Leading by Example: Ethical Leadership in Pharma

Potter Stewart’s quote, Ethics is knowing the difference between what you have a right to do and what is right to do, is most apt for the pharmaceutical industry and its leaders. Ethical leadership is crucial in the pharmaceutical industry, which is renowned for being a high-stakes, high-reward, and high-consequence environment. Ethical leadership in pharma involves making decisions while considering the needs of patients, healthcare professionals (HCPs), employees, and the public as a whole, in addition to company growth and profits.

To encourage their managers and team members to become ethical leaders and employees, C-suite executives must model this behavior. When pharma leaders adopt an ethical leadership style, it can positively affect the company’s culture and growth.

Ethical Leadership in Pharma: What’s in It for The Company?

Here are a few ways an ethical leader can impact a company:

It strengthens organizational culture.

Ethical leaders value fairness, honesty, respect, accountability, and transparency. By prioritizing these qualities, leaders set expectations that employees have to meet. In turn, they set similar standards for their teams, which develops the organization’s culture. As the culture is set from the top of the organizational hierarchy to the bottom, the leader’s behavior and priorities eventually become employees’ behavior and priorities, which is, simply put, the organizational culture.

It attracts the best talent.

Various studies have shown that ethical leadership improves employee performance and employee retention. When leaders consistently display ethical behavior, they establish trust and fairness in the team, which increases employee satisfaction and commitment, keeping people from leaving. This creates a positive external reputation, allowing the company to attract top talent from the pool that prioritizes culture over salary.

The company’s reputation improves.

When leaders consistently prioritize honesty, accountability, and transparency, stakeholders—HCPs, patients, and the public—will view them favorably. It allows the stakeholders to trust because they can expect the leader to do the right thing and not chase profits or company growth. This trust improves the company’s reputation in the market, enhancing its brand value.

It improves the company’s financial performance.

It’s a common misconception that when a leader prioritizes the right thing to do over company growth and revenue, it leads to poor financial performance. In reality, ethical companies attract some of the most loyal customers. Think of your favorite shopkeeper: you visit them often because you know they won’t cheat you. You visit them often because you know they won’t keep a bad product or a harmful item. The same is the case for any pharmaceutical company.

Investors favor you.

Investors also favor companies led by ethical leaders. The reason is quite simple: Ethical leaders keep their companies from making unethical decisions. This is especially important in the pharmaceutical industry, where unethical decisions lead to hefty fines, product recalls, and class-action lawsuits, all of which are financial drains and unsavory for investors.

As an ethical leader, you can bring tremendous value to your company. Realistically, becoming a moral leader is about focusing on some key points.

How to Become an Ethical Leader?

Ethical leadership in pharma focuses on prioritizing five qualities:

1. Accountability: Ethical leaders can ethically justify their decisions and stand behind them. If the decision leads to negative consequences, they take responsibility and look to rectify the situation instead of looking for people to blame.
2. Honesty: Ethical leaders don’t hide behind false promises and sugar-coated words. They are honest regarding all situations with all concerned individuals and can be relied upon to tell the truth—regardless of how bitter.
3. Respect: Traditionally, respect has been viewed hierarchically, with the people at the top of the organizational hierarchy receiving the most respect. However, ethical leaders respect the work and contributions of all employees.
4. Integrity: Ethical leaders show a commitment to doing the right thing. Integrity is shown through actions; hence, ethical leaders show that they can do the right thing instead of saying, “I will do the right thing.”
5. Altruism: Altruism involves promoting someone else’s welfare. Ethical leaders show altruism within and outside their organization by focusing more on people’s (employees’, HCPs’, patients’, etc.) benefits over the company’s.

These five qualities are the cornerstone of becoming an ethical leader. Many pharma leaders in the world are leading by example and displaying these qualities.

Inspiring Ethical Leaders You Know

Paul Stoffels, Former Chief Scientific Officer at Johnson & Johnson

Paul Stoffels played a critical role in advancing the R&D of the HIV vaccine for multidrug-resistant tuberculosis. Under his leadership, J&J developed the first drug licensed to treat multidrug-resistant tuberculosis. He also created collaborations with various organizations, including the World Health Organization, to provide medications.

Kenneth Frazier, Former CEO of Merck & Co.

Kenneth Frazier is well-known for advocating the affordability of pharmaceutical products. During his tenure, he advocated responsible drug pricing in the US and criticized unjust price hikes in the pharmaceutical industry.

Pascal Soriot, CEO of AstraZeneca

Pascal Soriot led AstraZeneca’s decision to provide COVID-19 vaccines at no profit in low and middle-income countries. During the period, AstraZeneca delivered 3 billion doses and saved a million lives. He has also advocated for environmental and social issues like climate change.

The executives have personified ethical leadership in pharma through their actions and decisions. Practicing ethical leadership every day, through every decision, is not easy. In their journey to become ethical leaders, many have to face common ethical dilemmas in the pharmaceutical industry and overcome them.

Common Ethical Dilemmas in the Pharmaceutical Industry

Here are some of the most common ethical dilemmas in the pharmaceutical industry:

The challenge of balancing profits and ethics.

Regardless of the company’s size, most leaders have to face the urge to prioritize short-term profits. Cost-cutting measures may improve numbers in the short term, but they may not always be the most ethical decisions. Ethical leaders must make decisions that align with stakeholders’ ethical standards and the company’s long-term goals. The goal is to ensure profitability doesn’t come at the expense of integrity, which is difficult.

The challenge of addressing unethical behavior.

Unethical behavior in the pharmaceutical industry can have far-reaching consequences, like fines, product bans, batch recalls, or lawsuits. Leaders must create a safe environment for employees to report unethical behavior or actions. Ethical leaders must address unethical behavior in the company and outside, which is challenging but will set a precedent.

The challenge of drug affordability.

As heads of their respective companies, Pharma leaders are responsible for ensuring their products are accessible and affordable. However, making affordable products while also balancing R&D funding is difficult. High drug prices or price hikes can be seen as unethical price gouging, which may not be true if the company is breaking even or has a very low-profit margin.

There are many ethical dilemmas in the pharmaceutical industry; these are just three examples that pharma leaders must address regularly.

Conclusion

Ethical leadership in pharma begins from the very top—the CEO. It requires leaders to make decisions by looking beyond profits and company growth and to people—the patients, employees, and stakeholders. Ethical leadership can help a pharmaceutical company grow, foster a culture where honesty, fairness and transparency are equal, and create a loyal customer base. However, leaders have to solve ethical dilemmas day in and day out. So, while it sounds relatively simple to become ethical, to be truly valuable and guide the company, leaders must be strict in their standards with themselves and others.

FAQs

1. Why is ethical leadership important in pharma?

Ethical leadership in pharma ensures patient safety, fair drug pricing, access to medicines, and trust among stakeholders, all of which create a positive healthcare environment.

2. What is the sixth principle of ethical leadership?

Empathy is often considered the sixth principle of ethical leadership. Ethical leaders must not only understand but also care for others’ needs.

3. Which actions can leaders take daily to show their ethical behavior?

Leaders can:

(1) ensure compliance with all laws and regulations

(2) engage in open communication

(3) encourage ethical conduct and

(4) take responsibility for their actions