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AMERISOURCEBERGEN CORPORATION’S CORPORATE SOCIAL RESPONSIBILITY

John M. Panizza

Community College of Rhode Island

Author Note

This paper was prepared for Professor Amantea’s BUSN 2050 Principles of Management

Course during the Summer 2019 Term.

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AMERISOURCEBERGEN CORPORATION’S CORPORATE SOCIAL RESPONSIBILITY

Introduction to Corporate Social Responsibility (CSR)

Business organizations are started with the purpose of earning profits for the

shareholders. Their activities are modeled with the sole purpose of achieving their agenda.

However, organizations over the past few decades began acknowledging the importance of the

communities around their operations and the needs and welfare of their employees. The

thoughts translated to what is now termed CSR. CSR refers to any activity undertaken by an

organization that affects their corporate citizenship. Activities are many and depend on the

financial power and influence of the organization. This paper evaluates AmerisourceBergen

Corporation (ABC) by analyzing CSR programs and federal violations conducted by the

company.

Founded in 2001, ABC is an American Fortune 500 company that operates as a

wholesaler in the health care industry. The company's two business segments, which are

composed of several subsidiary companies, include pharmaceutical distribution and other

ancillary services to human and animal health care and supply chain management. This paper

focuses on the pharmaceutical distribution business segment of ABC. Together,

AmerisourceBergen Drug Corporation (ABDC), and AmerisourceBergen Specialty Group

(ABSG) form the pharmaceutical distribution segment. Their responsibilities involve the

distribution of various drugs belonging to specific brands, as well as generic pharmaceuticals,

home healthcare equipment, supplies, and over-the-counter healthcare-related products, to

institutional and individual clients across the U.S. ABC’s other business segment has more of a

global presence. The collective assets of ABC and its subsidiaries are aimed not only at
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lowering costs plus improving human and animal patient outcomes, but also to engage in various

CSR initiatives to leave a lasting positive influence on society.

Diversity/Equal Employment Opportunity

One of the essential aspects of the company’s CSR is their commitment to expanding

gender diversity. ABC is engaged in CSR by building an involved group of associates.

According to ABC president & chief executive, the company employs its workforce to create a

culture of inclusiveness that values diversity where every individual is treated respectfully. The

company undertakes campaigns aimed at encouraging employees to connect with respect. ABC

has also developed a work environment where all persons are heard, welcomed, and accepted.

The organization encourages all its associates from different parts of the world to participate in

different employee resource groups and mentor programs, such as Women's Impact Network,

Veterans in Action, and LGBTQ Allies group, which offer considerable opportunities to help

employees reach their full potential and to give their ideas on how the company can further

enhance its culture through inclusion.

Commitment to expand gender diversity

ABC has exhibited a commitment to gender equality among their leadership ranks. In

2018, ABC was recognized by the Forum of Executive Women’s Women in Leadership report

for reaching a milestone of being one of the top ten public companies with 30% or more women

on their board of directors. Three of ten board member seats were filled by women. As for

reaching the goal of 30% executives, ABC was just shy by three percent, having 3 of 11

executive positions held by women (27%). Recruiting talented women and creating a workplace

culture which values women remains a top priority to ABC. In 2018, 55% of ABC’s employees

were women, and for that year, over half of the company’s promotions went to women.
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Corporate Equality Index (CEI)

Top Fortune companies receive an annual index rating by the Human Rights Campaign

Foundation (HRCF) for lesbian, gay, bisexual and transgender equality in the workplace. In

2018 and 2019, ABC demonstrated their commitment to recognize and embrace diversity and

inclusion by having received a 100% rating in the HRCF’s CEI report. Evidence of ABC’s

transition to sustained success in equality is displayed in the CEI reports for 2015, 2016, 2017,

2018, and 2019, which reflect the scores of 55%, 75%, 85%, 100%, and 100% respectively. The

improved CEI rating ABC received in 2018, attributes to their acknowledgment of previously

imperfect CEI scores and heeding the LGBTQ Allies and HRCF’s call to increase the national

number of employers that provide transgender-inclusive health care coverage. ABC

implemented changes to their health benefit program by removing transgender exclusions from

their health insurance contracts.

