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FEATURE
Corporate Social Responsibility of the Pharmaceutical Industry in Solidaristic Terms
Calvin WL Ho
Centre for Biomedical Ethics, National University of Singapore; The Ethox Centre, University of Oxford

Access to essential medicines has been a central concern in ethical evaluation of the pharmaceutical industry. Few will dispute that medicines should not be regarded as simply ordinary goods because of their curative and therapeutic properties. Others go further in their view that access to essential and effective medicines is a basic human right. As medical entities, it has been argued that pharmaceutical companies have heightened responsibilities to meet the medical needs of the sick. Just as physicians are expected to put themselves at some risk of infection, pharmaceutical companies should similarly risk some profits through ensuring access to essential medicines, or so the argument goes (Cohen-Kohler and Illingworth 2008). In this sense, corporate social responsibility (CSR) relates to the moral duty of pharmaceutical companies to provide these medicines, even if unprofitable. A problem with this and other mainstream conceptions of CSR is its unilateralism and simplification of a complex problem that encompasses a more diverse set of values, experiences and expertise. Arguably, this has contributed to the general perception that this access problem is only a problem with the pharmaceutical industry. This paper calls for broader ethical evaluation of the responsibilities of the industry, by re-conceptualizing CSR in a manner that is consistent with the principle of solidarity.

The Pharmaceutical Industry and its Challenges

Modern corporations are generally recognized as legal ‘persons’, in that they have legal rights and responsibilities, and can sue or be sued. Corporations have a variety of socially useful, beneficial and non-exclusive functions that include (Cruz-Cruz and Frey 2008):

  1. Stewardship over property for the benefit of one or more persons;
  2. Governance over certain (often specialized) knowledge and skills;
  3. Means of pooling together capital and resources;
  4. Mechanism of distributing or spreading risks;
  5. Organizational decision-making structure that is directed towards certain collective goals.
A pharmaceutical company would usually encapsulate all of these functions in pursuit of its overarching goal (or role) of developing, producing and distributing drugs as a profitable concern. In the 1970s and 1980s, John Mullins (2010) explains that the pharmaceutical industry has been extremely profitable for a number of reasons. Competition was low due to high entry barriers, with low threat of substitutes, and without resistance from its largely uninformed buyers and consumers. From the 1990s however, legislative and regulatory changes in North America and Europe lowered the entry barrier, and led to an influx of generics and biotech companies. The bargaining power of buyers and consumers increased dramatically with the emergence of managed care in the U.S. and establishment of price control through the determination of cost-effectiveness of drugs, for instance, in Europe. Consumer knowledge also increased dramatically with growing availability and accessibility of health-related information on the Internet. The net effect has been a decline in the growth of the pharmaceutical industry, although still profitable on the whole.

Perhaps the recent spate of widely publicized misconducts is a consequence of attempts on the part of industry to keep profit margins high (Canadian Health Coalition 2010; Maria Szalavitz 2012). Settlements with the U.S. Government for alleged misconduct of a number of pharmaceutical companies have been just as prominent in the media. While these settlements, called corporate integrity agreements, could provide a level of recompense, remedial actions (such as requirements of enhanced compliance) are only applicable for a limited duration, and it is questionable if they have any significant effect on the development of an ethically sound corporate culture in the long run (Outterson 2012). In addition, they are unlikely to have any effect on improving public trust. A radical stance may lead to the conclusion that drug development and production should not be a commercial concern given the difficulty in reconciling cost-effective drug production (and innovation) with maximizing accessibility with profit generation. However, it is at the present time unclear if the preclusion of industry would not lead to a worse outcome, especially in the absence of better and viable alternatives. Although primarily responsible for many of the alleged misdeed, the pharmaceutical industry is not solely to be blamed. In Ben Goldacre’s compelling critique of the industry (2012), he argued that regulators, doctors, academics and medical journals have all failed to effectively safeguard the interests of patients. Credible and reliable measures are necessary to check the power of the pharmaceutical industry and to render it accountable. They must arise not only from within the industry, but also from the broader societies within which it is nestled. This may seem an obvious point to make, but the focus on CSR has drawn attention very much to the former rather than the latter.

