RACHNA JAIN
The pharmaceutical industry is one of the largest and most influential in today’s global society, but it also harbors a great ethical flaw. Pharmaceutical companies research and develop, drugs; however, their aim is not to solely heal people.They are also in the business of making money. While developed countries benefit from the innovations that pinpoint ailments prevalent in the US market, less research is conducted on diseases that primarily affect developing nations. This inequity is caused when the business plans of pharmaceutical companies do not include small, unprofitable markets of developing countries. Many of the world’s deadliest illnesses, such as leishmaniasis and malaria, are not getting sufficient R&D funding from pharmaceutical companies because they are “thirdworld” diseases. Only 1% of the 1393 new drugs registered during 1975– 1999 were for these neglected diseases, yet these illnesses constitute more than 10% of the global disease burden.1 Affected persons often cannot afford to buy drugs and thus are “off the radar screen.” Thus, “third world” diseases only receive $1 out of every $100,000 spent on medical R&D.2 Improvement in people’s standard of living is contingent upon improving the populace’s health; these advancements will result in a more productive labor force, lower unemployment, and a lower rate of disease transmission. However, advances are difficult to come by because the industry is more interested in profits than in people’s well-being. Roy Vagelos, the former head of Merck, explained, “A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke.”3 He further declared, “That’s a social problem, and industry shouldn’t be expected to solve it.”4 Society, however, would beg to differ. The industry’s pricing strategies are unjustifiable: They spend enormous amount of money in defense strategies to maintain monopoly, but often have low marginal costs of production. Secondly, within the in-
dustry, patents protect corporations, which allow them to charge extremely high prices for these drugs until the patent expires. Corporate Crime Reporter, a website, listed Pfizer, the industry’s leader, as #17 on the list of the “Top 100 Corporate Criminals of the 1990s” for international price fixing. Pfizer spent more than 7.9 billion in R&D funding in 2008; however, less than .001% went towards developing new treatments for developing world diseases.5 Diseases such as malaria, trypanosomiasis, and lymphatic filariasis are not even on the “cure” list towards which Pfizer is striving.6 Not until 2007 did Pfizer say it is starting to work on a drug for malaria.7 Pfizer has been accused of moral depravity for pricing lifesaving drugs beyond the reach of millions of people.8 Oxfam International, a confederation of thirteen organizations working to find lasting solutions to poverty and injustice, is campaigning to end the company’s single pricing policy, and is pressing for more flexibility in patent laws.9 In a news report released simultaneously in eight countries, Oxfam claimed that Pfizer aggressively enforced its patents in poor countries, driving up the cost of medicines, and, unlike some of its competitors, did not reduce the price of branded drugs.10 David Earnshaw of Oxfam Brussels said, “The developing world accounts for only 5% of the pharmaceutical industry’s income. Behaving responsibly in developing countries is not going to cost Pfizer a lot of money.”11 The report maintained that despite owning three important drugs for infectious diseases—the antifungal fluconazole (Diflucan), the antiobiotic azithromycin (Zithromax), and the antiretroviral nelfinavir (Viracept)—Pfizer has shown little flexibility on pricing.12 Economic theories from R. Edward Freeman and Milton Friedman are relevant in examining the pharmaceutical industry. Though Friedman encourages corporations’ growth in revenue, he also promotes business free of “deception and fraud.”13 Freeman takes the idea a step further, de-
manding respect for all stakeholders through corporate social responsibility.14 By restricting access to products, Big Pharma is shunning CSR and playing with life and death scenarios. Many governments provide suboptimal R&D incentives, seeing pharmaceutical R&D as a global public good; so each country has an incentive to free ride on research financed by other governments.15 However, R&D preeminence enables one person or company to efficiently create a monopoly and thus retain exclusive control of their intellectual property, which then drive up the asking price and their profits. The CEO of Novartis said, “We have no model which would [meet] the need for new drugs in a sustainable way...You can’t expect for-profit organizations to do this on a large scale.”16 However, the industry is not battling with low-margin profits; the combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Sahara Africa.17 Profits are especially high in the United States because the government does not regulate drug prices. A retired drug company executive was quoted saying, “It’s obvious that some of the industry’s surplus profits could be going into research for tropical diseases, instead it’s going to stockholders.”18 The patent-based model does not encourage pharmaceutical companies to support the “cash-strapped and unstable markets of developing countries.”19 And no solution has been fully implemented since these companies are adamant about charging high prices to recover the cost of introducing a drug to a market. As per the Global Health Forum, we need to encourage pharmaceutical companies to “target markets that would otherwise be economically unattractive,” and find a way so that patent laws do not prevent poor countries from improving their people’s health.20 Obviously, pharmaceutical companies did not cause the health crisis. However, they are vital players that have the ability to positively affect the future of millions of impoverished people.
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