M.B.A. II (Semester III) Examination, 2017
Paper XVIII BUSINESS ETHICS
Day and Date Saturday, 6-5-2017 Total Marks 70
Time 10.30 a.m. to 1.30 p.m.
Instructions Question number 1 is compulsory.
Attempt any two questions from Q. Nos. 3 and 4.
Attempt any two questions from Q. Nos. 6 and 7.
1. Analyse the case.
Prescription drugs are drugs that can be obtained by a patient only with or under
the orders of a physician. The reason for the restriction is that the drugs contain
side effects, are not considered safe for casual use, and should be taken under a
doctor's supervision. Some such drugs, after many years of safe use with few
side effects, are allowed to become over-the-counter drugs and can be purchased
and used with a doctor's prescription.
In the United States, until 1985, prescription drugs could not be advertised directly
to consumers. That year the U.S. Food and Drug Administration which has
responsibility for safety regulations governing drugs, passed a ruling that allowed
direct market to consumers on the condition that a great deal of warning information
was provided about side effects and other dangers. This allowed for advertising
the drugs in magazines, for instance, in which the manufacturer could include the
necessary information in small print on several pages following the main part of
the ad for the product in question. The large amount of information that had to be
supplied, or not it was read, precluded any direct TV advertising of drugs. That
changed in 1997 when the FDA ruled that TV ads containing just the major dangers
of the drug were permissible. The result was a deluge of direct-to-consumer TV
ads for prescription drugs. One study showed that for each dollar of direct-toconsumer
advertising on TV by the pharmaceutical company during 1999-2000
resulted in a return of $4.20 for each dollar spent. In 2005, the pharmaceutical
spent $1.19 billion on TV ads.
The United States and New Zealand are the only two developed nations that allow
direct-to-consumer advertising of pharmaceutical drugs. Why are nations and
people divided on the appropriateness of direct-to-consumer pharmaceutical drug

advertising The drug industry claims that such advertising benefits consumers
in a variety of ways. It educates them about a variety of illnesses and informs
them of possible drugs to treat them. It thus encourages people to contact their
doctors if they have the symptoms described, and facilitates an open conversation
between them. Informed patients are better able to pursue their health care options
than uninformed ones. Seeing the ads on TV increases their trust in them when
they are prescribed by their doctors, and simple name recognition makes the
drugs more acceptable. In the end, it is the doctors who are the gatekeepers and
must prescribe or withhold prescriptions. Hence, the good achieved outweighs
any bad that might result.
Opponents, however, reply with reasons and concerns of their own. It is because
drugs have potentially serious side effects that they require a doctor's prescription.
As such it should be upto the doctor to decide on and prescribe what he or she
deems appropriate and best for each individual patient. Broadcast advertising
creates false impressions about effectiveness and downplays possible adverse
effects. Such advertising leads to self-diagnosis. Patients pressure their doctors
for the drugs advertised, whether they are the best for their treatment or the most
cost effective. Often a variety of drugs are available for a given condition-such as
for high blood pressure. Doctors can choose from among the large variety available.
The newer ones are the ones advertised and are usually among the more expensive.
They are not necessarily more effective than older and less expensive ones. Yet,
since they are acceptable, doctors often yield to the patient's pressure or choice,
even though it is not a well-informed choice. TV ads do not claim the advertised
drugs to be the best or that they are a certain percent more effective than older
drugs, nor do they compare the cost of the advertised drug with available generic
drugs of the same class. Even though a patient's health insurance may pay for
the more expensive drug when a less expensive one would do as well, the cost of
prescription drug insurance goes up for all. The cost of the ads, moreover, drives
the cost of drugs even higher. The claimed educational value of the ads, is not the
real reason for the industry's spending all it does on ads. The real reason is the
increase in purchases of the new drugs. Yet, if they were as good as advertised,
they would be adopted and prescribed by doctors without the direct-to-consumer
ads and the industry could spend its money on truly educational TV ads. The
calculation made by the critics yields more harm than benefit from such ads and
hence many hold them not only inappropriate but unethical. Based on this reaction,
a large number of bills have been introduced into the U.S. House and Senate and
into state legislatures curtailing the direct-to-consumer pharmaceutical drug ads
on TV. Some have passed on the state level.
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Analysis of the case.
Identification of the problem.
Suggest alternative solution.
Select best solution. 14
2. Short notes on (any two) 14
Business values.
Need for business ethics.
Relationship of values, norms, beliefs and standard.
3. Short notes on (any two) 14
What is an ethical dilemma When does it arise in an organization
Corporate culture.
Factor affecting business ethics.
4. Short notes on (any two) 14
Managing by values.
Corporate social performance.
Ethics and information technology.
5. Explain in detail ethics in finance and accounting. 14
6. What is environment pollution Explain in detail different types of pollution. 14
7. What is social responsibility Explain in detail social responsibilities of business
organization. 14