Why should a company establish ethical standards? For Abbott Laboratories, the answer is: “Because it is the right thing to do.” It's also important for business reasons because a pharmaceutical company needs to establish trust with all its stakeholders: employees, customers, regulators, shareholders, and so on.

Abbott has been in business for over 100 years. It now employs some 70,000 people around the world and operates in 130 countries. The company makes and distributes pharmaceuticals, medical devices, and nutritional aids. You can imagine the challenge the company faces in meeting the legal, moral, and ethical codes of so many different countries. This is especially true in the pharmaceutical industry because it is involved in numerous issues, like kickbacks, overpricing, and unethical promotions. Only an effort by top management is enough to even begin tackling such major issues. Abbott has had a compliance-based ethics code for many years. But it's one thing to talk about establishing a strong ethics program and quite another to implement one. That's why the company appointed Charlie Brock as Abbott's chief ethics and compliance officer. Each division has an ethics staff, and Brock is the coordinator over them all. One of Brock's first steps in implementing Abbott's ethics program was to let everyone in the company know what the firm's ethical standards are. But the company did not stop with employees; suppliers, distributors, and customers also needed to know that Abbott has such standards and intends to apply them rigorously. That meant establishing a program based on specific standards that are communicated clearly and are enforced with penalties for noncompliance. Abbott uses the latest technology to train employees in ethical standards. Interactive software presents difficult ethical cases and teaches employees what to do when tough ethical issues arise.

Abbott goes beyond just compliance-based ethics to integrity-based ethics. That is, it has a broad program of “global citizenship” that covers everything from how the company reports information to shareholders to how it treats its employees, to how it manufactures goods, to how it tries to minimize environmental effects. The company has been very generous to many nonprofit groups, but takes special pride in its efforts to conquer AIDS in the world, including developing products to treat and hopefully cure the disease. This effort also means teaching people in developing countries how to test themselves for HIV to prevent spreading AIDS to their children. All told, Abbott will spend over $100 million on such efforts over the next five years. That includes building partnerships with other firms to make a difference in the world. Abbott is truly a company to be admired for its corporate citizenship and its active involvement in self-regulation. Not only has the company established an ethics office and set clear ethics codes; it vigorously applies those codes. Its community outreach, including a strong commitment to ending the AIDS crisis, sets a model for other companies to benchmark. Most important, the company does it all for the right reason: It is the morally right thing to do!

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Doing Unto Others - Abbott Laboratories

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1			Do you think Abbott’s ethics program willsucceed in creating the trust the company isstriving to maintain? Why or why not?
2			Would you be more or less interested in workingfor a company with such a strong commitmentto ethics and community involvement?What does your answer say about the value ofsuch programs?
3			What are some issues involved in manufacturingand selling drugs in countries aroundthe world? How does an ethics code addressmost of these issues?
4			One way a company like Abbott could make adifference in developing countries might be tosell a treatment for AIDS at or below cost.What would be the long-term consequences ofsuch a decision to the company?