Nature Biotechnology 24, 285 - 290 (2006)
doi:10.1038/nbt0306-285
Ethical decision-making in bioscience firmsDavid Finegold
& Allison MoserDavid Finegold is at the Keck Graduate Institute of Applied Life Sciences, 535 Watson Drive, Claremont, California 91711, USA and Allison Moser is at Pomona College, Claremont, California 91711, USA david_finegold@kgi.edu A survey of the ethical practices of bioscience companies suggests that although most firms feature ethics in their mission statement or code of conduct, fewer than half of the companies surveyed have made any formal efforts to assess how well these approaches are working.A series of recent high-profile events—thefabrication of stem cell research, accusations that companies failed to disclose relevant clinical trial data on drug safety and allowed questionable marketing practices—is undermining public faith in the bioscience industry1,
2. The problem is most acute for the pharmaceutical industry, which as recently as 1997 had public approval ratings of 80%; today, it is viewed by a majority of Americans as doing "a bad job" for consumers, with only 13% of Americans believing that the pharmaceutical industry is "generally honest and trustworthy"3. Companies whose mission is to improve health and develop cures for life-threatening diseases are now ranked alongside the oil and tobacco industries in low levels of public confidence4.
Ethical issues, however, have not been confined to the large pharmaceutical firms. The biotech sector's image and the value of companies in the sector were badly damaged by business ethics scandals involving insider trading at ImClone and off–balance sheet financial arrangements at Elan. And as biotech firms push the envelope of new technology, they also face new business and bioethical challenges5,
6.
- What constitutes an adequate control for an experimental drug that requires surgery to implant it in the body?
- What are the rights of patients who feel they are benefiting from a drug in a clinical trial that the firm decides to stop?
- Is it fair to charge hundreds of thousands of dollars annually for a drug that offers major improvements for children with very rare diseases who would face large medical bills and early death without it?
Despite the media attention and public concern regarding the ethics of the bioscience industry, we know remarkably little about how bioscience companies are dealing with ethical issues. To remedy this gap, we conducted a survey of the 100 largest US biotech and pharmaceutical firms along with a sampling of smaller organizations to try to document their ethics policies and practices (see Box 1 and Supplementary Methods online for more details). We adopted a broad definition of ethical issues facing firms in this industry, encompassing corporate and social responsibility issues such as social accounting, donations and employee voluntarism, along with business ethics (e.g., conflicts of interest, marketing practices), bioethics (e.g., clinical trial design, informed consent) and the intersection of the two (e.g., decisions regarding which drugs to develop, drug pricing and access). The results from the 29 companies that responded to the survey are presented here. The survey was designed to complement and put into context the results from detailed case studies of ethical decision-making in 13 leading bioscience firms published in BioIndustry Ethics6.
Ethical issues and priorities
When bioscience companies were asked to rank a series of different areas as possible sources of ethical issues, they most commonly cited employee misbehavior, followed by the conduct of clinical trials, legal compliance and marketing (Table 1). Companies less frequently encountered ethical issues in the areas of regulatory strategy, corporate governance, accounting practices, sales practices and deciding which products to develop. Firms indicated that ethical issues associated with their research and product development, company mission or decisions regarding where to conduct clinical trials or sell their products were rare.
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A somewhat different order emerged when respondents were given an open-ended question asking them to identify the main ethical issues facing their firms. Product-related issues appeared along with business ethics as the most often cited source of ethical dilemmas (Box 2). These were followed by conducting clinical trials, sales and marketing, and assuring compliance with the Sarbanes-Oxley Act and US Food and Drug Administration (FDA) regulations.
When asked about the benefits of focusing on ethical issues, companies of all sizes selected "ensuring compliance with the FDA and other regulatory requirements" as the most important motivation. However, differences in motivation emerged between public and private companies (Fig. 1). Because all of the privately owned companies in this study were also small companies (with fewer than 100 employees), we separated these two factors by distinguishing among private, small public companies (fewer than 3,000 employees) and large public companies (more than 3,000 employees) in these and subsequent analyses (see Supplementary Methods online for a fuller discussion). Large public companies gave "enhances company image" as the most important reason, followed by "reduces risk" and "attracts and motivates employees." Small public companies gave more emphasis to "increases shareholder value" as it was their second most important reason for addressing ethical issues, whereas private companies, not surprisingly, listed "increase shareholder value" as their least important reason.
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Ethics capabilities
Bioscience firms have several, mutually reinforcing options to ensure they have the capabilities needed to deal effectively with the ethical issues that are an inevitable part of doing business in this sector (see Wilan page 237). We found that just over half of firms overall (52%) used outside ethics advisors or consultants, and 54% had hired at least one in-house ethics expert. Eight of the larger firms had gone further and created an in-house ethics or compliance office, often staffed by individuals with legal backgrounds. In contrast, three firms (all small or medium-sized enterprises) had no internal or external ethics expertise. Large public companies were much more likely to engage in a variety of ethical initiatives than private firms (Fig. 2).
