Saturday, May 16, 2009

McKesson; scholars' separation thesis

From: RDShatt
Sent: 5/16/2009 6:17:53 A.M. Central Daylight Time
Subj: Another separation thesis?

Dear Professors Harris and Freeman,

I am not an ethics scholar. I am, however, exploring ethics scholarship, including your article "The Impossibility of the Separation Thesis: A response to Joakim Sandberg" and other articles at this Business Ethics Quarterly link.

In the scholarship appearing at that link, I am having a hard time discerning where individual accountability and sanctions get factored in.

It seems to me that corporate wrongdoing is conceived, designed and implemented by individual corporate officers, employees, agents, and others. It further seems that important components of obtaining ethical business conduct are, first, establishing standards and guidelines governing actions on behalf of a corporation and, second, holding officers, employees and others personally accountable under the same. To the extent either of these is not done, I think there will be material impairment of business ethics.

I believe such a failure occurred in the Vioxx case. After reading Mr. Tom Nesi's book Poison Pills: The Untold Story of the Vioxx Scandal, I contacted a number of persons who were mentioned in the book and inquired about what they thought. Only two of the persons replied to me, and they seemed to agree with me. You may review that correspondence here:

Another developing story is a class action lawsuit regarding drug pricing by McKesson Corporation ( class action notice describes the tenor of the lawsuit as follows:

Prescription drugs often are priced using certain benchmarks. The most
commonpricing benchmark is called the Average Wholesale Price ("AWP"). AWP is
oftenused in determining how much insurance companies and other Third-Party
Payorswill reimburse for these prescription drugs and the co-payment price that
someconsumers pay for them. The lawsuit claims that two Defendants,
McKessonCorporation ("McKesson"), a large drug wholesaler, and First DataBank
("FDB"), apublisher of drug data, wrongfully inflated the mark-up factor used by
FDB todetermine the AWP for certain prescription drugs ("Subject Drugs"). The lawsuit claims that, as a result, many
drug purchasers overpaid for these drugs. Both FDB and McKesson deny any

With the settlement of this case by McKesson, I would ask the business ethics question of how in the world will any corporation or corporate officer or employee know what, if anything, anyone did wrong or unethical in McKesson's drug pricing. This is important in order to gain insight into what will be wrong or not wrong in other anaogous situations or contexts, so that business activities can be conducted ethically.

McKesson ostensibly denies there was any wrongdoing. Do the involved officers and employees at McKesson nonetheless believe they and McKesson nonetheless did wrong? Does the McKesson Chief Ethics Officer believe there was wrongdoing? Can he or she talk about any such wrongdoing at Ethics & Compliance Officer Association meetings to see whether ethics officers at other corporations agree that wrongdoing occurred at McKesson and to articulate standards and guidelines?

Do not the rest of society's members deserve to know whether or not there was wrongdoing, in order to inform their own business ethics guidelines about what is wrong and what is not wrong and to be able to better conduct their business activities ethically?

I believe there is a serious defect in the legal system here and a serious disconnect between the legal system and business ethics. I discuss this belief at length in this article: Does the Law Undermine Business Ethics?

At the above referenced Business Ethics Quarterly link, I see several articles discussing and debating the separation thesis and whether or not there is a separation between economic values and ethical values. Your article argues there is not and cannot be such as a separation.

To me, there is a more practical and more immediately consequential separation question that business ethics scholars ought to be delving into, and that is whether or not there is a significant disconnect between the legal system and business ethics in the ways I contend.

What do you think?

Thank you.

Robert Shattuck

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