The Case of the Detrimental Drug: Implications for the Stakeholder Theory of Directorship

J. Scott Armstrong ()

General Economics and Teaching from EconWPA

Abstract: The Winter 1979 issues of Directors and Boards presented readers with a questionnaire based to a degree on a 1969 board incident at Upjohn Corporation [see Box 1 (on page 2) and Box 2 (on pages 3-4)]. In this questionnaire, a profitable drug named “Wondola” was being produced by the so-called International Drug Corporation (IDC). Readers were told that members of the American Medical Association's Council on Drugs had objected to the sale of most fixed -ratio (combination) drugs on the grounds that they grant no benefits superior to those of single- ingredient drugs, and are more likely to produce detrimental side effects, including death. Wondola, with an approximated fatality record of 14 to 22 deaths per year, was no exception. The Federal Drug Administration had asked IDC to withdraw the drug. Readers were asked how they would have voted at a board meeting called to resolve the withdrawal issue.

Keywords: stakeholder theory; detrimental drug (search for similar items in EconPapers)
JEL-codes: A (search for similar items in EconPapers)
Date: 2005-02-11
Note: Type of Document - pdf; pages: 19

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Working Paper: The Case of the Detrimental Drug: Implications for the Stakeholder Theory of Directorship (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpgt:0502062

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