Sometimes profits should come second

Modern medicine and modern pharmaceuticals are marvels. We can justifiably be proud of some of the recent contributions that pharma industry has made to medicine. Cure for incurable melanomas. CAR-T therapies that save patients from certain deaths. Lucentis that allows blind people to see again. Development of Covid vaccines in months.

Some of the greatest highlights in pharma industry, though, come not from scientific breakthroughs but instead from acts of great kindness and compassion and decency. Merck's decision under Roy Vagelos to develop a cure for river blindness and to distribute it for free. J&J's decision to withdraw Tylenol from pharmacy shelves immediately when tampering became an issue.

And the lowest points in pharma history came not from scientific disasters such as the FIAU disaster or Vioxx adverse events but rather when avarice triumphed over decency. Pharma companies suing South Africa, at the time led by Nelson Mandela, for distributing HIV drugs to its citizens. Shkreli, the Pharma Bro raising price of Duraprim by 5,455%. Companies fighting march-in rights petitions when those petitions were clearly warranted.

I recently read an article in NY Times that made me wince.

I would encourage you to read the article but here is the summary:

Gavi is an organization that vaccinates children in developing countries. Their mission is, to put it simply, to save lives of children. Having worked in the neglected disease field myself, I can unequivocally say that Gavi is one of the best-run, one of the most scientific, and one of the most laudable organization in the world. It's the Mother Theresa of the pharma world.

They contracted for Covid vaccines to be produced by various pharma companies. Since they (and the children in developing countries) were way back in the queue, way after after developed countries, by the time they received the vaccines it was too late.

They're trying to recoup some of the deposits they paid for the vaccines, and the pharma companies are refusing their requests.

I suppose that legally speaking, pharma companies are within their rights to refuse. A contract is a contract, some might say.

But... that's morally wrong.

We as pharma industry are different from most other industries. We have a special responsibility to our patients and to our society.

Not only are the products we're making incredibly important and life-saving (and that's why we do what we do), but we cannot function without the special indulgence of the public, society, and the government to do what we do,

We rely on volunteers in clinical studies to freely risk their health lives to participate in our clinical studies. We cannot develop drugs without their help. And over 90% of the time, the drugs in those trials don't work. And sometimes, despite our best efforts, our drugs kill some of those volunteers.

Experimental drugs are dangerous. If you've been a drug developer long enough, you have killed or injured volunteer patients.

Our government gives us special permission to expose volunteers in clinical trials to experimental drugs. It shields us from liability when things go awry.

And much of what we do is built on the work funded by NIH, NCI, and other government agencies. We contribute a tremendous amount of intellectual capital and actual capital to develop drugs, to be sure, but we would not have many of those miracle modern drugs without the foundations laid by the academic scientists and the government.

Do other industries rely on government help? Of course. Tesla benefited tremendously from government subsidies, for example. But I can't think of another industry that relies on volunteers risking (and sometimes losing) their lives in order to develop their products.

So it is puzzling to me that we want to deny an organization like Gavi. We are taking money from an organization that would otherwise use that money to save childrens' lives in impoverished countries.

I would like to think that we could afford not to do that. I would like to think that shareholders would understand if we chose the more compassionate path.

And as many of us know, this is not an isolated incident. We've all heard about the rising price of insulin (though many may not know that the original inventor of insulin, Frederick Banting, licensed his patent to everyone for $1 because he wanted everyone to have access to it - "insulin belongs to the world, not to me")

Surely we can't continue on this path. Surely we don't have to. I want to believe that we don't have to put profit before everything else. That is not why many of us got into this industry, It's not why we do what we do.

Innovation is expensive, yes. Pharma companies are doing unbelievable work and deserve comfortable profit margins, yes.

But I would like to believe that we don't need to demand our pound of flesh from an organization like Gavi. I hope that we can still live up to principles like J&J's Credo: "We believe our first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services."

If we don't tack a different course, I fear that we will go the path of the tobacco industry - and more recently the soft drink industry. Both of those industries have lost society's support.

As a student of corporate governance and history, I know that corporations exist only by permission of governments. Our corporation operate under charters granted by government under the implicit assumption that the corporations produce net benefit to our community. There is no unalienable right of corporations to exist, and in fact England abolished corporations for a hundred years after the South China Sea bubble.

There may be a debate right now about whether Delaware corporations owe duties to anyone other then their shareholders (companies in some other states and other countries clearly do), but there is no doubt that corporations exists as a whole to benefit the community - or else we wouldn't allow them to exist.

I am hopeful though. I know people at almost every organization mentioned in the article. They're good people. Sometimes we let our organization do things we would not do ourselves. But in this case, I am hopeful that they--and by extrapolation, we as pharma industry--can and will do the right thing.