1. Read your assigned/selected case study carefully and in its entirety before attempting to analyze it.
2. Identify the most important ethical issues arising from the situation presented. It may be helpful to prioritize these issues.
3. Identify the viable options for addressing these issues and the ethical implications of the identified options for addressing these issues and the ethical implications of the identified options. This might include examining the options from the perspectives of the various ethical theories as well as the affected stakeholders.
4. Reach a definite resolution of the ethical issues by choosing what you think is your best option. You should have a well-articulated rationale for your resolution.
5. Develop a strategy for implementing your resolution.

Case 1 - Pharmakon Drug Company

1. BACKGROUND

William Wilson, senior vice president of research, development, and medical (RD&M) at Pharmakon Drug Company, received both his Ph.D. in biochemistry and his M.D. from the University of Oklahoma. Upon completion of his residency, Dr. WIlson joined the faculty at Harvard Medical School. He left Harvard after five (5) years to join the research group at Merck & Co. Three (3) years later, he went to Burroughs-Wellcome as director of RD&M, and, after eight(8) years, Dr. Wilson joined Pharmakon in his current position.

William Wilson has always been highly respected as a scientist, a manager, and an individual. He has also always been highly respected as a scientist, manager, and an individual. He has also been an outstanding leader in the scientific community, particularly in the effort to attract more minorities in the field.

Pharmakon concentrates its research efforts in the areas of antivirals (with a focus on HIV), cardiovascular, respiratory, muscle relaxants, gastrointestinal, the central nervous system, and consumer healthcare (i.e.,nonprescription or over-the-counter [OTC] medicines). Dr. Wilson is on the board of directors of Pharmakon and the company's executive committee. He reports directly to the chairman of the board and CEO, Mr. Jarred Swenstrum.

1. DECLINING GROWTH

During the previous eight years, Pharmakon experienced tremendous growth: 253 percent overall with yearly growth ranging from 12 percent to 25 percent. During this period, Pharmakon's RD&M budget grew from $79 million to $403 million, and the number of employees rose from 1,192 to 3,273 (see Figure A). During the previous two years, however, growth in revenue, and earnings had slowed considerably. Moreover, in the current year, Pharmakon's revenues of $3.355 billion and earnings before taxes of $1.12 billion were up only 2 percent form the previous year. Furthermore, both revenues and earnings are projected to be flat or declining for the next five years.

The cessation of this period's tremendous growth and the likelihood of future decline have been brought about principally by two causes. First, a number of Pharmakon's most important products' market shares. Second, as new types of health-care delivery organizations evolve, pharmaceutical companies' revenues and earnings will in all likelihood be adversely affected.

1. PROBLEM & PROPOSED SOLUTIONS

Figure 1A. Pharmakon Employment

Attribute / Years Ago	1	2	3	4	5	6	7	8
Total Employment	3,273	3,079	2,765	2,373	1,927	1,619	1,306	1,192
Minority	272	238	196	143	109	75	53	32
Employment	(8.35%)	(7.7%)	(7.15%)	(6.0%)	(5.7%)	(4.6%)	(4.1%)	(2.7%)
Revenue ($ million)	3,481	3,087	2,702	2,184	1,750	1,479	1,214	986
Profit ($ million)	1,106	1,021	996	869	724	634	520	340
RD&M Budget ($ million)	403	381	357	274	195	126	96	79

In response, the board of directors has decided that the company must emphasize two conflicting goals: increase the number of new drugs brought to market, and cut back on the workforce in anticipation of rising labor and marketing costs and declining revenues. Accordingly, Dr. Wilson has been instructed to cut costs significantly and to reduce his workforce by 15 percent over the next six months.

Dr. Wilson called a meeting with his management team to discuss the workforce reduction. One of his managers, Leashia Harmon, argued that the layoffs should be made "so that recent gains in minority hiring are not wiped out." The percentage of minority employees had increased from 2.7 percent eight years ago to 8.3 percent in the previous year (see Figure 1A). The minority population in communities in which Pharmakon has major facilities has remained over the years at approximately 23 percent. About 20 percent of the RD&M workforce have a Ph.D. in a physical science or in pharmacology, and another 3 percent have an M.D.

Dr. Harmon, a Ph.D. in pharmacology and head of clinical studies, is the only minority on Dr. Wilson's seven-member management team. Dr. Harmon argued that are RD&M has worked long and hard to increase minority employment and has been a leader and promoting Pharmakon's affirmative action plan (see Figure 1B). Therefore, she asserted, all layoffs should reflect this commitment, even if it meant disproportionate layoffs of non-minorities.

Figure 1B. Pharmakon Affirmative Action Program

Pharmakon Drug Company

Equal Employment Opportunity Affirmative Action Program

POLICY

It is the policy of Pharmakon drug company to provide equal employment opportunities without regard to race, color, religion, sex, national origin, sexual orientation, disability, and veteran status. the company will also take affirmative action to employ and advance individual applicants from all segments of our society. this policy relates to all phases of employment, including, but not limited to, recruiting, hiring, placement, promotion, demotion, layoff, recall, termination, compensation, and training. in community these where Pharmakon has facilities, it is our policy to be a leader in providing equal employment for all of its citizens.

RESPONSIBILITY FOR IMPLEMENTATION

The head of each division is ultimately responsible for initiating, administering, and controlling activities within all areas of responsibility necessary to ensure full and limitation of this policy. the managers of each location or area are responsible for the implementation of this policy. all other members of management are responsible for conducting day-to-day activities in a manner to ensure compliance with this policy.

Dr. Anson Peake, another member of Dr. Wilson's management team and director of new products, argued that Pharmakon's RD&M division has never discharged a worker except for cause and should adhere as closely as possible to that policy by terminating individuals solely based on merit. Dr. Rachel Waugn, director of product development, pointed out that enormous growth in employment over the last 8 years - almost a troubling of the workforce - had made the company's employee performance evaluation system less than reliable. consequently, she contended that because laying off 15% of her group would be extremely difficult and subjective, she prefer to follow a system of seniority.

Dr. Wilson immediately recognized that any system of reducing the workforce would be difficult to implement. Moreover, he was concerned about fairness to employees and maintaining the best qualified group to carry out the area's mission. He was very troubled by a merit or seniority system if it could not maintain the minority gains. in fact, he had even thought about the possibility of using this difficult situation to increase the percentage of minorities to bring it more in line with the minority percentage of the communities in which Pharmakon had major facilities.