Wasima Khan, J.D., is a PhD candidate in Corporate Law at the Erasmus School of Law, Erasmus University Rotterdam, the Netherlands. Wasima’s forthcoming dissertation focuses on how responsibilities toward distributive justice can be implemented in law, business, and society.
I. Profits and Medicine
On October 28, 2014, Google marked the 100th birthday of the American virologist Jonas Salk with one of its world-famous “doodles” [1]. Salk was an unconventional pioneer who developed the first effective polio vaccine [2]. Until the introduction of Salk’s patent-free invention, the then rapidly spreading disease of polio was considered to be one of the most frightening epidemics of the post-war era. Ultimately, it was Salk’s vaccine that paved the way to a polio-free United States. At a young age, the talented Salk had intended to study law to make just laws; now he found himself helping humankind with the laws of nature instead [3].
A few years ago, Salk’s success story was also brought to public attention in Michael Moore’s documentary Capitalism: A Love Story. The documentary briefly highlighted the fact that Salk had no personal interest in making enormous profits with his widely used invention. Salk’s desire was to use medical science as a means to find solutions to the world’s most pressing problems. Never did this become clearer than during a famous television interview when Salk was asked who owned the patent to his vaccine. He replied that there was no patent and asked the rhetorical question: “Would you patent the sun?” Salk believed his vaccine belonged freely to the people.
Notwithstanding Salk’s humanitarian legacy, today’s reality is that many medical scientists develop medicines for the world’s largest pharmaceutical companies – so-called “big pharma” [4] – who team up with intellectual property lawyers in order to obtain patents, i.e., exclusive property rights to innovative knowledge. If medicines were not patented, they would be much faster and cheaper to make [5]. Yet, it has become commonplace for pharmaceutical companies to rely on patents to acquire a short-term monopoly on the production of their medicines [6]. In a modern era of globalized competition, this makes sense from a commercial business perspective [7]. Salk’s polio vaccine, for example, might have made him a lot of money if he had patented it. At the same time, however, the restriction of knowledge for competitive market opportunities by for-profit pharmaceutical companies limits the ability to use medical science independently to address the world’s most urgent medical needs [8].
II. The Role of the Pharmaceutical Industry
In comparison with other for-profit business sectors, the pharmaceutical industry has a unique role and responsibility in society as it produces goods that are unlike any other consumer goods; medicines are not discretionary purchases and they have major health-related effects [9].
However, it is more profitable to sell medicines to the rich few than to the many poor [10]. As such, the pharmaceutical industry is caught in a fundamental dilemma between the pursuits of market-based wealth and need-driven health. Most recently, this dilemma received recognition in light of the Ebola epidemic. Ebola is a deadly virus that has killed people in Africa’s economically underdeveloped nations since the 1970s, despite years of research. In a poignant speech, Director-General of the World Health Organization Margaret Chan criticized pharmaceutical companies for not producing vaccines against Ebola until a profit was certain. She said, "A profit-driven industry does not invest in products for markets that cannot pay… The outbreak highlights the dangers of the world's growing social and economic inequalities… The rich get the best care while the poor are left to die." [11]
While pharmaceutical companies have advanced the quality of life for millions of people through their products, their motives are continuously questioned [12]. Pharmaceutical companies need to make entrepreneurial decisions that include both the “efficiency” goal of profit-making and the “fairness” goal of advancement of public health. Yet, the notions of efficiency and fairness do not neatly complement each other in practice, and striking a balance between the two goals has proven to be a challenging tug-of-war.
On the one hand, critics argue that pharmaceutical companies are too narrowly focused on the profit-maximization goal. According to public health advocates, the pharmaceutical industry produces the most marketable medicines instead of the most urgently needed medicines [13]. Moreover, it has been argued that the industry is risk-averse and invests in research on minor modifications to existing medicines with few clinical improvements, rather than on new medicines in the area of neglected diseases [14]. On the other hand, industry advocates argue that pharmaceutical companies need to maximize profits to ensure their continuity and require long-lasting patents in order to fund and protect their innovative research. They argue that the public underestimates the extent to which making a new life-saving medicine is difficult, time-consuming and expensive [15].
