Ethical Dilemma with Stakeholders

48‑Hour Crisis‑Response Timeline
(All times are “wall‑clock” hours from the moment the issue is brought to the CEO’s desk. All actions assume the CEO is the “you” in the scenario.)

Hour	Action	Lead / Responsible	Why/Legal‑Ethical/Financial Reasoning
0–1	Convene the Crisis Management Team (C‑suite + Legal, Regulatory Affairs, Medical Affairs, Communications, Risk mgmt, HR, Finance). Set a shared drive folder for all documents.	CEO	Immediate coordination is mandatory to avoid siloed decisions and to satisfy SEC “material event” reporting timelines.
1–2	Verify the data: confirm the 1/8,000 liver‑failure incidence, patient cohort, clinical trial gaps, and whether the risk is already in the label or not.	Medical Affairs + Regulatory Affairs	Accurate risk quantification is essential for compliance with FDA’s post‑marketing safety reporting and for realistic financial impact modeling.
2–3	Legal counsel briefs on regulatory options: (a) submit a 314.800 “Safety Update” (30‑day “preliminary” report) to FDA; (b) file a full label change (6‑month timeline). Decide to file the 314.800 now.	CEO + Legal Counsel	A 314.800 is required for any new safety information; delaying would violate FDA regulations and expose the company to civil penalties and lawsuits.
3–4	Draft a Patient/Physician Letter (risk description, monitoring recommendations, call‑to‑action). Draft a Press Release (material event, commitment to safety, next steps).	Communications + Medical Affairs	Transparency meets the ethical obligation to patients and preserves regulatory goodwill; the press release satisfies SEC material‑information disclosure before the earnings call.
4–5	Prepare the Board Briefing Packet: risk assessment, regulatory obligations, 40 % stock‑price‑drop scenario, potential liability exposure, recommended disclosure strategy.	CEO + CFO + Legal	Board must be informed of the full spectrum of risks; the packet allows a focused, informed decision at the upcoming meeting.
5–6	CFO runs a Financial Impact Model: (a) immediate market reaction (≈ –40 %); (b) potential lawsuit costs; (c) costs of label change/REMS; (d) long‑term revenue impact if drug is discontinued or restricted.	CFO	Quantifying the financial upside of disclosure versus the downside of inaction helps the board weigh the trade‑offs.
6–7	Communications finalizes messaging and media strategy. Draft Investor‑Relations (IR) Statement for SEC filing.	Communications & IR	Consistent, compliant messaging avoids “information asymmetry” violations; IR statement ensures the company meets SEC 10‑Q/10‑K filing requirements.
7–8	Draft the Earnings Call Script (include the safety issue, regulatory actions, patient‑safety commitments, and a brief financial outlook). Prepare Q&A scenarios.	CEO + CFO + Legal	Investors expect a candid update; the script keeps the call on track and protects the company from surprise questions.
8–9	Draft an Internal Memo for employees: what happened, why we’re acting now, what to do if patients or prescribers ask, and reassurance about company stability.	HR + CEO	Employee morale is critical; transparency prevents rumors and protects internal culture.
9–10	Submit the 314.800 Safety Update to the FDA (electronic filing). Confirm receipt and set a monitoring schedule for FDA replies.	Regulatory Affairs	This is the minimum regulatory requirement. The 6‑month formal label change can still proceed later; the preliminary update fulfills the immediate legal obligation.
10–11	Legal signs off on the press release, board packet, earnings script, internal memo, and regulatory submission.	Legal	Ensures compliance with FDA, SEC, and corporate governance standards.
11–12	Send the regulatory submission to FDA; copy Legal, Regulatory Affairs, and IR. Log the filing date and number for audit trail.	Regulatory Affairs	Creates a verifiable record of compliance, essential for both FDA and potential litigation.
12–13	Final board‑meeting prep: review agenda, set time for the “material event” discussion, and secure a 30‑min pre‑meeting call if needed.	CEO	The board must approve the disclosure strategy before the earnings call; a pre‑meeting call can secure a quick decision.
13–14	Conduct an early board call (if board members are in different time zones). Present data, legal risk, financial model, and recommendation. Ask for a “yes/no” decision on disclosure.	CEO + Board members	Rapid board approval reduces uncertainty for the earnings call and aligns the company’s public messaging.
14–15	Receive board decision. If approved, proceed. If not, convene a quick risk‑assessment meeting with Legal and Risk mgmt to explore alternatives (e.g., “wait for more data” vs. “proactive disclosure”).	CEO	Board’s “wait” stance conflicts with legal/ethical obligations; the CEO must ensure the company’s compliance posture remains intact.
15–16	Final alignment: update all internal teams on the board decision, circulate the final press release, and confirm the earnings‑call script and IR statement.	CEO	Ensures everyone is operating from the same information set and reduces the risk of conflicting statements.
16–17	Release the Press Release via wire service, company website, and to the SEC (if required by the filing deadline). Notify all media contacts and key stakeholders (payors, prescribers, patient orgs).	Communications + IR	Public disclosure satisfies SEC material‑information rules and demonstrates corporate transparency to patients and regulators.
