Walgreens: A Tough Pill to Swallow (2013)

Controversy

Walgreens Pharmacy logo

Walgreens, one of the many successful American drug-stores, was established here in 1901. The company provides goods and services of many kinds to people of all ages and has been for over 100 years.

Despite its Fortune 500 status as a trusted drug-store in the United States, in 2013 Walgreens was found guilty in the illegal distribution of oxycodone. The state of Florida admitted six different Walgreens locations; those of whom distributed absurdly illegal quantities of the powerful painkiller better known as oxycodone. Multiple excerpts from online-articles provide perspectives as to why Walgreens was penalized $80 million for such irresponsible actions. A proper analysis of this controversy reveals information that reinforces the harsh punishment put to Walgreens by the DEA. Fortunately for the public, Walgreens’ head of pharmacy Kermit Crawford “worked closely with the DEA over the past several months to reach this agreement,” noted earlier worth $80Million. According to an online article via Global Trade Talk, “a vulnerability in the supply chain management system and technology may have created an opportunity to divert oxycodone from one of the pharmacy chain’s distribution centers to the black market, triggering the federal investigation,” (Thornton 2013). 

Stakeholders

The Stakeholder Model of Corporate Social Responsibility is defined on Page 68 of An Introduction to Business Ethics when it states, “The basic idea is that businesses, and the executives who manage them, actually do and should create value for customers, suppliers, employees, communities, and financiers (or shareholders)…the primary responsibility of the executive is to create as much value for stakeholder’s as possible, and that no stakeholder interest is viable in isolation of the other stakeholders,” (DesJardins 2014).
Walgreens and CEO Gregory Wasson did give value to customers amidst their operations as a “Pill Mill,” but seemingly the wrong kind of customers. This means that Florida locations drew in crowds of people that were not truly abiding by their prescription, but rather taking advantage of a broken system. Due to such egregious actions, Walgreens agreed to pay a fee of $80 Million, which had to have affected stakeholders at the time being. Not only did Walgreens lose some customers after the debacle, but more importantly actual or even potential investors.

CEO Gregory Wasson

If a respectable supply company that distributed oxycodone to pharmacies like CVS, Walgreens, or Rite Aid, would you not think twice about keeping Walgreens on your list of customers after hearing how they took advantage of you? If you were one of the heads of Walgreens, should it not concern or even worry you that several of your stores was basically dealing painkillers to drug dealers or potential addicts? If a company takes such thoughtless action, it becomes inevitable that shareholders will pull out as investors. Such irresponsible actions ultimately tainted Florida communities with excess amounts of harmful drugs on their streets.

Individualism

The Business Ethics Case Manuel defines the ethical rules of Individualism when it states “business actions should maximize profits for the owners of a business, but do so within the law,” (Salazar 2014). The primary values within Individualism are noted as “The business, the owner’s choices, and business profits.” It becomes obvious that Walgreens was trying to “maximize profits for the owners of a business” but they failed to follow the whole “but to do so within the law,” section. Not only did federal investigators involve themselves, but potential profits of eighty million dollars were pulled from Walgreens’ pockets. The shady business of pharmaceutical drug-dealing is exceptionally profitable, but extraordinarily illegal. This dissonance alone violates the rules of Individualism, stamping this case with the ink of disapproval from an ethical perspective.Walgreens was definitely affected in a negative way, but in the long-run their stock-values have only increased since. Overall, Walgreens is still operates a quality store, but a scandal like this is something that never gets erased from a list of pros and cons. Somewhere, at some time, somebody thought it was okay to sell absurd amounts of oxycodone to absurd amounts of users.Fortunately for upper-management within Walgreens, their stock-value has only risen over the last five years. It seems that when a company shows its ability to make mistakes, or a human side in many ways, the consumer tends to forgive. Walgreens has proven to do exactly that over the years, as stock value in 2010 was rather low at $35 compared to its current value of $60 per share, (Yahoo Finance). Yahoo Finance also reports that the eighty-million dollar fine ultimately cost the company 4—6 cents per share at the time of the incident. Even though it maintains its profits, Walgreens definitely violates the theory of Individualism making its actions unethical. 