Corporate Social Responsibility and Solidarity

As a concept, CSR has a multitude of meanings. It could be understood and deployed in very practical ways, such as (Smith 2008; Leisinger 2005): (1) Strategy to increase goodwill, improve the corporate image and prevent new government regulation; (2) Signal to attract social responsibility-oriented investors, as well as to attract and motivate committed employees; and (3) Means of building intangible asset, particularly if reputation and brand loyalty are recognized as assets. In more ethical terms, it arises from the principle of responsibility, whereby a corporation owes certain moral and social duties to other stakeholders that it relates to, whether directly or indirectly. In addition, the principle of sustainability also underpins CSR, since corporate decisions are not only based on financial considerations, but also on the long-term social and environmental consequences of their activities (Olivier et al. 2008). As a philosophical basis for corporate action, Klaus Leisinger (2005) proposes for corporate responsibilities towards society to be considered in terms of what a corporation must do, what it ought to do, and what it can do. He explains that as a private enterprise, a corporation does not have the social or political mandate or the capabilities to bring about certain changes. This is practically a sensible approach, although it is ultimately and essentially a unilateral corporate initiative. While commendable, initiatives in CSR may or may not receive acceptance or endorsement from broader society. Benchmarking can serve as a useful platform to measure progress beyond the corporation itself (Lee and Kohler 2010). There are already efforts to benchmark certain corporate actions, such as increasing access to medicines by the Access to Medicines index. But it is less clear as to the extent that these benchmarking efforts also meet public expectations, even if at a normative level.

Arguably, the absence of a widely accepted measure of progress reflects a lack of clarity as to the expectations of different stakeholders and how they could actually work together towards the progressive realization of ethical and political goals, such as those entailed in the United Nations Millennium Declaration of 2000. While the notion of CSR serves a critical function in reminding corporations of their broader societal duties and aspirations, broader ethical framework and engagements are necessary to develop trust and build solidarity. After all, a responsible corporate act need not necessarily be a solidaristic one. In a recent report, the U.K. Nuffield Council on Bioethics (2011; page xiv) explains solidarity “in its most bare-bone form” as signifying “shared practices reflecting a collective commitment to carry ‘costs’ (financial, social, emotional or otherwise) to assist others”. On this understanding, shared practices and collective commitments are often difficult if not impossible to achieve because of a failure to recognize sameness by one person or group with another, and a corresponding failure to establish an overall symmetrical relationship. At risk of over-generalization and simplification, it still appears that corporations and non-corporate entities (whether governmental or not) are generally reluctant to engage in deep and sustained conversation over common concerns, unless otherwise compelled. Where engagements occur under compulsion (though not necessarily coercive), the outcome (if any) is unlikely to be solidaristic or constructive in terms of establishing long-term trust. To be sure, there are exceptions in the various public-private partnerships, but these tend to have a transactional character and their outcomes could be difficult to evaluate (McKee, Edwards and Atun 2006).

Conclusion

It is beyond the scope of this paper to elucidate on the broader ethical framework that is proposed, but its main argument is reiterated: that current thinking in CSR should be expanded to include the ethical principle of solidarity. Solidaristic considerations and acts are especially relevant to the pharmaceutical industry because their products could be life-saving. Klaus Leisinger (2012, page 158) states that the “primary responsibility of a research-based pharmaceutical company is to be successful with integrity in its R&D, and in its production and profitable sale of medicines and vaccines. This not only increases shareholder value, it also contributes significantly to the quality and protection of life.” To enable greater access to essential medicines in low and middle-income countries, a variety of initiatives have been implemented. These include differential pricing, patient assistance programs and donations. However, solidaristic acts are not simply charitable giving because similarities and shared commitments are not necessarily entailed in the latter. They are also not investment in “reputational capital”. Ethical analysis requires a critical understanding of the sources of, and motivations underlying, reputation and reputable actions. A solidaristic act is not a public relations exercise, even if this is an important corporate activity. Underlying such an act should be a genuine interest in the well-being of others, even if self-interest, benefit or advantage is compromised to some degree.

However, solidarity also requires recognition that ensuring access to essential medicines is not and should not solely be the responsibility of the industry. Access may be limited or otherwise precluded by poor governance, weak health care system, lack of effective and safe medicines on the market or in the developmental pipeline, among other factors. Solidarity is also relational, and must be sustained through deep and continuing engagements on an equal and symmetrical basis. The recent World Health Summit Regional Meeting that was held in Singapore is a first step towards developing solidarity, by promoting an understanding of sameness among health professionals, academics, civil society, industry, media and policymakers. But as the Summit Statement illustrates (World Health Summit 2013), more still needs to be done in formulating or sustaining shared practices and collective commitments in relation to health impact on economies and societies, innovations in health technologies and interventions, health care financing and emerging health threats. CSR is integral to these efforts, but it should be understood and implemented on solidaristic terms.