17–18	Monitor media, social media, and investor forums. Assign a crisis‑response team to field questions and direct them to the appropriate spokespeople.	Communications	Early monitoring allows rapid correction of misinformation and protects the company’s reputation.
18–19	Internal update: send the memo to all employees and hold a brief virtual town‑hall for Q&A.	HR + CEO	Reassures staff, reduces internal rumors, and ensures employees understand the patient‑safety protocols.
19–20	Final internal briefing: confirm that all executives know the earnings‑call script, key talking points, and the legal boundaries of disclosure.	CEO + Executives	Avoids “off‑script” statements that could trigger regulatory scrutiny or legal liability.
20–22	Earnings‑call rehearsal: executives practice the script, run through tough Q&A scenarios, and receive feedback from the communications team.	CEO + CFO + Legal	Rehearsal reduces the risk of misstatements and builds confidence during the live call.
22–23	Technical rehearsal: test the audio/visual platform, backup feeds, and ensure the IR system can handle the call traffic.	IT + IR	Technical failures could amplify the crisis; a smooth call preserves investor confidence.
23–24	Final check: confirm that (a) the press release is live, (b) the regulatory filing is logged, (c) the board has approved disclosure, (d) the earnings‑call script is ready.	CEO	A final “ready‑set” checklist eliminates last‑minute surprises.
24–25	Earnings Call: disclose the liver‑failure risk, the company’s regulatory actions, and the commitment to patient safety. Address investor questions within the prepared boundaries.	CEO + CFO + Legal	Live disclosure meets SEC “material event” obligations and demonstrates corporate responsibility.
25–26	Post‑call debrief: review investor reactions, media coverage, and any new questions that arose. Update the crisis‑response log.	CEO + IR	Immediate feedback informs ongoing communication strategy and helps manage the post‑call narrative.
26–27	Conduct an Impact Assessment: track stock price movement, short‑interest changes, and any new regulatory inquiries.	CFO + Legal	Understanding the immediate financial fallout informs next‑step planning (e.g., additional disclosures, investor outreach).
27–28	Start drafting a Label Addendum (if the FDA approves a label change). Work with Regulatory Affairs and Medical Affairs to prepare the text and supporting data.	Regulatory Affairs	Label changes are a direct patient‑safety measure and help mitigate future liability.
28–29	Begin REMS (Risk Evaluation & Mitigation Strategy) planning if FDA or payer requirements suggest it. Draft the REMS framework and patient‑education materials.	Medical Affairs + Regulatory	REMS is a proactive tool to reduce risk and demonstrate regulatory compliance.
29–30	Reach out to patient advocacy groups, prescriber networks, and payors to explain the safety update and the company’s action plan.	Communications + Medical Affairs	Early stakeholder outreach reduces misinformation and preserves trust.
30–32	Set up a Patient Safety Monitoring Plan: data collection from post‑marketing surveillance, pharmacovigilance databases, and real‑world evidence.	Regulatory Affairs + Risk mgmt	Continuous monitoring is required by FDA and is essential to assess the long‑term risk profile.
32–34	Draft the Future Regulatory Submission Plan: timelines for label change, REMS implementation, and any post‑marketing studies.	Regulatory Affairs	Having a clear plan demonstrates proactive compliance and can influence FDA’s review speed.
34–36	Internal review of the crisis‑management process: lessons learned, gaps identified, and improvement actions. Prepare a Crisis‑Response Report for the Board.	CEO + Risk mgmt	Board oversight of crisis handling is a governance requirement; lessons learned help prevent future incidents.
36–38	Follow up with the FDA: confirm receipt of the 314.800, ask for the next steps, and schedule a call if needed.	Regulatory Affairs	Maintaining open communication with FDA preserves a cooperative regulatory relationship.
38–40	Work with Legal to prepare for possible litigation: identify potential claims, evaluate the company’s exposure, and outline a defense strategy.	Legal	Early litigation preparation reduces the risk of surprise lawsuits and helps quantify potential liabilities.
40–42	Update the Board (via a brief written report or a quick call) on regulatory status, investor sentiment, and next steps.	CEO	Ongoing transparency keeps the Board informed and supports governance integrity.
42–44	Conduct Employee Training on patient safety reporting, regulatory compliance, and crisis communication. Use the recent event as a real‑world case study.	HR + Regulatory Affairs	Training builds a compliant culture and reduces future risk.
44–46	Host a Company‑wide Town Hall (virtual) to answer employee questions, reiterate patient‑safety commitments, and outline the company’s long‑term strategy.	CEO + HR	Town halls reinforce morale, align the workforce, and demonstrate leadership accountability.
46–48	Final wrap‑up: ensure all documents (regulatory filings, board minutes, press release, IR filings) are filed and archived. Confirm that the crisis‑response log is complete. Schedule a Post‑Crisis Review in 30 days.	CEO	Completing the administrative closure satisfies compliance, protects the company’s audit trail, and sets the stage for a forward‑looking recovery plan.