Community Service/Environmental Concerns/Charitable Work

Associate Assistance Fund (AAF)

As a part of its CSR, ABC states that they put people first in everything they do. In 2018,

the California wildfires affected the communities in which ABC’s operations are located, and in

response, its associates participated in the relief efforts by providing medical supplies to the

urgent medical care teams that were required to save individuals affected by the calamities.

Additionally, through its AAF, ABC rescued people and animals by transporting them to safe

places away from the wildfires. Lastly, during this time, the company’s AAF approved

resources and funding for associates that suffered severe financial hardships, such as the inability

to pay costs for medical services, food, or temporary shelter.

AmerisourceBergen Foundation (ABF)

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Notably, charitable work is another important aspect of the company’s CSR initiative.

ABC engaged in charitable activities, aimed at giving back to the society for purposes of

supporting various community initiatives through the ABF. In 2017, ABC participated in the

charitable initiative that provided support of relief effort services for the people of Florida,

Puerto Rico, Louisiana, and Texas that were affected by Hurricanes Irma and Harvey. ABC,

through the ABF, donated around $100,000 towards the support of relief activities provided by

organizations that safely evacuated the affected victims and offered other humanitarian services.

One year later, in 2018, the ABF committed their aid after natural disasters rattled parts of the

U.S. During this instance, the foundation contributed monetary donations which totaled more

than $300,000 to support relief efforts in the communities directly affected by Hurricanes

Michael (Florida Panhandle, Georgia) and Florence (the Carolinas).

A prominent charitable activity that ABF has been a part of is aimed at addressing the

national dilemma of the opioid epidemic in society. The ABF provided funds to several non-

profit organizations committed to dealing with the national issue. In 2018, the ABF donated and

distributed about 1 million resources for drug deactivation to 140 non-profit organizations and to

44 states in the U.S. under the initiative named the Safe Disposal Support Program.

Finally, in 2018, ABC through the ABF, started an opioid-focused grant program where

they donate grants in the amount of $50,000 to the Emergency Department Accidental Opiate

Overdose Intervention program. This program is part of the ongoing efforts to prevent opioid

overdoses and aims to reduce stigma through education, advocacy and peer-based recovery

support services, especially through out the recovery process.

Violations Committed by AmerisourceBergen Corporation

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However, the biggest challenges ABC faces as it engages in CSR initiatives are unethical

business practices. In 2018, ABC was found guilty by the Eastern District of New York, for

engaging in unfair business practices by distributing unsafe pre-filled syringes to clients. ABC

admitted that between January 2001 and January 2014, they engaged in unethical practices best

described as creating, packaging, and shipping millions of pre-filled syringes to oncology

practices across the country for administration to patients. The patients involved were under the

impression they had received Food and Drug Administration (FDA) certified pharmaceutical

treatments, however, the evidence presented in court revealed that ABC put the vulnerable

patients at risk by illegally manufacturing the pre-filled syringes in unsafe conditions. ABC

profited some $99.6 million during the 13-year long scheme. The company agreed to enter into a

settlement with the U.S. to pay $625 million to the state of New York and the federal

government.

In 2017, ABC pleaded guilty to violating federal laws for promoting the sales of

misbranded pharmaceuticals (pre-filled syringes) to interstate commerce. The FDA investigated

and presented the evidence against ABC in federal court, and therefore, ABC pleaded guilty and

paid $260 million in criminal penalties. The case findings concluded that ABC failed to include

the profits from the pre-filled syringe scheme during audits that occurred between 2001 and

2014. The violations ABC admitted and plead guilty to during 2017 and 2018 brought a total of

over $885 million in combined penalties they paid in effort to resolve their liability.

The 2007 case against ABC involving a former subsidiary of theirs, Long Island

pharmaceutical company, Bellco, highlights a significant instance in the company’s history

where they were found guilty of violating the Controlled Substances Act. ABC was the parent

company to Bellco during this episode, therefore this blemish remains on ABC’s violation record
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today. Bellco failed to notify the Drug Enforcement Agency (DEA) of repeatedly suspicious

opioid orders of unusual size and frequency. Since ABC continued to authorize and provide the

large quantities of narcotics to the on-line pharmacies, the DEA investigated and intervened,

ultimately shutting down Bellco for good. In addition to receiving a penalty of $800,000,

ABC/Bellco had to surrender its DEA registration, and turn over all its entire controlled

substance inventory to the DEA.

