| There exists a significant business ethics problem related to human well-being in the context of the drug development industry.1 The origin of this problem rests in false assumptions about science in the execution of drug research. An article in Nature highlights the problem: In the contentious world of animal research, one question surfaces time and again: how useful are animal experiments as a way to prepare for trials of medical treatments in humans? The issue is crucial, as public opinion is behind animal research only if it helps develop better drugs. Consequently, scientists defending animal experiments insist they are essential for safe clinical trials, whereas animal-rights activists vehemently maintain that they are useless (Giles 2006, p. 981). We provide detailed evidence that the use of animals in the drug development process is harmful to key stakeholders. There is a rich literature which examines ethical issues—from the perspective of animals2 —arising from the use of animals in biomedical research, testing, and science in general. See LaFollette (2011) and Ferdowsian and Beauchamp (2013) for recent discussions of those ethical issues. We purposely sidestep the ethical question of animal well-being to focus instead on other stakeholders harmed as a consequence of current drug development practices. Who are these other stakeholders?3 Investors represent one group, since the managers of publicly traded firms are expected to maximize shareholder value vis-a-vis the theory of the firm and agency theory; see Friedman (1970) and Jensen and Meckling (1976); also see Martin (2011) for a critique of the modern valuemaximization proposition. Pharmaceutical firms additionally have responsibilities to employees, suppliers, the general public, and of course perhaps most importantly the patients for whom their drugs are intended to treat. We posit that the vast majority of public firms in the drug development business are falling short of their ethical responsibilities to all of these stakeholders, and we contend this is due to a constraint imposed by regulators, specifically to require animal tests. This constraint was put in place many decades ago and drastically and adversely affected the way the pharmaceutical companies serve their stakeholders. Absent this regulatory constraint, we argue drug development firms would be naturally inclined to better serve their stakeholders. But with the constraint, they fall woefully short of their potential to do so. |