More Bad Pharma

This is a longer version of the Bad Pharma article I was posted last year. Red Pepper were going to use this piece but didn’t in the end. So here it is.

“It’s easier to imagine the end of the world than the end of capitalism,” everyone’s favourite Marxist film critic, Slavoj Žižek, once remarked. Perhaps a sudden fleeing of the imaginative capacity explains the strangely brain-dead reaction of the science writer Ben Goldacre to the idea that the pharmaceutical industry should, for the good of humanity, not be conducted on a capitalist basis.

The question, posed by the economist Harry Shutt, was not complicated. Given that the pharmaceutical industry appears totally unsuited to being run on a profit-maximising basis in shareholder-owned companies, Shutt asked Goldacre in The Observer, wouldn’t its functions be better carried out by non-profit or publicly-owed enterprises?

Goldacre is clearly a very intelligent person, whose Guardian newspaper Bad Science columns are oases of un-credulity refuting the claims of corporate science. His book Bad Pharma says that drug companies deliberately put dangerous or useless drugs on the market. He’s no fool and no shill so why this did obvious question precipitate such confusion?

Niall Ferguson has invaded my head

First, Goldacre said he was a realist, clearly implying that he’d like a different way of running the industry but that wasn’t possible. But by the next sentence, he revealed that he didn’t want a “central command state economy” (Help! Niall Ferguson has invaded my head), a very jaded straw man and definitely not what Shutt was advocating. This was followed, most bizarrely, by the assertion that people in the drugs industry perpetuate acts of great evil, not because they are innately evil, but because they work in a badly designed system. This is precisely what Shutt was saying – it’s a badly designed system, its acts are not the “fault” of the individuals working in it, so change the system. As an answer, that lacks something. It’s like saying 2+3 isn’t 5, it’s 5.

Finally, Goldacre says what he thinks should happen – a “competent regulatory framework”. Are you still awake? Don’t worry, the boogie man won’t get you because the good regulation fairy will stop him. Spoiler alert. She won’t.

Imagine, as an experiment, the reaction if state pharmaceutical agencies were guilty of the foisting dangerous or dysfunctional drugs on the market. There would be immediate and deafening calls for privatisation. You get an insight into the balance of power, intellectual and otherwise, by the fact that critics of the misdemeanours of corporate drug companies call merely for better regulation.

Let’s set aside for one moment the integral problem that western “democratic” political systems, and frequently the politicians in them, have been bought by corporations so that regulation is not remotely competent or effective.

Regulation/Smegulation

For the sake of argument, imagine an ideal world where the state sits benevolently above the fray and government regulation can do its job unimpeded. What would regulation actually do?

Bear in mind the recent claim by two French medical specialists, Professor Phillipe Even and Bernard Debré, that over half of the medicines prescribed in France are either useless or dangerous. 20,000 deaths a year and 100,000 hospital admissions are linked to hazardous medication, they claim. Goldacre’s book, Bad Pharma, is specifically about the dangerous medicines that shouldn’t be out there, but are. “… for several of the most important and enduring trials in medicine, we have no idea what the best treatment is, because it’s not in anyone’s financial interest to conduct any trials at all”, he writes. And that doesn’t take into the account the drugs that, while not harmful, do not serve any medical purpose. “If you can get on to the market by making a me-too copycat drug that represents little or no therapeutic advance and is even less effective than the drugs that it copies, then you will,” says Goldacre.

So competent and effective regulation will, if it does anything, radically reduce the number of pharmaceuticals that are allowed to go on the market. Thereby massively hitting drug company profits and, in turn, the number of people they employ; numbers which are dropping anyway.

Thus, you are soon face to face with a fundamental conflict of our capitalist system. An unavoidable collision between the impulse most decent people share for reducing the anti-social effects of capitalism, against the need for capitalism to prosper so that everyone can have good jobs and incomes. We are, whether we like it or not, materially dependent on the system’s success. But a successful system causes outcomes, such as global warming and prescribing dangerous medicines, that are inherently destructive.

Planned Regulatory Obsolescence

If regulation of the pharmaceutical industry were actually competent, as Goldacre wants it to be, it would prevent capitalism from working. Actually it’s not working well, once high performing pharma stocks have fallen below those of Coca-Cola and Unilever and drug companies are shunning research, but effective regulation would be another drag on profits. A UN report in 2009 found that a third of the profits of the world’s biggest 3,000 companies would be wiped out if firms were forced to pay for the use, loss and damage to the environment they cause. In other words, truly effective environmental regulation would render capitalism impossible.

So regulation is, quite deliberately, not effective. It allows, as research has found, just enough reform to buy off critics without seriously impeding corporate priorities. In the end, Goldacre’s vision of a “competent regulatory framework” is far more utopian than changing the system so that profit maximization is no longer the modus operandi of pharmaceutical companies.

An Alternative to regulation

 Is there an alternative to the futility of regulation that avoids the pathologies of a Soviet-style command economy? Actually there is:  a weapon to bend bad pharma to the public interest that entails no mass expropriations and preserves a market economy.

“A man who causes harm in the course of his work can be sued for the full cost of that harm to the point of personal ruin,” writes Dan Hind in his book, The Return of the Public.  “A man who owns shares in a company that causes the same harm risks only his original investment.” This is the privilege of limited liability, granted by the state, on the grounds that by limiting risk to corporate investors, innovation, in the public interest, is encouraged. But recent experience of the finance industry, as well as pharmaceutical companies, demonstrates that limited liability, far from promoting the public interest, inculcates public harm.

Hind argues that limited liability be reserved for employee-owned and managed companies. Harry Shutt, who originally voiced the incompatibility of profit-maximising pharmaceutical companies with the public good, believes that limited liability should only be granted to companies that represent the community on their boards and serve a defined public purpose.

Removing the automatic conferring of limited liability would restore the non-profit impulse that was once a significant part of the pharmaceutical industry. Before it was floated on the stock exchange in 1986, the Wellcome Foundation, wholly-owned by a charity, was one of Britain’s largest pharmaceutical companies. The Royal Marsden Hospital in London – part of the NHS - is, still today, a major source of research into drugs combating cancer, financed by a combination of state and charitable contributions.

Without the cover of limited liability, shareholders would, as Shutt has said, “rapidly become an endangered species”. Profit maximising for external owners, the root cause of “bad pharma”, would be transcended. Of course, if “drugs for drugs sake” becomes a thing of the past, so will “jobs for jobs sake”. You can’t evade the material dependence of virtual everybody on capitalism’s smooth functioning, nor the implications that would result if we collectively decide that its smooth functioning has too many damaging side-effects.

Enterprises without external shareholders, could becomes places where the concerns of citizens and workers are heard. If the effects of corporations, such as pharmaceutical corporations, have enormous social effects, then they should serve, institutionally as far as it is possible, all of society. And that doesn’t mean the patina of regulation.