You are a new associate at the law firm of Dewey, Chetum, and Howe. John, a former researcher at PharmaCARE, comes to your office. He has concerns about PharmaCARE's use of AD23, one of the company's top-selling diabetes drugs. Two (2) years ago, after PharmaCARE's research indicated that AD23 might also slow the progression of Alzheimer's disease, John and his team of pharmacists began reformulating the drug to maximize that effect. In order to avoid the Food and Drug Administration's (FDA) scrutiny, PharmaCARE established a wholly-owned subsidiary, CompCARE, to operate as a compounding pharmacy to sell the new formulation to individuals on a prescription basis. CompCARE established itself in a suburban office park near its parent's headquarters. To conserve money and time, CompCARE did a quick, low-cost renovation.
CompCARE benefited from PharmaCARE's reputation, databases, networks, and sales and marketing expertise, and within six (6) months had the medical community buzzing about AD23. Demand soared, particularly among Medicare, Medicaid, and Veterans Affairs patients. Seeing the opportunity to realize even more profit, CompCARE began advertising AD23 directly to consumers and marketing the drug directly to hospitals, clinics, and physician offices, even though compounding pharmacies are not permitted to sell drugs in bulk for general use. To circumvent this technicality, CompCARE encouraged doctors to fax lists of fictitious patient names to CompCARE. PharmaCARE sold CompCARE to WellCo, a large drugstore chain, just weeks before AD23 was publicly linked to over 200 cardiac deaths.
As CompCARE and its new parent company enjoyed record profits and PharmaCARE's stock price approached $300 per share, reports started surfacing that people who received AD23 seemed to be suffering heart attacks at an alarming rate. The company ignored this data and continued filling large orders and paying huge bonuses to all the executives and managers, including John, whose wife recently died from a heart attack after using AD23.
John has come to you with an internal company memo describing the potential problems with AD23, and information describing the company's willingness "roll the dice" and continue to market the drug.
1. Pursuant to the scenario above, identify three (3) legal issues and problems Pharmacare has in relation to marketing and advertising, intellectual property, and regulation of product safety. Be sure to identify the law in these areas and the extent to which Pharmacare violated the law.
2. Argue for or against Direct-to-Consumer (DTC) marketing by drug companies. Provide support for your response.
3. Analyze the manner in which PharmaCARE used U.S. law to protect its own intellectual property AND if John has any claim to being the true "inventor" of AD23. Suggest at least three (3) ways the company could compensate John for the use of his intellectual property.
4. Summarize at least one (1) current example (within the past three (3) years) of intellectual property theft. Explain the facts and outcome if available.
5. Analyze the potential product liability issues surrounding the death of John's wife and other potential litigants against PharmaCARE as a result of AD23. Be sure to explain product liability law and then answer the question specifically.
6. Specify the major arguments that John can make to claim that he is a whistleblower and the type of protections that he should be afforded. Justify your response.