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Overall, just under a third of companies employed an ombudsman with whom employees could speak confidentially if they perceived an ethics problem. Only six firms in our sample had created an ethics advisory board (one of which was discontinued), in which experts from a variety of disciplines—such as philosophy, law, clinical practice, religion—could provide their perspectives on the ethical issues facing firms. Four of these firms were well-established pharmaceutical or diagnostics/platform technology companies, along with one biotech company that was an early pioneer in human genomics, and hence on the cutting-edge of dealing with the ethical issues raised by identifying human genes associated with particular diseases and how best to use this information. Some of these advisory boards were general, dealing with the full array of ethical issues, whereas others had a specific focus, such as the "difficult ethical issues associated with blood and plasma" or "pharmacogenetics and other special issues in clinical research." Although none of the smaller, privately owned companies had an ethics advisory board, they were more likely than the larger public firms to have an ethics expert on their board of directors (Fig. 2).
In addition to hiring ethics experts, firms can increase the ethical awareness and decision-making capabilities of their workforce through education and training. A majority of the companies (57%) offered "formal education/training or workshops devoted to ethical issues" for their employees. The likelihood of a firm offering such training increased with company development as 82% of large public companies had ethics education and training versus 50% of small public companies and 28% of private companies. The topics covered in these ethics classes could be divided into three general areas: the company's ethics code, ethical issues within the bioscience industry and specialized topics. Three of the companies focused purely on their code of ethics, whereas the focus of the remaining companies were equally divided between general awareness and special topics. Specialized topics included "clinical development in less developed countries," "clinical studies involving pharmacogenetics," "patents," "genetic testing," "nutrigenomics," "use of animals in research" and "animal handling."
Ethics information sources
There is no single dominant source of information for companies on ethical issues facing the industry. External conferences were the most common source of ethical information, followed by the popular press and media. Specialized ethics publications, discussion with ethics experts in other bioscience firms and the internet were all rated between "important" and "somewhat important" (2.50–3.0 on a 5-point scale). Discussions with ethics consultants and advisors received the lowest average rating (2.6), but also showed the greatest variation, serving as the "most important" source of information for many who used them, whereas a third of companies considered them "not at all important."
Policies and practices
Beyond education and training, companies adopted a wide array of policies and practices to encourage ethical behavior. A number of these were internally focused; for example, all companies had either a set of written ethical guidelines—included in a code of conduct or the firm's mission statement—or were considering putting one in place (Table 2). In addition, 84% of firms reported using ethical criteria when screening prospective employees and assessing behavior in employee appraisals. Just over half of firms had an ethics phone help-line, with a dramatic difference between small private firms (where only 15% had a help-line) compared to public companies, where two-thirds operated a help-line as one way to meet the Sarbanes-Oxley Act requirement that public companies provide a confidential means for employees to share concerns with the board. In addition, 42% of firms reported using ethical criteria in choosing suppliers, for example, by insisting that their suppliers adopt some of the firm's own employment, environmental and business standards.
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Companies also engaged in a variety of external activities associated with ethics and corporate and social responsibility (Fig. 3), among them encouraging employee voluntarism (82%) and involvement in industry or regional business associations or other joint company activities relating to ethics (68%), such as establishing industry standards for ethical marketing standards. Slightly fewer than half of the companies conducted public outreach or education on ethical issues (48%), with public companies roughly twice as likely as smaller private firms to engage in this interaction with the community. Over half of the larger, profitable companies had a compassionate-use program or a corporate foundation, practices that weren't found in smaller firms that typically had not yet become profitable. A few firms wrote-in comments describing specific global public health initiatives, including "outreach in conjunction with [the] World Bank" and "work in South America." Only 37% had engaged in dialog with the firm's external stakeholders to get their views of the company's ethics and actions, one of the approaches that the companies in our case studies—such as Novo Nordisk and Monsanto—had found most powerful in informing their own approach to ethics. For example, Novo Nordisk hosts a regular open day, where many of its harshest critics in nongovernmental organizations and animal rights communities are invited to inspect its laboratories and have discussions on any issues of concern with Novo managers and scientists. The company has found that this dialog has helped it build trust with external stakeholders and enabled it to be more proactive in dealing with their concerns6.
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Discussing ethics
As the Enron and other recent corporate scandals have demonstrated, a company can have a wonderful set of ethics policies and practices in place on paper, but if these are not actively supported and reinforced by the firm's leaders, they are unlikely to have a real impact on employee decision-making and behavior. Thus, we asked respondents how frequently CEOs, other members of the leadership team and directors on the company's board discussed ethical issues. CEOs discussed ethical issues with the highest frequency, with over two-thirds discussing ethical issues frequently or at every opportunity. For "other members of the leadership team" 64% discussed ethical issues frequently or at every opportunity, whereas for directors on the firm's board the numbers were the lowest at 46% (Fig. 4).
What works and how do firms know?