III. The Human Right to Health and the Pharmaceutical Industry
In capitalistic societies, there is an ongoing debate over the role of the government vis-à-vis the free market in delivering and financing public health. Free-market advocates defend market mechanisms for access to health and consider medicines merely as a commodity. They perceive public efforts to promote fairness as illegitimate interference with the functioning of the market and private enterprises. Critics, on the other hand, promote fairness and stronger regulation of the pharmaceutical industry, arguing that medicines are social goods that should be available to all. They apply a rights-based approach and consider the right to health to be a universal human right.
In the current debate, there has increasingly been an appeal to the human rights perspective, given the growing concerns about the global inequalities in access to health care. Almost two billion people lack access to essential medicines. Although governments have a primary responsibility to ensure the health of their citizens, it is recognized that pharmaceutical companies also play an important role in realizing the human right to health by making medicines accessible to all those in need.
The United Nations (UN) has targeted the pharmaceutical industry in its 8th Millennium Development Goal, aiming to “in co-operation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.” In 2008, the UN Special Rapporteur on the Right to the Highest Attainable State of Physical and Mental Health, Paul Hunt, submitted the first Human Rights Guidelines for Pharmaceutical Companies in Relation to Access to Medicines to the UN General Assembly [16]. It resulted in specific recommendations and practical and constructive guidance that could be implemented internally by pharmaceutical companies. The extent to which pharmaceutical companies can be held accountable, however, remains unclear. The UN guidelines are non-binding, and the application of human rights to the pharmaceutical industry is an unsettled question in international law [17]. Amidst such ambiguity, it is perhaps not surprising that pharmaceutical companies are reluctant to acknowledge any such responsibilities in practice [18]. If not all answers about the future are, can, or should be written into law or self-regulation, what can lead to the much needed balance between efficiency and fairness in the pharmaceutical industry?
IV. Educating (Future) Business Leaders
Considering the R&D partnership between universities and pharmaceutical companies, many medical scientists might have a financial incentive aligned with the practices of pharmaceutical companies, which develop their ideas into medicines, with an emphasis on the profit-maximization goal. It is not their burden to push reforms. The burden lies with the directors of pharmaceutical companies. Ultimately, they are the ones who need to balance the profit- maximization goal with the goal of public health advancement. They can reform their corporate strategy. This is where the influence of business education comes into play.
Academia plays an important role in educating the world’s future business leaders. Education can shape their future mind-set and motives. Currently, it is argued that the world’s leading business schools are primarily focused on teaching their students to focus on shareholder value maximization [19]. A practical suggestion for reform aimed at business schools is to develop new teaching materials that unravel the current tensions between efficiency and fairness in the pharmaceutical industry to their students. Business schools can rebuild public trust by proactively teaching today’s students – tomorrow’s business leaders – how to balance the pursuit of value creation with the advancement of public health to serve the public interest. Today’s students are the ones who are able to challenge the status quo [20].
V. Concluding Remarks
Scientific discovery in medical science comes at a cost, but the celebration of Salk’s intellectual gift to the world is a stark reminder that fairness in the form of great advances for humankind as a whole can and should be pursued without a too narrow focus on efficiency in the form of profit maximization. A cynic may say that (future) business leaders have an ineradicable natural tendency towards profit maximization because they are unable to manage what they can’t financially measure. An optimist, however, will say that if all they care about is what they can financially measure, they will miss out on the precious and priceless bigger picture: the healthy progress of our civilization.
References
[1] The doodle is available online in Google’s doodle archive at: <https://www.google.com/doodles/jonas-salks-100th-birthday>. It is a joyous picture showing children and adults celebrating, running around, and thanking Dr. Salk for his life-saving invention.
[2] For the first complete biography of Jonas Salk’s remarkable life (partly based on unprecedented access to his sealed archives), see DeCroes Jacobs (2015).
[3] Academy of Achievement (1991).
[4] The Economist (2013).
[5] Law (2006)
[6] For a study that combines the legal, medical and business history of the modern US pharmaceutical industry to explain how the patenting of pharmaceuticals was considered an unethical form of monopoly until the steady rise of corporate capitalism following the Civil War, see Gabriel (2014).
