MGMT 520 Week 1 Discussion Question 1 (National and International Ethics Patent Rights)

7/14/2019 MGMT 520 Week 1 Discussion Question 1 (National and International Ethics Patent Rights)

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National and international ethics - Patent rights

In the fall of 2001, anthrax was used as a weapon of terror in the United States, when it wassent to numerous media and political organizations and individuals, including Tom

Brokaw of NBC News, Dan Rather of CBS News, and US Senators. According to a

report from the CDC, 22 people who were infected with the anthrax spores which weremailed out in two separate attacks, and of those, five persons died. (CDC) Fortunately

for many of the victims, once it was established and known that anthrax was the cause

of the illnesses (and deaths), Bayer was able to provide for sale to the victims and to

others who feared becoming victims, a drug they had invented and patented called

"Cipro." Bayer, AG, is a German based company, which has plants in various

countries, the U.S. included. Bayer was founded in 1863 and is well known for its

trademarked "aspirin" (1899) but not so prominently known for its trademark of

heroin in 1900, marketing it for decades as a children's cough medicine. During the first

and 2nd world wars, Bayer was involved in chemical warfare manufacturing and has

spent a considerable amount of time and money overcoming some of the repercussions

of their involvment in those wars and the atrocities which occurred during them.

Despite this, they remain a well-respected name brand in many households throughout

the world. (GMWatch)

Bayer had paid reparations after World War II and had its patent for aspirin stripped

from it and awarded to a US Company due to its involvement with the World Wars.

Bayer wasn't allowed to even use its name until 2000 and so during the anthrax crisis,

kept a low profile as a deliberate means to avoid appearing "exploitive of the problem"

of the anthrax scare in the U.S. Once the anthrax scare happened, however, Cipro went

into high demand, and people all over North America were stockpiling the drug,

making it even more scarce and driving up the cost. Because only people withprescriptions could purchase the drug in the U.S., Mexican pharmacies capitalized on

the market and starting selling it to the US citizens for a huge profit. Canada became

frustrated with Bayer's refusal to answer their questions about its ability to meet

production needs in the event the anthrax crisis went global. It suspended Bayer's

patent and ordered other drug companies to produce their generic formulas. Bayer

immediately threatened such companies with litigation in the event they violated the

patent on Cipro. (Jennings)

The U.S. Congress began considering suspending the Cipro patent as well. The CDC

announced a warning to people stockpiling Cipro that it was a dangerous drug with

serious side effects which people should not use without medical supervision. Manyargued that the US suspension threat was simply used to negotiate down the price of

Cipro, and in fact, Health and Human Services Secretary Tommy Thompson was

instrumental in these negotiations. At no time during the situation was Bayer unable to

fulfill the orders or needs for Cipro. Bayer had $1 billion in Cipro sales in the year prior

to the anthrax attacks (Herper, 2001)

At the time of the crisis, Bayer's statement of corporate values was:

Our goals are to steadily increase corporate value and generate a high value added for the

benefit of our stockholders, our employees and the community in every

country in which we operate. We believe that our technical and commercial expertise



involves responsibility to work for the common good and contribute to

sustainable development. (Jennings, 2008)

Now, more than a decade after the crisis, you can review Bayer's newer mission and

values statements on their US website (http://www.bayer.com/en/mission---values.aspx).

Let's discuss this scenario using the ethical dilemma resolution models and the

information about social responsibility in our text, as well as using the International

Code of Ethics article you can find here or in doc-sharing, authored by our textbook

author, Marianne Jennings.

• Are there situations in which a company, for the common good, must give up the

economic advantage accorded by intellectual property laws?

• Should Bayer have followed its own credo more than it seemingly did?

• Was it unethical in threatening litigation to those who attempted to thwart its

patent rights?

• And was the US and Canada unethical in using their governmental actions in

ignoring patent law to gain a negotiating edge in getting the price of Cipro

lowered during the crisis?

• Would an International Code of Ethics have assisted in this scenario?

----------------------------------------------------

This case is based on a case study written by Marianne Jennings in her 2008 version of

our textbook. It has been modified significantly through use of the following references:

Herper, M. (2001) Cipro, Anthrax and the Perils of Patents Forbes.com Retrieved from:

http://www.forbes.com/2001/10/17/1017cipro.html (Accessed on 3/31/2012)

Jennings, M. (2008) Business: Its Legal, Ethical, and Global Environment, 8th Edition.

South Western Educational Publishing, 01/2008. p. 74.