Evaluating the effectiveness of ethics initiatives and approaches is an inherently difficult task, because of the difficultly of measuring outcomes and the large impact that relatively rare events—such as a drug recall or FDA sanction letter—can have. To illustrate this difficulty, one large firm experienced a big increase in calls and ethics incidents reported to the ethics office help-line after launching a company-wide ethics initiative, which it interpreted as a sign of the initiative's success in raising awareness of ethical issues. Less than half of firms (40%) indicated that they had attempted to evaluate the effectiveness of any of their ethics practices. Only a third of firms had conducted a social/ethical audit or were using a balanced scorecard that includes ethical and/or societal measures of corporate performance, although many other firms were considering adoption of these practices (Table 3).
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When asked, "Which of the practices listed do you consider to have had the most positive impact on ethical decision-making in your firm?" half of respondents listed their written code of ethics, or having ethics incorporated in the company's mission statement. However, these were also the most prevalent practices in place. Companies that had previously written in special programs typically cited them again here as the practice with the most positive impact. Advisory boards and ethical consultants were also rated as having a very positive impact on ethical decision-making.
An industry view
For the bioscience industry as a whole, the survey revealed a significant gap between how effective firms consider their "industry to be in dealing with ethical issues" (averaging a 3.43 rating on a 5-point scale) and how effective they believe the public perceives the industry to be in dealing with ethical issues (3.0 rating). This gap in perceptions is only likely to have grown with the thousands of lawsuits and media attention concerning Cox-2 inhibitors and other recent controversies, such as the faked South Korean stem cell research, the dissatisfaction with the implementation of the new Medicare Prescription Drug Benefit and the heavy lobbying role that the pharmaceutical and biotech industries played in shaping this legislation.
Respondents suggested a variety of reforms that could "promote more ethical behavior" in the industry including: more training programs for their employees and the public regarding ethical issues, and the adoption of an ethics code for the industry. Among those who suggested that the industry should have a code, most wanted a "strict code of ethics with enforcement teeth behind it." Those who wanted training suggested, "mandatory compliance and ethics training" that "starts with ethics training—first with executive management (not mid-level management)" and that there is a "need to educate scientists on a broader range of ethical issues, including business [and] financial" issues. Two participants suggested a more active role could be taken by industry organizations such as the Biotechnology Industry Organization (BIO).
Additional write-in suggestions for ways to promote more ethical behavior in the industry included the following.
"Engaging in policy discussions around the tension between drug access and the forces of capitalism in a more meaningful way. The pharmaceutical industry is being demonized in the press and our response is weak."
- "Putting ethical considerations first in design of clinical trials—maximum transparency in disclosures relating to clinical trials, conservatism in promising and characterizing clinical trial results."
- "Identification of real (not self-appointed) ethics experts to help develop positions for the industry."
- "Greater willingness to recognize intellectual property rights of others."
Conclusions
All firms have a responsibility to act ethically, but the life-and-death impact of the products that biotech companies produce and the rapidly evolving new technologies used to produce them mean that this industry will inevitably and necessarily come under greater ethical scrutiny. As recent experience has demonstrated clearly, a few ethical missteps can have disastrous consequences for the public image and shareholder value of the entire industry.
The results from this exploratory survey suggest that many bioscience companies are devoting substantial attention to ethical issues. All companies report taking the first step of including ethics in their mission statements and codes of conduct, and most have gone further, incorporating ethics into their hiring process, employee evaluations and training. Over half have at least one internal ethics expert, and many have supplemented this with the use of external consultants and/or advisory boards. Over two-thirds of firms are also engaged in cooperative industry efforts to address ethical concerns, an area that companies recognize has not been very effective to date. These results may exaggerate the extent of ethical initiatives in the industry, as firms actively engaged in these activities may have been more likely to fill in the survey.
More disturbing is the finding that more than half of companies have made no effort to engage in ethics discussions with the firm's stakeholders or to evaluate the effectiveness of their programs. Only a third, for example, feature ethics when assessing corporate performance or conduct a social or ethics audit, although this practice is under discussion in many more firms. Rather than incorporating ethics into their core strategic discussions and performance management systems, most firms focus on legal compliance as their top reason for focusing on ethical issues.
The industry needs to take the next step and recognize the distinction between legal compliance and behaving ethically. Drug companies' standard approach to the pricing and access to drugs, for example, may not have violated any laws, but has caused a major decline in the perception that the industry is truly concerned with improving health, and not just raising profits. In addition, many firms are exploring new technologies (e.g., embryonic stem cells, personalized medicine, gene therapy) where clear regulatory guidelines are not yet in place. And even where regulations exist, such as governing drug monitoring and recalls, they may not provide a sufficient guide to corporate decision-making or protection from damaging lawsuits. Bioscience firms, as one respondent noted, "must be more proactive in how ethical decision-making is incorporated into a company's culture." The best way to avoid future restrictions and to begin rebuilding the industry's public reputation is to critically examine how ethical issues are currently being handled and to seek ways to enhance the effectiveness of individual and collective approaches to ethical decision-making.
Note: Supplementary information is available on the Nature Biotechnology website.
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Acknowledgments
The authors thank Deborah Flynn for help with the survey instrument and excellent administrative support, Steve Casper for his helpful suggestions and Tiffany Sun for advice and editing. Funding for this research was provided by the Seaver Institute, a Los Angeles-based foundation.
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