[7] See e.g., Bagley (2005), at 117 et seq. (on how intellectual property protection can be used by (high-technology) companies as a legal strategy to capture value creation as it “transforms ideas into revenue-generating assets and sources of competitive advantage”).
[8] Stiglitz (2007) (Stiglitz instead proposes to introduce government-funded medical prize funds as an incentive to discover new cures instead of patents).
[9] Weber (2006), at 30-33. For a theoretical perspective on the special moral importance of health compared to other goods, see Daniels (2007), at 17-21 (arguing that Rawls’ theory of justice as fairness provides support to the notion that there is some obligation of distributive justice to promote health to protect the opportunities of people).
[10] Grover, et al. (2012).
[11] Director-General Chan’s speech is available online at: http://www.who.int/dg/speeches/2014/regional-committee-western-pacific/en/>.
[12] See e.g., McTavish (2004), at 112-133 (describing how German pharmaceutical company Bayer – originally a synthetic dyestuff manufacturer for the textile industry – successfully managed to turn aspirin into the world’s most widely used pharmaceutical through aggressive business practices, despite the fact that its medical merits were and still are contested), and Verweij (2011) (describing how the pharmaceutical industry faces criticism for developing medicines according to profit prospects instead of health needs).
[13] Wall Street Journal (2012).
[14] Light & Lexchin (2012). See also Goozner (2004) (describing how the most significant new drugs in recent years have been developed based on research funded by the U.S. federal government rather than by pharmaceutical companies).
[15] LaMattina (2008). According to pharmaceutical industry experts, the discovery process of a prescription drug takes place over a time span of more than 10 years at an estimated cost of $2.6 billion, see Mullin (2014).
[16] United Nations General Assembly (2008). These guidelines are consistent with and complementary to the more general corporate responsibility to respect human rights laid down in the Guiding Principles on Business and Human Rights (Ruggie Principles) by the UN Special Representative of the Secretary-General on the issue of human rights and transnational corporations and other business enterprises. Furthermore, on June 3, 2009, the Special Rapporteur presented a UN independent human rights report to the Human Rights Council on the practices and policies of GlaxoSmithKline (GSK) in relation to responsibilities to the human right to health and access to medicines.
[17] Forman & Kohler (2012), at 9.
[18] For example, despite GSK’s commitment to the right to health, the company has emphasized the lack of a legal obligation on companies, and responded that its commitment is not in any way required by international legal norms, thereby claiming that it cannot be held accountable to this international human right; see GlaxoSmithKline (2009). See also Ratner (2001), at 449 (mentioning that corporate leaders might find a philosophical objection to the idea that human rights law should regulate private actors).
[19] Murray (2013).
[20] Indeed, the results of a recent survey from the Cranfield School of Management – commissioned by Coca Cola Enterprises and in partnership with the Financial Times – reveal that 88% of current CEOs and 90% of future leaders – i.e., MBA or MSc students or recent graduates of business schools – believe companies should have a social purpose. Yet, only 19% of the future leaders think companies are already putting this into practice compared to 86% of the CEOs (see Coca Cola Enterprises (2014), a study based on the views of 50 CEOs and almost 150 MBA and MSc students and recent graduates across Europe). It is encouraging that a younger generation recognizes that there is still work to be done to readjust the purpose of companies in order to have a social impact.
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Acknowledgments
I am grateful to the AAAS Science and Human Rights Coalition for the opportunity to address the topic of science, business, and human rights through its 2015 Student Essay Competition. I thank the nineteen jury members of the essay competition for reviewing this essay. I thank the AAAS-Andrew M. Sessler Fund for Science, Education, and Human Rights for its generous contribution to the competition that made it possible for me to attend the 2015 AAAS Science and Human Rights Coalition Meeting in Washington, D.C. I thank Theresa Harris and Joshua Ettinger of the AAAS Scientific Responsibility, Human Rights and Law Program for their excellent coordination of all matters related to the competition and the Coalition Meeting. I thank Mark S. Frankel, Editor of the Professional Ethics Report, for providing valuable editorial feedback on the initial draft of this essay.