Jernigan, D, et. al. (2002) Investigation of Bioterrorism-Related Anthrax, United States,

2001: Epidemiologic Findings EID Journal Vol. 8, No. 10 Retrieved from:

http://wwwnc.cdc.gov/eid/article/8/10/02-0353_article.htm (Accessed March 31, 2012)GMWatch (n.d.) Retrieved from: http://www.gmwatch.org/gm-firms/11153-bayer-a-

history (Accessed March 31, 2012)

Holmes, P. (2001) Bayer Responds to Cirpo Crisis The Holmes Report. Retrieved from:

http://www.holmesreport.com/opinion-info/1346/Bayer-Responds-to-Cipro-Crisis.aspx

(Accessed March 31, 2012)

Why an International Code of Ethics would be good for Business.docx

• September 11, 2001. . . to this day we can all recall where we were and what wewere doing. Not since Pearl Harbor had the United States been under direct



attack by an enemy of our country. We turned a corner on that day, and life will

never be the same. The Bayer/Cipro controversy considers the duties of a

company in time of national crisis, terrorist attacks, and time of war.

Does anything change for business during a time of national or international

crisis relative to its core mission of returning a profit to its owners? Should abusiness consider social needs and responsibilities in addition to or to the

exclusion of the needs and expectations of its shareholders in such a situation?

Specifically, does the Bayer Credo--"... We believe that our technical and

commercial expertise involves responsibility to work for the common good and

contribute to sustainable development" guide the company as to what its social

responsibilities should be with regard to its Cipro product in a time of crisis?

Ans:

"Our goals are to steadily increase corporate value and generate a high value added for the benefit of our stockholders, our employees and the community in every country in which weoperate."

To answer the question, Does anything change for business during a time of national or international crisis relative to its core mission of returning a profit to its owners?

Coming from the stand point of Bayer, I assume that they still a company that still indeedneeds to make it's profit, they have workers to pay, also keeping the shareholders happy, Idon't see why it would change anything. They're there making the medicine, it's not like theycan stop production and now people in high demand. It's more of an issue wheregovernment and other countries trying to get a piece of the money. At the end of the day,Bayer still has a company to run, and they are producing what the people needs, the unethical

part would be that they Bayer quit production and with the patent, they force other companiesnot to be able to make the Cipro. If there was no money involve, Canada and the USGovernment would not care what Bayer is doing... It's wrong that Canada and US Gov. usingtheir power to suspend a companies creation and let it go wild. Bayer's corporate values were,"Our goals are to steadily increase corporate value and generate a high value added for the

benefit of our stockholders..." and they delivered on that promise with $1 billion in sales.Therefore, if you were a stockholder or any one of the many pharmacies making money off Bayer then you would more than likely have to say that Bayer did what they told the publicthey would do.

In a perfect world, companies would not profit off of tragedies, but that's just not the way theworld works. Capitalism works because there are good times and there are bad times. I don'tthink that Bayer should of had to give up their patents to other companies so that they couldmake a drug that they didn't do the research on. Companies that do research in creating a druglose millions upon millions of dollars when that drug is in development, testing and trials.The company has to be able to recoup the money it spent in designing the drug. It's the same

for the music and movie industries. Is it right for people to download music that they didn't pay for and "rob" the artist of their intellectual property? If not, then it's not right for a drug



company to basically be given a formula and allowed to produce that drug and sell it for a profit when they didn't help develop it.

I don't think it was unethical at all in threatening litigation to those who attempted to thwartits patent rights. They spent the money developing the product and have the legal rights to

it's ingredients. That being said, I do think they could have done more in such an uncertaintime where war was basically at our country's doorstep. Part of their Credo even states"involves responsibility to work for the common good." Bayer could have done more tocreate the Cipro product to ensure availability. Pharmacies were starting to run low on the

product, which drove up price. The higher demand causes consumers to look elsewhere for the product, and ended up purchasing Cipro illegally from Mexico. Not only does Bayer, inthis circumstance, have social responsibility to the U.S., but to the entire globe. Canadashould have had more access to the product, especially considering our continuous alliancewith our neighbor to the North.

Herper, Matthew. "Should Bayer Cut Prices to Protect a Patent." Forbes. Forbes Magazine,

24 Oct. 2001. Web. 31 Oct. 2012.

Should a business consider social needs and responsibilities in addition to or to the

exclusion of the needs and expectations of its shareholders in such a situation?

During the time of national or international crisis, corporations should have a moralresponsibility to provide products and/or services that would help the common good.Companies should take into accounts its customer base and how their lives are being affected

by crisis. How can a corporation generate revenue if its customers destitute or dead?

The tragedies of September 11th showed that Americans are able to support each other during

a time of crisis. However, companies such as Bayer and other corporations may look attraumatic situations as business opportunities. Bayer refused to allow other drug companiesto produce a life- saving drug in order to protect its patent that would have expired within afew years. Meanwhile, the U.S. Government bullied the drug company into lowering its

pricing for the drug by threating its patent for the drug. Bayer conceded and lowered its price from $4 per pill to 95 cents per pill. Should the government have footed the bill and paid the $4 per pill, or should Bayer have the corporate responsibility to lower its prices inorder to make the drug more affordable?

Government tried to bully Bayer, but should it be allowed to impact Bayer's rights in its

R & D and in its patent? Or should this be a natural part of the government's role in

crisis?

