L4: Guidant

• From stakeholder management:

  • Reactive analysis of external stakeholders

  • in view of their impact on organizational goals

  • To avoid legitimacy issues

• To stakeholder engagement:

  • Proactive analysis of stakeholders

  • in view of their potential contribution to address a society issue

  • To drive a change in society

1. Identifying Critical stakeholders

2. Identifying their (ethical) expectations

3. Identifying points of contact

4. Opening a dialogue with them

5. Integrate/modify your strategy

6. Keeping the interaction active

1. Risk management and ethics: accepting a certain degree of risk as opposed to a lower, means accepting a “tolerable number” of accidental harms (even deaths). Crucial role of moral framing to these complex ethical issues

2. Stakeholder engagement has ethical motives (intrinsic dignity of others and legitimate stakes in corporation’s behavior) + strategic motives (stk eng can be used by a firm as an effective crisis management technique)

3. Ethical issues related to new product development, from design to industrialization and commercialization + Legal compliance does not exhaust ethical compliance

• Risk management involves balancing the need to take some risks against the potential harm that could happen.

• Engaging with stakeholders is important not just because it's the right thing to do, but also because it can help the company handle crises better.

• When developing new products, ethical considerations go beyond just following the law; companies should think about the broader impact of their products and operations.

Relevant Facts:

• Malfunction Disclosure: Guidant Corporation, a manufacturer of medical devices, came under scrutiny for not disclosing malfunctions in some of its heart defibrillators. These devices, which are implanted in patients to regulate heart rhythms, were found to have potential flaws that could cause them to fail in preventing life-threatening heart rhythms.

• Specific Incidents: The issue gained public attention in 2005 when it was revealed that Guidant knew about the defects as early as 2002 but failed to inform doctors and patients. One of the devices in question, the Ventak Prizm 2 DR Model 1861, was linked to at least one death because of this failure.

• FDA Involvement: The U.S. Food and Drug Administration (FDA) became involved, leading to recalls and advisories about the devices. Guidant was criticized for its handling of the situation, including the delay in disclosing the malfunctions and its approach to managing the recall process.

• Legal Consequences: Guidant faced legal action, including lawsuits from patients and investigations by federal authorities. The company eventually pleaded guilty to misleading the FDA and agreed to pay significant fines and penalties.

• Patient Safety vs. Business Interests: The Guidant case highlights the ethical conflict between prioritizing patient safety and the financial interests of a corporation. Failing to disclose known defects in life-saving devices puts patients at risk, raising questions about the company's commitment to ethical principles and its responsibilities towards its stakeholders.

• Transparency and Trust: The case underscores the importance of transparency in the healthcare industry. By not disclosing the device malfunctions, Guidant breached the trust of patients, healthcare providers, and the public. Trust is crucial in healthcare, where patients rely on companies to provide safe and effective products.

• Corporate Responsibility: This case exemplifies the broader ethical issue of corporate responsibility, especially in industries directly affecting human health. Companies have a moral obligation to ensure their products are safe and to act promptly and ethically if problems arise.

• Regulatory Oversight: The Guidant case also points to the need for stringent regulatory oversight in the medical device industry. It raises questions about the effectiveness of existing regulations and the enforcement mechanisms to protect patients from defective medical products.