Never-before-released federal data reported from July 2019 revealed that ABC was

responsible for 11.7% of the market share of opioid distribution in the U.S., and that they were

the fourth largest prescription opioid distributor throughout 2006-2012. When requested for a

comment on the findings, ABC backed away from the claims that they intentionally disregarded

controls to detect the surges in opioid orders from their pharmacy customers. Instead, ABC

blamed the epidemic on over prescribing doctors and the FDA. ABC stated the FDA is to blame

since they are the sole custodian of the records for national distribution of controlled substances.

The company truly believes their controls in place are adequate to free them of liability over the

national opioid epidemic.

Student Insight

This paper demonstrates that ABC engages in numerous CSR initiatives. The student

applauds ABC over their commitment to building a diverse workforce while supporting the

community through charitable activities. As it relates to ABC’s employee health benefit

program, the student salutes their implemented strategy which transformed an internal weakness

into a notable strength and competitive advantage among other employers. This displayed that

despite a person’s background, the company is prepared and ready to value them and offer

support as part of its diversity initiatives.

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The student praises ABC for promoting mentoring in the workplace through their various

resource groups. Benefits of these programs include the development of growing relationships

between the mentor and mentee that helps create and perpetuate a positive company culture that

blends the best qualities of the individuals, regardless of age. Depending on an employee’s

background and personal interests, they may feel like they are different and are alone, but the

resource forums and mentorship programs help to mesh personalities and bring people together

by showcasing their individual differences.

ABC’s effort to go above and beyond during dangerous events such as disasters and

hurricanes manifests their awareness of impending issues and willingness to expeditiously help

their neighbors in need. The student commends ABC on their laudable engagements that support

the community and address social, economic, and natural problems faced by the people through

charitable work. ABC has shown that they give back to the society part of its profits generated

from its different business activities. Their Safe Disposal Support Program advertises that the

company is committed to ensuring that members of the public use its drug products it distributes

responsibly, by removing the likelihood and potential for abuse of prescription drugs in illegal

drug transactions without prescriptions. Although the actions are explicitly praiseworthy, the

student questions ABC’s principle behind the recent birth of their grant program which supports

the recovery phase for victims of the opioid epidemic. By weighing the coincidence behind the

timing of the charitable acts with the looming lawsuits which are both similarly related to the

opioid epidemic, the student wonders what is ABC’s motive.

Unethical business practices remain a challenge for the company as it tries to build an

image and reputation of an organization that is committed to good corporate citizenship. The

student contemplates that ABC’s main challenge today may overshadow the company’s positive
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CSR initiatives. The company’s blemished reputation of corporate citizenship reveals associates

having engaged in unethical business practices for a period nearly the company’s entire

existence. The student stresses that ABC’s present business practices of the distribution of

controlled substances must be called into question due to their previous violation of the

Controlled Substances Act. It’s difficult to ignore the fact, in 2007, they were found guilty of

brazenly disregarding alerts of suspiciously large opioid orders. The student’s inclined to believe

ABC's current lack of controls beyond corporate greed were largely responsible for their share of

the opioid distribution and contributed to today’s epidemic. The student believes ABC must take

corrective actions following a complete and thorough review of their pharmaceutical segment’s

handling of controlled substances. They need to integrate more stringent protocol for the release

of opioids to their customers. The student suggests in effort to restore its CSR image, ABC must

avoid participating in the blame game, and instead, do as they preach and put people first, by

taking accountability for their market share of the national opioid distribution.
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Works Cited

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1m-drug-deactivation-resources.

Bloomberg. "AmerisourceBergen and the AmerisourceBergen Foundation Commit More Than

$100,000 To Support Victims Of Hurricanes Harvey and Irma". Bloomberg.Com, 2017.

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