Oxycodone Prescription Drug

Utilitarianism

The Business Ethics Case Manuel defines the ethical rules of Utilitarianism when it states, “business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action.” The primary values within this ethical theory include “happiness of all conscious beings, often interpreted hedonistically as pleasure and the absence of pain, but also sometimes interpreted as the satisfaction of desires.”
The only benefits for Walgreens in this case were simply temporary, besides the regulation program put into place because of the scandal. Any revenue they made from this illegal activity, any customers they gained, were all lost. Once the DEA came down hard, the issues amidst this case subsided quickly. Those who were taking advantage no longer could, while those unaware of any issue were certainly made aware. Maybe one benefit Walgreens gained afterward was the public perception of a company that could rebound from such drastic miscues, as Walgreens has only grown since as a business in America.The monetary costs in this scandal surmount to a total of eighty-million dollars, but the ultimate cost of reputation is something that money simply cannot buy. For CEO Gregory Wasson, the scandal caused the company to pay up to the DEA, which was the least he could have done. The DEA eventually put several Florida locations on lockdown; prohibiting them from distributing oxycodone for a whole year. Although Walgreens has only grown as a company since this 2013 scandal, they missed out on even more potential growth, or an opportunity cost. In hindsight, had the six locations in Florida refrained from ever committing such crimes, Walgreens could have kept their eighty million dollars, and prevented any further harm to their brand-name, or business reputation. After weighing the pros and cons within Utilitarianism, the actions taken by Walgreens are ultimately unethical.

Walgreens; Florida Location

Kantianism

The Business Ethics Case Manuel defines the ethical rules of Kantianism when it states, “Always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all.” The primary values within this ethical theory include, “rational decision-making, autonomy of individuals, honesty and freedom.” The Case Manuel adds in the idea that “Kantian analyses are concerned with 1. the moral permissibility of the action, and 2. The moral worth in the motivation of the action.”
Walgreens distinctly lied, cheated, and manipulated those who were obtaining insane amounts of oxycodone from their Florida locations. Keep in mind that Walgreens did not stop their own problems, the DEA did. The company did not have “informed and rational consent from all,” but rather some employees and a bunch of addicted customers. Walgreens gave certain people the freedom to obtain illegal amounts of a controlled-substance, yet those who distributed didn’t know what they were doing? Please, if you are a pharmacist who is dishing out irregular amounts of oxycodone, wouldn’t you think that something is up? If so, did Walgreens offer an honest way for people to explain what was happening, or did this blow over like dust in the wind? According to the Case Manuel, “The formulation of humanity states that it is wrong to use people as a mere means to get what you want,” yet this is exactly what Walgreens did to gain a profit amidst this scandal. Walgreens reaped the rewards from customers who were taking advantage of such a “Pill Mill.” Kant would certainly approve of the regulation guidelines developed by Walgreens after the scandal, as it strictly covers how many prescriptions any given patient can obtain in certain amounts of time. Under the Kantian Theory perspective lens, Walgreens' actions ultimately prove to be unethical. 

US DEA Badge

Virtue Theory

The Business Ethics Case Manuel defines the ethical rules of Virtue Theory when it states, “act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits.” The primary values within this ethical theory include, “character traits that promote wellness or flourishing of individuals within a society.”

Certainly Walgreens is guilty of exhibiting vicious or bad character traits, as the greed to make a profit at all costs was taken over the expense felt by the six Florida communities. At not one, but six locations Walgreens was demoting the wellness of those individuals affected within Florida’s society, and our country for that matter. Although Walgreens was fulfilling its role as a pharmacy, they did it in a vicious way, not a virtuous way. Not until after the controversy and eighty-million dollars later did Walgreens develop a responsible system to properly distribute prescriptions to those in need. Virtue Theory lists many virtuous traits that one must follow in order to be considered virtuous, or purposeful. At least Walgreens had the virtuous trait of courage to come out and admit their wrong-doings, in addition to the implementation of prudent guidelines to prevent any similar circumstances in the future. Walgreens lacked the initial care it takes to responsibly run a pharmacy that distributes such powerful substances, although they showed the honesty it takes as a corporation to come out and say, we messed up. Walgreens did exactly that and as mentioned before, only improved upon their mistakes ever since. Looking at this case under Virtue Theory proves that Walgreens was indeed unethical.


References
"DEA Settles Walgreens Painkiller Case for $80M." The Big Story. N.p., n.d. Web. 20 Oct. 2014.

DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill Higher Education, 2014. Print.

Heather Salazar " The Case Manual " The Authoritative Step-by-Step Guide to Understanding and Improving the Ethics of Any Business

Yahoo! Finance. "Walgreen Co." Web. Nov. 2014

Thornton, Emily."SUPPLYCHAINVISIBILITY.ORG. GlobalTradeTalk. Amber Road, 22 Oct. 2012. Web. 01 Oct. 2014.