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Why We Did Not Wait for More Data

1. Legal Obligation – The FDA’s post‑marketing safety reporting rules require that any new safety information be reported promptly (within 30 days for a 314.800). Delaying would constitute a regulatory violation with potential civil penalties and criminal exposure.

2. Ethical Duty – Patients rely on accurate safety information. A risk of liver failure, even if rare, is significant. The duty to protect patients outweighs short‑term financial concerns.

3. Financial Risk of Inaction – While a 40 % stock drop is severe, the cost of potential lawsuits, recall, and regulatory sanctions (which could be multi‑billion) far exceeds the one‑time market impact.

4. Reputational Capital – Transparent disclosure preserves trust with regulators, patients, and investors. A “wait” strategy would likely erode trust, leading to longer‑term revenue decline.

5. Board Governance – The Board’s mandate is to act in the best interests of the company and its shareholders. The Board should be fully informed of the risks and the benefits of disclosure; the CEO’s duty is to present that information and recommend the legal, ethical, and financial best path.

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Key Take‑aways

• Act quickly: Submit a preliminary safety update to the FDA now.
• Disclose publicly: Release a press release before the earnings call to satisfy SEC material‑information rules.
• Get Board approval: Secure the Board’s endorsement before the earnings call.
• Communicate internally: Reassure employees and equip them with the correct messaging.
• Plan for the future: Initiate label changes, REMS, and ongoing safety monitoring.

This hour‑by‑hour plan balances legal compliance, ethical obligations, financial prudence, and stakeholder communication—ensuring the company meets its responsibilities while minimizing long‑term damage.