Companies and organizations will adapt and change to support the needs due to a time of national or international crisis, such as the 9/11 attacks on the Twin Towers, I believe that thewant to turn a profit is great and the choice to show a company's social responsibility is moreof a photo opportunity to get the organization good publicity. An American company or anyinternational company that has a large business holding in America would have facedimmediately public out-lash and lost revenue if they did not provide support and showsensitivity to the attacks. That sort of out-lash forces companies to be socially responsiblerather than them choosing and wanting to be socially responsible, its almost not even a choicefor them anymore. I think it is only a matter of time before we start seeing companies doing

this regarding Hurricane Sandy.



The idea of corporate social responsibility is a fascinating one and has become quite a trend.The term "corporate social responsibility" is a relatively modern one, but companies have

been helping their communities for ages. I think that a business needs to concentrate more onthe part of their mission statement that focuses on the well being of their community and their employees during a time of crisis. Yes, they need to stay steady as a rock to keep time

moving forward and to keep the economy going. However, they also need to be strong sothey can help out emotionally and monetarily for their hurt community and possiblyemployees. This could be through donations, or extra pay checks for thos affected. They of course should still think of the shareholders in terms of the economy and not crashing thestock market, but a company should also focus on the employees and communities mentionedmost often in their mission statements. Bayer does stay that they have a responsibility to work towards the common good as they were working again political arguments to just help the

people. I believe the company does guides what its social responsibilities are during a time of crisis.

In the Bayer scenario can we identify possible conflicts between the needs of Bayer, its

shareholders, and the public?

There are multiple perspectives in looking at the Bayer situation, so I hope we will consider them all. There are certainly ethical and legal questions here. Yet, beyond Bayer's choices, weshould also consider the role of government in this scenario. What is the role of thegovernment in a time of crisis? For example, who defines what is a "crisis," when it begins,and when it ends? When, if at all, should the government involuntarily suspend a patent?

Should Bayer have voluntarily suspended its patent in light of a potential public health

crisis? Or should it have complete freedom to protect its patent and its profits? If Bayer

did not voluntarily suspend its patent, should the government then step in? We have a

debate going, with excellent thoughts on both sides of this issue.

This is a topic that we always discuss at work - exactly what is the government'sresponsibility to us in these situations? I don't believe that it's necessarily their job to protectus, but at the same time the government has the means and ability to provide us with anyadditional resources we need and to investigate the causes of certain things. They have aforum and a voice that we as individuals don't have and they're able to disseminateinformation to a larger group of people. For example, when there are outbreaks such ashepatitis or swine flu we as citizens rely heavily on the government to inform us of an

outbreak and let us know what precautions we may need to take. Even with Hurricane Sandy,those affected are relying on the government to make resources available so that communitiescan be rebuilt.

I think for me it would depend on the product/service I was looking to buy as wether or not Iwould choose or reject a company based on it's social responsibility. If it was a big purchasethat I really wanted and was going to spend a lot of money on and could possibly be aboutmy safety/well being like a car or house, I would definintly base my opinion on the socialresponsibility of the company. If it was known that companies had recalls on their products

but didn't tell the consumer right away I wouldn't want to buy a car from that company, for example.

If I was choosing a company for an item like toilet paper, tooth paste and things like that



more than likely I would choose price over social responsibility of the company. Walmart for example. I have seen movies about how Walmart treats their employees bad and tells them totry and get on Welfare so that they don't have to pay for their insurance. I don't agree with thesocial responsibility of Walmart here at all, but I will still go there and buy the products that Ineed to save money.

Bayer had international obligation to provide the countries with drug and to be honest aboutits ability to meet demand. The International Code of Ethics would have greatly assisted inthis scenario; Bayer and the Mexican government would have a social & global responsibilityand responsible care to people to assist the US, Canada and other European nations. If Bayer would of been a responsible company, it would not given the Mexican companies or anyother company to price gouging the international community.

The US did what needed to be done by the suspension of their patent rights. If a companycannot behave ethically during a possible international crisis that a country has the right to dowhat needs to be done to protect the citizens of their country.

In light of the attacks of 9/11 and subsequent threats, we considered the duties of Bayer to theworld at large as contrasted with its duties to its shareholders. Specifically, should Bayer sacrifice short-term profits and even suspend its patent temporarily in order to ensure that if needed, Cipro was available in mass quantities? As it turned out, mass quantities were notneeded, but Bayer struggled to make the right decision and to handle public perception of itsactions. In a world fraught with corporate scandal and fear about our security, this is aquestion of real consequence.

It is important to understand that "shareholders" and "stakeholders" are not necessarilyidentical--a company's stakeholders may include employees, customers, shareholders,

suppliers, governments, and nongovernmental organizations in essence, anyone affected bythe actions of a company. In other words, are there times a company must consider the bigger

picture of the needs of its stakeholders at the expense of its shareholders only?

A company can aggressively compete in the global economy while still following an ethicalcredo, such as Bayer's "responsibility to work for the common good."

Clearly, there is no set answer to these questions.

MGMT 520 Week 1 Discussion Question 1 (National and International Ethics Patent Rights)

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