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Despite what most think, pharmaceutical companies don’t enter the industry with profit as the motive. In fact, research and development for pharmaceuticals come with a rather hefty price tag. Going further, there is even less financial incentive to develop therapies for rare diseases given the limited population suffering from the disease and the potential to recoup the investment(Gomez, 2013).

Money, Greed, and a Public Relations Crisis

However, in the face of this fact, many still see the pharmaceutical industry as one with a great deal of money and greed involved. While it is true that the industry is involved heavily with both hedge funds and the political lobby, it is primarily due to the financial as well as regulatory requirements.  It is this perception that the pharmaceutical world is prone to crisis.

 

Even though many of the pharmaceutical companies have been the subject of both scandal and crisis, a few have yet to be involved in one, at least one any sort of scale. That’s not to say that they shouldn’t be prepared for a crisis. In fact, there are three situations that are likely to cause a crisis in the company. These three situations involve; the opioid crisis, insider trading, and payoffs to ease the regulatory burden.

The Opioid Crisis

This is perhaps one area in which individual companies don’t need to be directly involved for it to become a full-blown crisis for the company. With all of the press, and government officials calling the opioid crisis a state of emergency, it’s not hard for a company to become embroiled in crisis. In fact, there are reports as recent as this week outlining how both the government and individuals plan to file suit against the drug companies for simply manufacturing and distributing opioids(Line, 2017).

Insider Trading

Most of us have heard the term insider trading, and in its simplest form it involves receiving or providing information on a company, stock, or other financial interest that is not otherwise available to the public. It is illegal and unethical. So, how can this become a problem for the pharmaceutical industry? Well, there are always research developments, drug trials, and other internal occurrences that affect the company and their stock. Given that and the potential to get rich off of this information, there is clear motive and means of committing insider trading. The worst part is insider trading can, and often does involve only a handful of people at the company, yet drags the entire organization into crisis. In fact, as recently as this past August, a former pharmaceutical company accountant along with three others were charged with insider trading(SEC, 2017).

Payoffs

It is no secret that the pharmaceutical industry puts a great deal of financial capital into lobbying our elected officials. Given this, along with the strict rules behind lobbying efforts, it is rather easy for a pharmaceutical company to find themselves on the wrong side of the law and ethical behavior with respect to working to get legislation passed that would benefit the industry. In fact, in 2012, a pharmaceutical company admitted to over 2 million dollars in bribes paid to government officials in return for additional consideration and favorable legislative conditions.

References

Federal prosecutors take on pharmaceutical companies for their alleged role in opioid crisis. (n.d.). Retrieved from http://www.foxnews.com/us/2017/11/10/federal-prosecutors-take-on-pharmaceutical-companies-for-their-alleged-role-in-opioid-crisis.html

Former Pharma Company Accountant, Three Others Charged With Insider Trading. (2017, August 31). Retrieved from https://www.sec.gov/news/press-release/2017-151

Seven Steps for Managing Crises in Pharma and Medical Device. (n.d.). Retrieved from https://www.pm360online.com/seven-steps-for-managing-crises-in-pharma-and-medical-device/

(2014, March 31). This Pharma Company Admits to $2 Million in Bribes to Government and Health Officials ⋆ VacTruth.com. Retrieved from https://vactruth.com/2012/08/28/pharma-admits-to-bribes/

 

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