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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
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