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Article 1
Goodhealth Drug
From: Dunfee, T. W. et al. Modern Business Law . (2nd ed.). New York:
McGraw-Hill.
In 1980, the Goodhealth Drug Company obtained clearance from the
Federal Food and Drug Administration and began marketing Colstop, a
drug designed to control cholesterol levels in the blood. Colstop has been
a smashing success and now accounts for 15 percent of sales and 25
percent of earnings.
Preliminary evidence from the field indicates that the drug significantly
lowers cholesterol levels in 50 percent of the cases where it is used. The
drug has already been used by 400,000 people and the number of users is
increasing rapidly. There is no comparably effective drug on the market for
treating high cholesterol, a factor in cardiovascular disease.
Eighteen cases have been reported to the company of instances in which
users developed severe cataracts after prolonged use of Colstop. The
most recent report came from the Mayo Clinic and involved a nine-year old
boy. Goodhealth immediately reported the cases to the FDA and to medical
doctors prescribing the drug. Most doctors continued to prescribe the use
of Colstop on the theory that the risk of heart disease outweighs the risk of
cataracts.
Goodhealth just received a report from a university researcher who claims
to have tested Colstop on white rats with the result that half of them
developed cataracts. In response to that report, the CEO conducted a
review of the initial testing of Colstop at Goodhealth. The review uncovered
the fact that the original experiments that were done at Goodhealth
resulted in 5 per-cent of the test animals developing cataracts. The original
report stated that slightly less than 5 percent of the test mice
developed cataracts after prolonged use . Dr. Merk, the project director,
deleted that sentence before the report was sent to senior management
and, ultimately, to the FDA. Dr. Smith had written the original report. She
protested to Dr. Merk, who told her to keep quiet. Dr. Smith then protested
to Dr. Chou, who was Merk's superior. Dr. Chou promised to look into it ,
but nothing happened. Dr. Smith received a poor rating from Dr. Merk in
her next performance review. Dr. Smith is the widowed mother of two small
children and probably could not find an equivalent job with another firm.
The research director of Goodhealth has made a report on the Colstop
controversy. The report indicates that there is no evidence to show a
cause/effect relationship between taking the drug and developing
cataracts. The report characterizes the university researcher as unreliable
and anti-drug industry and notes that white rats are generally susceptible
to cataracts. The report recommends that Goodhealth conduct research on