with their claim (which they often make) that their ads are only aimed at converting people who currently smoke to their brand. The limit on advertising affect all firms equally (well, except that it’s tougher on new firms, firms that don’t have well-established brands). So, generally, big tobacco can only complain if it sees the limit on advertising as preventing them from expanding the total number of smokers, something they have claimed not to be trying to do.
So, evern IF they’re right that the limit on advertising is a wrongful restriction of commercial speech…why exactly are they bothering to fight it? Please don’t try to tell me that they’re doing it on principle.
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Thanks to Lorraine for alerting me to this story!

It’s almost as if, with increasing attention being paid to breast cancer lately, the folks at R.J. Reynolds figured they could afford to help a few more women get lung cancer, and maybe no one would notice. Never mind that lung cancer already kills a lot more women than breast cancer does.

R.J. Reynolds, the tobacco company, is about to start a new advertising campaign, at an estimated cost of $25 to $50 million, the foreseeable consequence of which will be the deaths of a lot of women.

That’s the estimated cost of the ad campaign to introduce Camel’s latest sub-brand, “Camel No. 9,” which is aimed at women. Apparently Joe Camel has been a guy’s guy for too long. As of this year, he’s got an equal helping of love for the ladies.

See the New York Times story here:
A New Camel Brand Is Dressed to the Nines

THE next time R. J. Reynolds Tobacco asks smokers to walk a mile for a Camel, watch how many of them are in high heels.
Reynolds, eager to increase the sales of its fast-growing Camel brand among women, is introducing a variety aimed at female smokers. The new variation, Camel No. 9, has a name that evokes women’s fragrances like Chanel No. 19, as well as a song about romance, “Love Potion No. 9.”

What can I say that’s not obvious? Yeah, cigarettes are legal, but not everything that’s legal is ethical. Sure, people choose to smoke…well, sort of. Most people start due to peer pressure (and advertising?), and keep smoking because nicotine is addictive. But hey, everyone’s got a right to make a living, right? And sure, RJR says it’s only trying to attract women who already smoke to switch to their brand. But that’s neither plausible nor exculpatory. All of that is obvious.

So, here’s the discussion question for the day. How much individual, personal responsibility falls on each and every employee at R.J. Reynolds, for selling a deadly, addictive product? The industry, as a whole, doesn’t care about the ethics of selling their product, and from a legal point of view, their huge profits allow them to survive even enormous lawsuits. But don’t the people who work for these companies deserve some blame? (Clearly, the blame can’t be too specific, and can’t be shared equally. A janitor mopping the floors at RJR’s corporate headquarters is indeed an employee, but he can’t reasonably be blamed for the death of some specific individual smoker, even though he’s contributing to the success of the business that made the product that contributed to her death. But just as clearly, senior executives can’t escape personal moral responsibility for statistical increases in deaths associated with their products. Right?)
But I’ve said enough. Discuss among yourselves.

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Tip of the hat to Andrew potter, who appropriately labelled Camel the “evil brand of the day.”

The CRO (Corporate Responsibility Officer) Magazine has just announced its 8th annual list of the “100 Best Corporate Citizens 2007”. As always, the list itself and the article that accompanies it both make for interesting reading.

Topping the list are:

1. Green Mountain Coffee Roasters, Inc.
2. Advanced Micro Devices, Inc.
3. NIKE, Inc.
4. Motorola Inc., and
5. Intel Corp

Here’s a bit of the article that accompanies the list:

Environmental responsibility. Corporate governance and ethics. Fairness toward employees. Accountability to local communities. Providing responsible products and service to customers. Maintaining a healthy rate of return for investors.

Those are just some of the challenges of responsible business in the 21st century, challenges that are being met head-on by the 100 companies listed. These are the 100 Best Corporate Citizens for 2007—companies that are proving that good corporate citizenship and good business go hand in hand.

The 100 Best Corporate Citizens list takes a systematic approach to assessing the social and environmental characteristics of a good corporate citizen. The list is drawn from approximately 1,100 publicly held U.S. companies in the Russell 1000, S&P 500 and Domini 400 indices, relying on extensive data collected by KLD Research & Analytics, an independent investment research firm in Boston.

A couple of comments….

My first comment is about size. It’s interesting that the list seems to be dominated by big companies. This means one of two things. It could be that the evaluative criteria used are biased in favour of big firms (in which case they ought to be fixed). The other possibility is that, on average, big firms make better corporate citizens, a thesis that is strongly at odds with many people’s perceptions (though that doesn’t make if false). (FYI, there’s a small but useful literature about the various ethically-significant ways in which small-and-medium enterprises — SME’s — differ from big firms. See, for example, Laura Spence, “Does size matter? The state of the art in small business ethics,” Business Ethics, A European Review, Volume 8, Number 3, July 1999.)

My second comment is about aggregation of indicators. As regular readers will know, one of the criticisms that Wayne Norman and I aim at the so-called Triple Bottom Line is that it’s impossible, even in principle, to meaninfully aggregate various measures of social performance to generate a social “bottom line.” But of course, CRO does reach a sort of “bottom line” of corporate citizenship for each company it studies, upon which it bases its ranking. In particular, it does so by averaging the scores that a company attains in each of 8 categories (Community, Diversity, Environment, etc.). And this method probably does a decent job of indicating social performance. But please do take note of the method used: mathematical averaging. Averaging implies that each of the factors averaged is exactly equally important. So, for example, it implies that Employee Relations is no more important than Community (an ethical perspective which is at the very least debatable). It also means that lousy performance in any area (even a really crucial area) can be hidden. Doing poorly on environment? That’s OK, you did great on Employee Relations, so it ‘all averages out.’ Now, I’m not actually trying to criticize the methodology here. It actually seems pretty reasonable, for the purpose at hand. I just want everyone to be aware of the value assumptions that go into the design of such a ranking.
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(p.s. Here’s a curious question. I saw a press release today from Motorola, touting the fact that they were #4 on the Top 100. Given that thousands of companies are eligible, ranking ANYWHERE in the top 100 is an accomplishment. But rhetorically, it might sound funny to brag about being #92 or something. I wonder, of all the companies that issued press releases about their ranking, what was the LOWEST ranked company?)