Margin, Mission, Morals and Moniker in the Drug Industry: An Industry Perspective

by Jennifer E. Miller

Jennifer E. Miller, of the Edmond J. Safra Center for Ethics of Harvard, chats with Kevin Brewer of Astellas Pharma about the mission, ethics and reputational challenges of pharmaceutical companies. They conclude by discussing reform strategies.

Jennifer: What are the key bioethical challenges that arise at Astellas Pharma and which ones do you feel are most pressing to address?

Kevin: I think of the bioethical challenges that arise at Astellas as Corporate Social Responsibility (CSR) issues, which can be thought of in terms of the economy, employees, environment, compliance and society. Broken down, it looks like this:

Economy: does Astellas have ethical business practices ranging from the execution of clinical trials all the way to the promotional/marketing practices of an approved product?
Employees: are employees treated in an ethical manner and provided a work platform in which they can perform and have opportunity for personal growth?
Environment: this may be less of a bioethical challenge, but an important challenge nonetheless; do company initiatives reduce or increase environmental burden?
Compliance: do we uphold business/personal integrity and adhere to all laws and ethical practices during all business activity?
Society: for me, this is the most important issue with Economy and Compliance—does Astellas contribute to society and the health of the global community?

As far as these core components of CSR are concerned, Astellas excels in the first 4 arenas. We have room for growth in the Society sector. And I think every company does. It’s important to consider two factors: medicine as a commodity and corporate mission statements. It is my firm belief that medicine is beyond a simple commodity—it is a product essential to saving lives. Thus, it must not be thought of in simple free-market terms, that is, a priced good based on supply/demand. This, coupled with the fact that EVERY pharmaceutical firm states within their mission statement to some extent that it is their goal to provide for the health of humanity, makes it a moral obligation for the pharma firms to provide, within reason, access to medicine for those that cannot afford it. Clearly, a company does not have the resources or capability to give free medicine to all those who need it, but when a company provides access to segments of impoverished people they are staying more consistent with their mission statements and some would argue are making it possible for these people to one day be able to pay for medicine.

Jennifer: Are these the same issues that other drug companies face, and industry as a whole?

Kevin: The issues Astellas faces are the same the whole industry faces. Although the pharmaceutical industry, on balance, delivers huge benefit to humanity relative to the negative aspects (ranging from unethical marketing practices to irrational pricing structures), the general public doesn’t know or believe this. The pharmaceutical industry is thought of in the same terms as Big Oil, Big Tobacco, and Wall Street. The onus is on the industry to not only clean up its act, but to not allow the media to dictate negative terms in order to gain eyeballs for their stories. The industry needs to be proactive and let the public know about all the good done. Many do not know that the pharmaceutical industry gives out more free medicine than all the global NGOs and governments combined.

Jennifer: Are these industry challenges the same ethics issues the public thinks you are dealing with and should reform? If public perception differs from industry realities, do you have an idea as to what the public thinks you deal with and why their perception may be wrong?  

Kevin: Public perception, regulation, pricing and marketing are 4 issues the industry needs to address. Pricing and marketing are big public concerns as well. And they are all very interrelated. Because of pricing and marketing practices, negative public perception has been the impetus for increased oversight and regulation. The industry needs to take a close look at pricing and marketing. Because overall mission statements dictate that it is the goal of pharma firms to provide “health for humanity,” there is a moral obligation to provide access to more than just paying customers.

I’m fine with a company having a 400% markup on medicine if in their statement they say their goal is to provide shareholder return and working capital for the future. But to be consistent and genuine to mission statements that declare their duty is to stakeholders, not simply shareholders, a firm must provide reasonable tiered pricing programs for impoverished areas or make an effort to donate products to areas in dire need. It’s not rational or possible for the pharmaceutical industry to provide access to medicine for all those that need it. But it is possible to do a much better job in developing drugs for neglected tropical diseases (NTDs) or working with NGOs and governments to help provide access to more medicine for those in need.

From a marketing standpoint, there needs to be zero tolerance for unethical marketing practices. And I think this has evolved. It is only the short-sighted executive who would green light promotion of a drug in non-indicated areas. It just does not make business sense. The large pecuniary fines and negative impact on brand equity make it an irrational move. So regulation has worked.

Yet, I believe, as an industry, we have allowed media to highlight all the negative issues around the industry. This is ludicrous, for I have met hundreds of pharmaceutical executives and employees that care about humanity and want to make a difference. And I’d wager that from a positive global impact standpoint, we do as much or more for public health than any other industry. It’s about ensuring ethical business practices moving forward at all costs. The pharma industry is about health—we should not be thought of in the same terms as the tobacco industry.

Jennifer: Does this negative reputation and distrust affect the industry and individual companies’ ability to do business? If so, how?

Kevin: The pharma industry, really because of its own doing, has developed a bad reputation amongst the public. If you are executing unethical clinical trials on poor people, marketing products in non-indicated areas, or charging exorbitant prices for me-too drugs, an industry will pay a large reputation price. This drives increased scrutiny and regulation and accelerates the cost of doing business. If one has no moral fiber within, and is simply a numbers driven business executive bent on margins, you still need to do the math. It makes zero business sense to have these short-term strategies. The public is my concern here, but look at what the industry has done to itself. The long-term costs far outweigh any billion dollar streak a firm may have had by adhering to unethical business practices.

Jennifer: Is there is a way to reform the industry’s reputation and any genuine ethics problems?

Kevin: There is a way for the pharma industry to heal its reputation. First and foremost all unethical business practices and executives who drive this type of archaic thinking must be excised. Then the industry needs to address more rational pricing and access issues. Also, work together, as Astellas is with other companies to develop drugs for NTDs [Neglected Tropical Diseases] or other diseases that may not drive profit but are part of the “healing humanity” equation. These are difficult steps but I am seeing it happen.

The industry also needs to utilize an agreed upon ethical platform, such as Bioethics International’s [rating system] or the Access to Medicine Index, in order to monitor and gauge their bioethical footprint relative to their competition. And then get this information to the public in order for people to comprehend that the industry is about all stakeholders, not just their shareholders.