About the Author

Calvin WL Ho is Assistant Professor at the Centre for Biomedical Ethics in the Yong Loo Lin School of Medicine, National University of Singapore (NUS), and Research Associate with The Ethox Centre, University of Oxford. He holds a doctorate in juridical science from Cornell University, and was also trained in law at NUS and University of Cambridge. In addition, he is also trained in anthropology, sociology and economics. He recently co-edited (with Professor Terry Kaan) the monograph Genetic Privacy: An Evaluation of the Ethical and Legal Landscape (Imperial College Press, 2013). His research interests include research policy analysis, property and intellectual property rights, informational confidentiality and privacy, comparative analysis, and economic analysis of healthcare systems.

References

Canadian Health Coalition (2010). Drug industry malpractice endangers public health. Available at: http://healthcoalition.ca/wp-content/uploads/2010/10/7-Deadly-Pharma-Sins.-October-27-2010.pdf

Jillian Clare Cohen-Kohler and Patricia Illingworth (2008). “Access to medicines and the role of corporate social responsibility: the need to craft a global pharmaceutical system with integrity”. In The Cambridge Textbook of Bioethics. Peter A Singer and AM Viens, editors. Cambridge: Cambridge University Press, pp. 359-368.

Jose A Cruz-Cruz and William Frey (2008). Business Ethics. Open-source textbook. Available at: http://florida.theorangegrove.org/og/file/439fe286-20de-cd12-b13e-cd66b8d5bf20/1/BusinessEthics.pdf

Ben Goldacre (2012). Bad Pharma: How drug companies misled doctors and harm patients. London: Fourth Estate.

Hans V Hogerzeil (2012). “Essential Medicines”. In The Right to Health: Theory and Practice. Gunilla Backman, editor. Pozkal: Studentlitteratur, pp. 263-279.

Matthew Lee and Jullian Kohler (2010). “Benchmarking and Transparency: Incentives for the Pharmaceutical Industry’s Corporate Social Responsibility”, Journal of Business Ethics 95: 641-658.

Klaus M Leisinger (2005). “Corporate Responsibility for Pharmaceutical Corporations”, Business Ethics Quarterly 15(4): 577-594.

Klaus M Leisinger (2012). “Poverty, Disease, and Medicines in Low- and Middle-Income Countries: The Roles and Responsibilities of Pharmaceutical Corporations”, Business & Professional Ethics Journal 31(1): 135-185.

Martin McKee, Nigel Edwards and Rifat Atun (2006). “Public-private partnerships for hospitals”, Bulletin of the World Health Organization 84(11): 890-896.

John W. Mullins (2010). The New Business Road Test: What Entrepreneurs and Executives

Should Do Before Writing a Business Plan. London: Financial Times Prentice-Hall.

Nuffield Council on Bioethics (2011). Solidarity: reflections on an emerging concept in bioethics. London: Nuffield Council on Bioethics.

Catherine Olivier, Bryn Williams-Jones, Béatrice Godard, Barbara Mikalson and Vural Ozdemir (2008). “Personalized Medicine, Bioethics and Social Responsibilities: Re-thinking the Pharmaceutical Industry to Remedy Inequities in Patient Care and International Health”, Current Pharmacogenomics and Personalized Medicine 6: 108-120.

Kevin Outterson (2012). “Punishing Health Care Fraud – Is the GSK Settlement Sufficient?”, New England Journal of Medicine (20 September) 367(12): 1082-1085.

Alan Smith (2008). “Corporate social responsibility practices in the pharmaceutical industry”, Business Strategy Series 9(6): 306-315.

Maria Szalavitz (2012). “Pharma Behaving Badly: Top 10 Drug Company Settlements”, TIME Healthland (17 September). Available at: http://healthland.time.com/2012/09/17/pharma-behaving-badly-top-10-drug-company-settlements/

World Health Summit (2013). World Health Summit Regional Meeting – Asia, Singapore 2013: The M8 Alliance Statement. Available at: http://www.worldhealthsummit.org/fileadmin/downloads/2013/WHSRMA_2013/WHSRMA_Publications/WHSRMA_M8_Statement-2013.pdf

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